H. D. Smith recently sat down with one of its retail pharmacy customers to discuss what it’s like to be an independent pharmacy today amongst many national chain “big box” pharmacies, and to understand why he left his “big 3” drug distributor to switch to an independent distributor.
I’m visiting Don Grove, Owner and Pharmacist at J & D Pharmacy in Warsaw, Missouri, a rural area where Don has been a prominent healthcare provider for the community since 1979. Don, what made you want to be a pharmacist?
Pharmacy is in my DNA. Many of my family members are pharmacists and I grew up in pharmacies. Not only was my dad a pharmacist, but my uncle was, my brother is and my two nephews are pharmacists now. Being around a pharmacy my entire life, it felt like the natural plan for me.
That sounds like good DNA. How did you get started?
My dad actually used to pull me out of junior high to make deliveries for his pharmacy when he was short-staffed. It was a different time then. I would deliver hamburgers and milkshakes all over town.
I’m sure your dad had competition in his local market back then, just like many independent pharmacies face now. We hear about small business owners facing competition against national chain pharmacies. What competitive pressures do you face locally?
As an independent pharmacist, I’m always going to have competition. I've found that independents in the area, whether they are in the nearby larger town or this rural town of 2,000, are not my competitors. My competitors are the big box stores. So I do everything I can to be better than them. Growing up, I was very small but that didn't stop me. I played a lot of sports and I learned that it doesn’t matter how big you are – all you have to do is be faster and smarter. So, that’s how I operate in business, too.
I like that idea! At H. D. Smith, we operate on very similar values – we are big enough to ensure pharmacies get the right products, across the U.S., but we are flexible enough to cater to the needs of our independent customers. Tell me about your switch from a big three wholesaler to H. D. Smith.
When I signed with the big wholesaler, I had a good contract, or so I thought. But, you can't always check your contract, and my time with that wholesaler was fine at the beginning. But, several years into the contract when we were getting ready to renegotiate, I thought, “What am I doing?” I can't believe I expect patients to come to me, an independent pharmacist, instead of one of the big box stores. Yet I'm doing the same thing. I'm going to a publicly held company and I'm actually subsidizing those big box stores.
That’s a really good point. I bet many independent pharmacies don’t realize they are funding their competition, let alone, expecting great service when they aren’t really a priority to their publicly held distributor.
Right. Because, each of the big three has huge accounts – some of them have 8,000 pharmacies they are serving. Well, who would you take care of? Your 8,000 pharmacies account or Don Grove here in Small Town, Missouri?
I’m sure you have contacts in the industry who are in a similar position to you – they use a big three wholesaler as primary. How do you handle this touchy subject with them?
I’ve always wondered why pharmacists have such a hard time understanding that they are subsidizing the big box stores by giving their business to a big three wholesaler. The big three are taking care of the big box stores. I finally realized that pharmacists are clinicians. They are very patient-centered, they are intelligent, and they went to school to be wonderful, caring, compassionate clinicians, but not all of them are good businesspeople.
What advice would you give other pharmacies like yours who do business with the big three?
All the businesspeople out there, you need to do the numbers and realize every time you spend money with a big three wholesaler, that you are subsidizing whichever large chain they are taking care of. Because, they will give the larger chains the better prices and the only way they are able to do that, is with your money.
What did you do when your contract was up?
When I was ready to negotiate, I knew it would be hard because I don’t like to negotiate. Well, I happened to come out with what I think is the best deal with H. D. Smith, and of course the big three didn’t really care because I'm just one account. Independent wholesalers are so important because they know I'm their bread and butter and if they don't take care of me, they won't have a business in the end.
Do you spend a lot of time comparing prices to secondary wholesalers or other generic suppliers?
I have to trust that I’m being taken care of by my primary wholesaler. There is huge trust in my relationship with my wholesaler. And I know if they are taking advantage of me, they can only do it once. And then I can always leave at the end of the contract. So, I operate by three things: cost of goods, service and relationships.
How do you maximize your contract with H. D. Smith and not get swayed by deals from other wholesalers?
I feel that whenever you commit yourself to a buying group or to a wholesaler, you need to buy everything from them. Every day, I get a call from a generic manufacturer and they have great deals for me. There is a double edged sword here. If I buy a lot of merchandise from them, it's going to cut down on the rebates that I'm getting from my own wholesaler or buying group. So, that is a good reason not to.
Back to that concept of trust – I told my primary wholesaler that I would be buying everything from them. So, why would I want to support an organization that hasn't supported me in all the areas of my business like delivery, service, calling on me, working on third party issues? I just can't abandon the team that is supporting me.
Thanks, Don, for spending time with me today, and for sharing your story.
Happy to spread the wealth that I’ve found with H. D. Smith.