An inquisitive civilian went on the hunt for the secret to independent pharmacy success. Here's what he came up with.
With an uncertain regulatory landscape and declining reimbursement rates, most pharmacists would agree that it is tougher to be an independent pharmacist today than it was in years past.
Asked to describe their challenges and concerns, pharmacists mentioned declining reimbursement rates for prescription drugs, mail-order use forced on patients, and the uncertainty surrounding healthcare regulation, among other issues.
What to do?
So how does an independent survive and thrive in these uncertain times?
Some pharmacists say that it's going to be much tougher for independents to survive as typical retail pharmacies in which filling patient prescriptions is the only service offered.
On the other hand, “If you're willing to work hard and have an entrepreneurial mindset,” said Andrew Keenan, PharmD, of Valley Prescription and Compounding Pharmacy in Merced, Calif. (www.valleyrxandcompounding.com), “then it can be a great time to be an independent pharmacist owner.” His advice to independent pharmacists: “Look into other areas where you can use your education as a drug expert.”
You gotta have smarts
The common thread running through the success stories is that independent pharmacists need to think creatively in order to capitalize on new business opportunities.
According to Jeffrey Hill, PharmD, co-owner at Valley Rx, he and his partner are looking into opportunities to offer services in the areas of hormone replacement therapy and long-term care. In addition, they're already providing compounding services accredited by the Pharmacy Compounding Accreditation Board (PCAB).
When asked why a compounding pharmacy should obtain PCAB accreditation, Hill said that it was a good way for a compounding pharmacy to show that it adheres to rigorous standards that increase patient safety. In addition, it gives an independent pharmacy another way to show that its services are unique and that the pharmacy is committed to excellence in patient care. [Editor’s note: In the wake of last fall’s fungal meningitis outbreak resulting from contaminated products sourced to the New England Compounding Center, to forgo PCAB accreditation would be irresponsible and foolhardy. One of these days it may also be illegal.]
How unique does having a PCAB accreditation make your pharmacy? Elizabeth Schrage, a consulting pharmacist for Money Crashers Personal Finance (www.moneycrashers.com), stated that “less than 3% of compounding pharmacies currently have PCAB accreditation. A PCAB accreditation means that your staff is highly trained, only high-quality pharmaceutical ingredients are used, all equipment is clean and sanitary, and the pharmacy is compliant with all PCAB standards. The organization blamed for the meningitis outbreak last year was not accredited.”
Granted, getting into the compounding pharmacy market is not all roses. Stephen Bernardi, RPh, co-owner of Johnson Compounding and Wellness Center in Waltham, Mass. (www.naturalcompounder.com), noted that a significant financial investment is required to ensure that your compounding labs comply with existing regulations. In addition, if you decide to become a compounding-only pharmacy, there is the added challenge of building an entire new customer base.
A little bit of this, a little bit of that
Another approach to diversifying your services as a pharmacy owner is to take a hybrid approach. This is what Saad Dinno, BS, RPh, and his brother, Raid Dinno, RPh, have done at Acton Pharmacy (www.actonpharmacy.com), a hybrid retail and compounding pharmacy in Acton, Mass with a focus on non-sterile compounding. According to Saad, this approach has won the pharmacy a loyal customer base.
Schrage pointed out that pharmacists can expand their businesses by offering their services online. “Having a website is a great way to expand one's online presence, and providing online prescription fulfillment is one of a number of additional services a pharmacist could offer,” she said.
The legal front
The recognition of pharmacists as healthcare providers may also open new opportunities for pharmacists.
Recently, www.change.org sponsored a petition to the White House asking that pharmacists be recognized as healthcare providers so that they can be paid for “therapy management and patient consultation services.” According to the petition, studies show that when pharmacists are directly involved in patient care, patients demonstrate “fewer adverse drug reactions, experience improved outcomes, and healthcare costs are reduced.”
In 30 days, the petition passed the 25,000-signature mark, making it eligible for a review and response from the White House.
With more than 28 years experience, Zachary Scholl, owner and head pharmacist at Oncology Plus Inc. in Brandon, Fla., thinks that this will help pharmacists be recognized for the patient counseling and care that pharmacists already provide.
The market with mega returns
With the uncertainty surrounding any kind of legislative effort, might there be a market an independent pharmacist can explore that would provide an average annual growth rate of 15%-20%?
In 1975, pharmacist Phil Hagerman and his father, Dale Hagerman, also a pharmacist, launched Michigan-based Diplomat Specialty Pharmacy. They grew what began as a basic retail pharmacy into the fourth-largest specialty pharmacy in the United States and the largest specialty pharmacy to be privately held. In a 2012 Inc. Magazine survey of 5,000 companies in the healthcare industry, Diplomat ranked No. 4 in total revenue. Notably, Diplomat generated $502 million in revenue growth over 3 years.
Unlike a typical retail pharmacy, Diplomat doesn't just employ pharmacists and pharmacy technicians. Because it offers medication management services for patients with conditions ranging from HIV/AIDS to multiple sclerosis, it also numbers nurses, dietitians, and patient-care coordinators among its 765+ employees (plans are to hire 1,000 more) at locations in 7 cities across the country.
How’d they do it?
So how did Diplomat grow from a typical retail pharmacy into such a large and successful company?
Phil Hagerman, Diplomat’s CEO, said that he and his father were in a sense “pushed” into growth by area doctors who needed high-cost drug therapies that a specialty pharmacy can provide. When they were first starting out, to mitigate the risk of carrying expensive specialty-drug inventory, Phil and his father networked with as many doctors as possible to ensure that they would have a customer base to support their initial efforts.
Thirty-eight years later, their efforts seem to have paid off. Like the other pharmacists mentioned above, Phil attributes his company's success to an “entrepreneurial mindset” and willingness to take risks in order to capitalize on opportunities.
Lay it on the line
So what's the bottom line for independent pharmacists in these tough and changing times?
Jeffrey Hill summed it up when he said, "Be open to new ideas and be entrepreneurial. Never accept the status quo."
Bruce Park lives in Los Angeles. His writing interests include business and healthcare issues. Contact him at 805-244-6594.