How do you stay ahead of changing patient needs, evolving technology and new competitors—all while still providing patients with top-notch care?
Independent community pharmacies today are faced with fierce competition from national chain and big box pharmacies. They deal with new industry challenges constantly, like retroactive direct and indirect remuneration (DIR) fees and limited drug pricing transparency. But despite these obstacles, many independent community pharmacies remain resilient, and manage to keep the doors open.
How? They’ve learned to adapt to the changing marketplace and adjust their business models when necessary.
“The growth and consolidation of pharmacy chains created upheaval in the pharmacy marketplace throughout the 1980s and 1990s,” said B. Douglas Hoey, R.Ph., MBA, CEO of the National Community Pharmacists Association (NCPA). “Since then, the number of independent community pharmacies has stabilized in part because of their adaptability.”
In order to stay relevant in today’s marketplace, independent community pharmacies need to continue to adapt and find ways to be successful in spite of the pressures weighing them down.
“It’s a matter of survival,” said Scott Brunner, CEO of the Georgia Pharmacy Association (GPhA). “The dispensing-based models that for years enabled pharmacists to care for their patients and earn a decent living simply don’t work in today’s world of thin margins.”
Today, the independent community pharmacies that find ways to redefine their place in the industry are the ones that are going to survive.
“Our profession is evolving so quickly that if we don’t adapt to change, we could very easily look up and have no patients left to serve,” said Tripp Logan, Pharm.D., vice president of Logan & Seiler, Inc., and senior quality consultant at MedHere Today, a pharmacy quality and performance consulting group.
Hoey shared a similar outlook. “Independent community pharmacies that don’t adapt to change are destined to struggle financially,” he said. “They need to consider diversified revenue and other opportunities to transform their practice settings.”
New opportunities
Brunner said that while the old dispensing model is slowly dying, opportunities are opening up for pharmacists who are willing to be creative.
“Independent pharmacists who want to thrive in this evolving health care environment are going to have to get out from behind the counter and think more broadly about what patient care means,” he said.
Hoey said independent community pharmacies can distinguish themselves by offering niche services that cater to specific patient needs, such as compounding, medication therapy management (MTM) and diabetes education classes.
“These small business health care providers are not constrained by corporate headquarters, like their publicly-traded chain counterparts, in terms of what they can offer patients to best serve their needs,” he said.
NCPA has seen significant growth in immunizations in recent years, which has become the most popular patient care service offered by independent community pharmacies. “Providing improved access and convenience without a doctor’s appointment will continue to drive patient adoption and uptake,” Hoey said.
More independent community pharmacy owners and pharmacists are using their training and expertise to solve health care problems in their communities. “And in so doing, they’ll not only improve their business, they’ll also improve the quality of life in their community,” Brunner said.
For example, a local pharmacist in Valdosta, Ga., provides diabetes care management services to employees of a large local employer. And, the service has more than tripled employees’ medication adherence over the past year, Brunner said.
Additionally, pharmacists are engaging in coordinated care models to help improve patient outcomes and reduce overall health care costs by driving greater medication adherence.
“Transitions of care programs have allowed community pharmacies to team up with hospitals to help discharged patients better adhere to their prescribed medication,” Hoey said. “This can greatly reduce the likelihood of readmission, yielding substantial savings for both hospitals and health care payers.”
Logan said pay-for-performance programs are another force driving independent community pharmacies to make changes.
“In our experience, we’ve seen the quickest adaptation to change occur within true pharmacy-driven incentive programs,” he said. “If a pharmacy can be adequately incentivized for enhanced service delivery, we’re seeing these enhanced services rolled out and rolled out quickly.”
Staying relevant
By expanding their scope of practice and adapting their business models, independent community pharmacies can continue to stay relevant and competitive in the marketplace.
Tim Connor, a full-time professional speaker and business consultant who is the keynote speaker at the 2017 Synergy Conference, June 23-25, 2017 in Kansas City, Mo., hosted by PBA Health, Pharmacy Providers of Oklahoma (PPOk) and the Oklahoma Pharmacists Association (OPhA), said independent community pharmacies have to understand how relevance should influence the products or services they offer to better meet customers’ wants and needs.
According to Connor, there are three fundamental things customers want: service, low price and quality.
“It’s not necessarily the product that you’re selling that determines your relevance, it’s your ability to stay consistent with what people want in the marketplace,” he said.
For independent community pharmacies, staying relevant means staying in touch with your patients and your competition, as well as payers and prescribers.
“You have to pay attention to what trends are impacting your industry and your customer base,” Connor said. “You have to know what their concerns, their needs and their desires are.”
Even though you probably won’t adapt to every expectation, you need to know what patients want in order to make effective changes.
“We must occasionally step out from behind the pharmacy counter, and engage payers and prescribers in our communities,” Logan said. “Looking outside of our walls to engage other health care stakeholders isn’t an easy thing to do, but in today and tomorrow’s health care environment, we must do just that.”
It’s also important for independent community pharmacies to expand their scope of practice to combat the financial squeeze they face due to inadequate prescription reimbursements from pharmacy benefit managers (PBMs).
Without finding another way to increase margins, it’s impossible to keep a competitive edge.
Hoey said diversified revenue streams facilitated by expanded scope of practice will allow independent community pharmacies to maintain some control over their bottom line without being beholden to PBMs.
Logan agrees. “There are many pharmacies out there that are taking advantage of the growing number of value-based, non-prescription-dispensing-dependent, non-PBM-driven revenue streams that help them increase patient access, revenue and opportunities,” he said.
Evaluating your business
Embracing change means being willing to take a hard look at your business—regularly.
Jan Makela, Gallup-certified strength coach and a mentor with SCORE, a nonprofit association dedicated to educating entrepreneurs and helping small businesses through mentoring in partnership with the U.S. Small Business Administration (SBA), recommends conducting a SWOT analysis to evaluate your pharmacy’s business model and the current market. A SWOT analysis is a business tool that stands for strengths, weaknesses, opportunities and threats, and it can help you take an objective look at your business.
Makela said pharmacies need to reinvent themselves and stay relevant in areas where they can compete and be successful. “They should look outside their own communities for examples of community pharmacies that are doing well,” he said.
For example, Brunner said more than 70 independent pharmacies in Savannah, Ga., have partnered with the Savannah Business Group, which offers group health purchasing for employers in the Savannah region. The partnerships created a generic dispensing group that not only saves employers money, but also generates a significant amount of revenue for the pharmacies.
Similarly, Connor suggests creating employee focus groups and surveying customers to determine your pharmacy’s strengths, weaknesses and challenges.
You have to find relevant and current ways to discover what your customers want, what they like, what they expect, what they’re uncomfortable with and what they want to see changed, he said.
For Logan, it’s about staying informed. Pharmacy owners and managers should attend conferences, engage with peers, read newsletters, educate their employees and ask questions.
“Independent pharmacies need to understand that we’re competing for access to patients, not competing with other pharmacies,” he said.
Embracing change
While you may have heard that people tend to resist change, Connor said people don’t resist change; they resist losing control.
For example, one reason independent community pharmacies may resist change is due to an ego-driven owner or manager. “Their attitude is, ‘I started this business, so it’s my way or the highway,’” Connor said.
Similarly, Brunner said the biggest impediment to adapting to change is the stubborn notion among some owners and managers that if they wait long enough, and keep doing what they’ve always done, things will get better.
Logan notes that change isn’t easy. “Change is scary when it rarely happens and we attempt to change too much too quickly,” he said. “If change comes gradually and regularly in the form of evolution, it isn’t quite as scary.”
In his pharmacies, patient-centered programming, work flow and the overall pharmacy practice approach are in a constant state of evolution.
Looking at the bigger picture can help pharmacy owners and managers start to understand the need for change—and accept it.
“I think the most difficult aspect of embracing change is being able to look beyond the day-to-day challenges and pressures and see what it will take to be successful long term,” Hoey said.
And it takes time. “Embracing change requires time, brainpower, hard work and, yes, some discomfort,” Brunner said. “If you want to discover the next big thing, you have to overcome your affection for the status quo.”
Creating a culture
The owner or manager can’t do it alone. Keeping an independent community pharmacy relevant means forming a company culture that embraces change. Pharmacy owners and managers need to train their employees to support change.
Logan said owners and managers can prepare their employees through education, exposure, reinforcement and leadership.
“Pharmacy staff needs to have a basic understanding of the pharmacy environment, be re-engaged with evidence of this environment regularly, and know that their leaders and colleagues fully support the changes that will allow the pharmacy to evolve along with our rapidly changing health care system,” he said.
Hoey said change is about the betterment of business performance, so that should be a motivating factor for employees. “A more robust and efficient business will make a greater difference in the lives of the patients these pharmacies serve, which should be a point of pride for any employee,” he said.
Keep in mind that culture doesn’t just change overnight. “Pharmacy owners need to have a culture of trust and show they truly care for their employees,” Makela said.
The time is now
Brunner said independent community pharmacies need to understand that if they’re waiting for provider status legislation to change their world, they may be waiting a while.
“As great as it will be when pharmacists are finally considered providers, there are nearer-term ways for enterprising pharmacists to expand their practice,” he said.
And, new models for pharmacy patient care and profitability aren’t going to be handed to pharmacies on a platter, ready-made. “They must be created, one-by-one,” Brunner said. “Each independent pharmacy is in control of its destiny, and it will take work and creativity to achieve that destiny.”
Connor said the bottom line is that people need to stay in touch.
“Start getting in touch with what’s really going on with the customers in the marketplace, even if that means the pharmacist has to get out from behind the counter and meet with patients,” he said.
Because when a business model isn’t consistent with the expectations or demands of the marketplace, ultimately that business will close its doors.
“Continued downward pressure on prescription reimbursement is placing a lot of pressure on low to mid-volume dispensing-based practices,” Logan said.
If these pharmacies don’t add enhanced services, prescribers and payers will steer patients to other pharmacies that offer those enhanced services, he said. While pharmacies may not feel the effect of this immediately, they’ll gradually lose access to patients over time.
“If you don’t adapt, you will likely perish in today’s environment,” Makela said. “Look at your marketplace and understand that standing still is not an option going forward.”
How to have more “aha” moments
Sometimes you find a solution when you least expect it. Follow these research-backed steps to help you have more “aha” moments, so you can find inspiring ideas to improve your independent community pharmacy—more often.
1. Take some quiet time
Take a break from your busy schedule and make time for some peace and quiet. For example, find time between tasks to get out of the pharmacy and go for a walk.
2. Let your mind wander
During your downtime, avoid focusing on work or using electronics and allow yourself to daydream. Schedule a time each day where you unplug from all distractions.
3. Stay positive
Relieve anxiety and put yourself in a good mood before brainstorming or making an important decision. If you feel stressed out or frustrated, do something that makes you happy and relaxed, such as having lunch with a friend.
4. Don’t deliberate
Rather than thinking long and hard about the problem or decision at hand, distract yourself with another activity. For example, get some exercise or read a book.
Source: Harvard Business Review
Diversified revenue opportunities
In today’s ever-evolving, competitive health care environment, independent community pharmacies are looking for ways to distinguish their businesses. Consider some of these diversified revenue opportunities.
Diabetes care services
Provide services to assist patients with diabetes, such as hosting diabetes education classes, providing self-management training and offering products like therapeutic shoes, some of which can be covered under Medicare Part B.
Health screenings
Offer health screenings to help patients detect serious undiagnosed conditions, such as diabetes and hypertension.
Immunizations
Administer immunizations and vaccinations at your pharmacy to attract new patients and offer convenience to those who don’t have time to visit a doctor’s office.
Pet medications
Become a destination for pet lovers in your community by offering pet medications, compounding services and education for pet owners about safe usage and side effects.
Point of care (POC) testing
Provide POC testing to aid in disease screening, diagnosis and patient monitoring for diseases such as strep, influenza and HIV.
Smoking cessation
Help patients quit smoking by offering smoking cessation classes and carrying products to aid in the process.
Specialty pharmacy
Care for patients with complex conditions by dispensing specialty medications and providing medication therapy management (MTM).
Transitions of care
Improve patient outcomes and help reduce health care costs by assisting patients with their transition from the hospital to the home setting.
Travel health
Offer travel immunizations and make medication recommendations to patients before and after their travels to ensure quality of care.
Wound care
Help patients determine whether self-care for their wounds is appropriate and assist them in choosing—and using—the correct wound care products.
Source: National Community Pharmacists Association (NCPA)
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