5 Big Challenges (And Opportunities) In Today’s Independent Pharmacy Marketplace
by Alan J. Hymowitz
Volume 5 Issue 15, July 17, 2018
The independent pharmacy marketplace has become one of the most competitive in all of healthcare. Despite the presence of CVS, Walgreen’s and RiteAid on nearly every street corner in America, independent pharmacies are beginning to increase in number. They vary from compounding pharmacies that serve the increasing demand from veterinarians and animal owners to the rapid expansion of special needs pharmacies that respond to the requirements of the aging and disabled Medicaid population.
The rumored death of independent pharmacies has not occurred and will not (where there’s an entrepreneur there’s a way), but there are significant challenges awaiting today’s pharmacy entrepreneur. Here are five that stand out given our current assessment of the national marketplace:
Customer preference for complete health needs providers – Pharmacists are increasingly viewed as providers of diverse health services as opposed to simply filling prescriptions. Immunizations, medication management therapy, counseling and other point-of-care and testing services can be integrated into existing operations as the pharmacy becomes more clinic-like in its service and product array. In addition, they need to become more hybrid retail operations, as well as specialty and compounding pharmacies. Independent pharmacies that ignore these customer preferences may find themselves on the outside looking in.
Increased sophistication of the reimbursement environment – Pricing is becoming more competitive than ever, especially with the growth of preferred networks and direct and indirect remuneration (DIR) fees. One option available to independent pharmacies is the URAC Specialty Pharmacy Accreditation which involves some initial expense but opens up new payment opportunities with an eye on value-based reimbursement. To be successful in this marketplace requires careful calculation of profitability given both the squeeze on margins and the opportunity to significantly expand prescription volume.
Focused demand for performance metrics – As in all of healthcare, attention to performance metrics is more critical than ever. Some adherence measures (i.e., blood pressure, cholesterol, diabetes medications, etc.) require continued focus, while operational metrics (e.g., formulary compliance) and clinical metrics (e.g. comprehensive medication review completion dates), are becoming more important for entrepreneurial pharmacists.
Improved efficiency yielding enhanced outcomes – The increased use of technology can greatly enhance performance outcomes for even smaller independent pharmacies and strengthen their market position. As an example, independent pharmacies can now use technology to identify patients at risk of nonadherence for diabetes medications and coordinate this data with the patient and prescribing physician, including patient satisfaction ratings. The outcomes from this technology can greatly improve life quality for the customer, as a result.
Coordination of services in the new integrated healthcare world – The demand for more integrated healthcare, including mental health issues, is pushing pharmacies squarely into the world of value-based reimbursement and managed care. Independent pharmacies will have an increasing role in related efforts (e.g., how to reduce the overutilization of hospital admissions), with an opportunity to increase their reimbursed participation in new business models not typical of traditional independent pharmacies.
This last challenge may also suggest one of the best opportunities for independent physician entrepreneurs – to assist in the facilitation of cost-effective care that reduces the likelihood of undesirable, expensive hospitalization. Independent pharmacies with a strong connection to their communities are well-positioned to address these needs in the managed care environment that grows each day.