Major Business Challenges of Pharmacy Organizations

The Major Business Challenges of Pharmacy Organizations

The pharmacy business is a much overlooked part of the healthcare provider sector, often being seen as an ancillary service, and yet is a very important part of the success of the whole system of care. Although as much as 50% of the pharmacy business is now run by a small number of major retail organizations (such as CVS, Rite-aid, Walgreens, Wal-Mart and Target etc.) there are still thousands ofindependent pharmacy businesses that are grappling with a range of challenges such as the ones described below.

More Targeted Marketing
A target audience is all of the potential people most likely to buy the products and services on offer. A pharmacy business therefore needs to identify the different types of customers who make purchases and consider a number of factors including their intrinsic medical needs, lifestyle choices, age, other demographic information (such as gender), family size, budget etc. This analysis is likely to reveal several possible target audiences. For example, if your pharmacy is located in an area with a lot of young families, pediatric patients may be a large target audience. If you are located near a gym, you’ll probably a target audience may be those who are looking for health supplements or other nutritional products. Similarly, nearby retirement communities can bring in seniors with many differentcombined prescription needs. The challenge then is to know your customers and make available what they need

Focusing on higher value added products and services
Most pharmacy owners know that some drugs may actually be very profitable in mark-up terms and others less so. This means that it is important to know which is which and then find ways to drive higher margin products when you can. In addition, pharmacies can review their prescription data, to see which doctors prescribe the higher margin drugs and build stronger relationships with them. This also goes for insurance companies that cover or recommend the most profitable drugs and then perhapsthe pharmacycan develop a marketing campaign which will allow it to give special discounts to customers carrying these insurance company’s coverage which is most profitable for the pharmacy.

Improving Quality
From an insurance company perspective, payers increasingly care about the quality of the pharmacies in their network. Because of this, payers are making network decisions and are beginning to structure some payments based on quality measures. To ensure access to preferred networks, independent pharmacies need to fully appreciate how quality is therefore measured at a detailed level and then take actions to help improve methods and processes accordingly.

Building Strong Customer Relationships
Because so much business goes to big box stores and retail chains and to online drug ordering, today’s independent pharmacy business needs to have even stronger personal relationship with their customers. This means that they need to have good CRM or customer relationship management systems that staff can utilize at point of sale to better know who is buying from them and why. This information is also a powerful way to understand multiple drug needs in combination and to appreciate wider family relationships that can help drive new business when this is done well.

Hiring and Training Good People Talent
Good talent is hard to find in many industries but can be even more difficult in independent pharmacies, especially when they need not only to be technically competent and well organizedbut have good customer service skills and as much “emotional intelligence” as possible. Not only does this means that pharmacies need to pay higher salaries but often need to invest more in training.

Summary
Independent pharmacies are under huge pressure to survive and thrive in the very competitive situation (especially against large retailers and online drug shippers) that exists today. In addition to this general challenge to their existence, they also have a number of other challenges to overcome if they are to make a reasonable return on investment as a business and even grow. RX4 has experienced all of these independentpharmacy business challenges in many different healthcare environments and can provide considerable insight and options where the knowledge is limited or does not exist internally.

Dr Jon Warner

Dr. Jon Warner
CEO-RX4 Group-Taking Care of the Business of Healthcare

Jon is the CEO of RX4 Group based in Los Angeles, California. He can be reached at jon@RX4Group.com

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