Micro-practice – Future Direction for Pharmacy

I2P has long proposed that pharmacy attracts two types of consumers – customers and patients.
A little reflection will resolve this issue because clearly, customers will be attracted to the more commercialised aspects of pharmacy that compete with retailing in general, and the reason why pharmacists see their major competitors as supermarkets and variety stores.
However, if the question is posed as to: “What is your core business?”, the answer is inevitably “dispensing and professional services” – and  that offering is attractive to patients- and they want it now.

Why do pharmacists feel competitive to general retailers, (that are legally unable to provide pharmacy core services), while ownership rules in Australia still keep pharmacies in the hands of registered pharmacists?

To be sure, major retailers view pharmacies as a business opportunity that can be grafted on to their own business infrastructure and enhance the whole by creating a destination point – but there is no real competition between general retail and “core” pharmacy business (dispensing and professional services) as yet.
The only competition that exists is the sale of products that are held in common, some of which are medicines.

In pharmacies where retailing is a prime focus, competition with general retailers is successfully undertaken.
In pharmacies where the focus is on the traditional “core”, retailing is less successful, mainly because of competing priorities of space, investment and vision.

Asked where the future of pharmacy lies and almost universally the response will be the engagement in primary health care services and expanding that offering with a pharmacy flavour.
However, that marketing opportunity is in slow development and pharmacy leaders have had difficulty in defining a positive pathway with appropriate support.
Core expansion lies in difficult territory and is vulnerable to the real competitors – health professionals from all other health disciplines.

Community pharmacy perspective and basic culture has to free itself up before it can deliver an infrastructure capable of managing a sustainable marketing package that would enable pharmacists to fall in love with their profession again, and allow enthusiasm to bubble to the surface, rather than negativity and a feeling of impending doom.

The first step in adjusting to a new reality is to review the scope and direction of the marketing franchise you operate under.
Ask the question:
“Does my franchise generate customers or patients?”(Q1).
This is a simple question, but it does point to the next sequential thought:
“If I need patients to support my future direction, is the franchisor offering a suitable service package to match my patients?”(Q2).
And that leads to a further thought:
“Do I have an appropriate infrastructure to deliver a professional services package?”(Q3).

Looking at potential answers I would propose the following:

* Q1 response – Pharmacy professional journals, other pharmacy communications, (even pharmacists in discussion between themselves), use the word “customer” and “patient” interchangeably and without differentiation.
It is apparent that pharmacists are trapped in a retail mindset and have not sorted out who their actual consumers are, and what strategies need to be deployed to satisfy the aspirations for each consumer subset – customer or patient.
As pharmacy franchises are mostly directed to customers, they depend on physical product sales and a supportive supply chain – which is a costly process and best handled at wholesaler level.
And that leaves a pharmacy forever dominated by a brand that is not owned by the pharmacist proprietor, which further translates into a loss of control and direction at a high cost.

* Q2 response – A professional services package would be of limited interest to a wholesaler because it is difficult to commoditise a service that requires skill, dedication and care matched to the need of an individual patient.

This can only be provided by a trained professional clinical pharmacist.
So looking to a franchisor to provide this service need will not become a reality in practice.
This provision can only come from a dedicated clinical service pharmacist.
By redefining your franchising needs you can reallocate your franchise costs in the direction of clinical pharmacist shared risk contracts.
A lesser investment in customer-generating franchises can free up major budget dollars for a pharmacy.
These budget savings can be further utilised towards patient fee subsidies to reduce the cost to a patient purchasing services or alternatively, investing in physical infrastructure and campaigns to promote clinical services, using local area marketing techniques.

Marketing this type of approach can only be done by the pharmacist proprietor because each pharmacy will develop according to patient need and matched to a pharmacist skill-set.
That will create a point of difference between pharmacies that can identify and promote under their own brand and control.
A further benefit is that shared risk contracts will take the participants outside of award arrangements through a shared fee structure.
This creates incentive for both sides with pharmacy resources able to be shared with contracted clinical pharmacists.
Sharing resources also includes the referral of existing pharmacy patients to a clinical pharmacist whilst allowing clinical pharmacists to also convert customers from within the pharmacy customer pool to become registered patients, using a shared system.

Q3 response – Pharmacy infrastructure needs to be mapped according to expertise required.
A new paradigm pharmacy needs to be a collaborative structure (not necessarily as a partnership) allowing for a level of independence for each collaborator that fits into a supportive background culture, while still allowing for a shared ownership (or a single owner) as the model firms up and defines itself.

Multiple independent operators under a single roof allows for composite investment and shared risk.
Creativity and innovation would flourish in an environment that would be driven by self-interest through skilled pharmacists providing benefit and insight that would not be available through a single independent owner.
But a strong investor/owner could coordinate and guide the business aspects and stability of such  model allowing multiple skills to be delivered separately, differently but above all, integrated collaboratively.

For example, existing dispensing is a process that involves a high degree of pre-planning in terms of inventory prediction, quality control processes to ensure high levels of accuracy, the management of robotic processes, the training of skilled assistants, the development and delivery of patient information resources (both printed and human, including cloud Internet access) and the patient referral to an internal clinical pharmacist or other external health practitioner, as appropriate.
Ownership of this segment should be a primary investor pharmacist who holds the relevant PBS licence.

Compounding is a separate process that involves space and equipment that can optimally be registered as a manufacturer.
If appropriately licenced and equipped this area can be utilised for dispensing prescribed mixtures of ingredients in formats tailored for individual patients, specified by doctor prescription or other health practitioner prescription including that of an internal clinical pharmacist.
If appropriately licenced, part of this area can be used to manufacture small to medium batches of house brand formulas.
Dose administration packs can be managed from this area leading in to compounding of multiple medication ingredients using modern printing with the best cricut machine.
Drug testing, using near infrared technology can also be incorporated and this can be extended to specialist growth areas involving medical cannabis where cannabinoid type and quantity can be identified and labelled appropriately and be able to support various clinical programs such as pain management, anxiety and depression management, and the management of childhood epilepsy and other emerging programs such as diabetes, supported by appropriate evidence as identified.
Ownership of this segment should be an investor/operator qualified compounding pharmacist or other registered pharmacist employing a skilled compounding pharmacist.

What we are illustrating here is a range of micro-practices that can have separate owners or a common owner.
As few pharmacists can have the full spectrum of skills needed to develop all the practices involved, it follows that future infrastructure will need to involve pharmacists who can develop a total infrastructure in alliance, to accommodate each separate skill (a primary investor pharmacist) and who owns the infrastructure in its entirety and employs or contracts other pharmacists to build and provide services on a fee sharing basis or on a sublet space rental basis.
Or alternatively, an investor pharmacist to simply allocate space to a range of pharmacists where they separately invest and develop their own allocated spaces for their own skill purposes.
A further variation might be to have all participants as members of a cooperative or as an unlisted pharmacist public company. The latter would probably be the neatest and most efficient structure.
The same philosophy applies to other micro-practice enterprises that could include the following:

* Retail practice – This can be a traditional space that employs advanced technologies, and deals almost exclusively with customers.
Retail consumer offerings can be developed through franchised marketing groups similar to those already existing, or through regional buying groups.
Because a department has to be established to market all the other internal pharmacy “spaces”, catalogue production can become totally in-house developed and embrace the retail space as well.
The retail space will provide some traditional basic functions:
(i) to provide a pool of customers that is intelligently targeted for conversion to registered patients. All spaces combined will subscribe to a patient conversion policy.

(ii) to merchandise a range of home brand products manufactured by the compounding space.

(iii) to promote a limited range of other brands that are high turnover and attract additional margins through shelf rentals and catalogue inclusions.

(iv) to keep specialty items requested by clinical pharmacists or walk-in patients and customers.

(v) to keep a range of items that match certain patient demographics e.g. assisted living devices and surgical appliances.

* Clinical pharmacist practice – Of course, this is the area that needs urgent attention and support.
Appropriate private areas (including office space) need to be developed and fitted appropriately.
Clinical pharmacists, if contracted and work on a fee sharing basis, should be prepared to independently invest in their spaces in the form of furniture, suitable point-of-care testing devices, suitable patient management and information software systems and contribute to an internal marketing fund to promote their service.

If clinical pharmacists have PBS prescribing rights bestowed on them then care should be observed in the investment in PBS spaces in the pharmacy business model described in this article, so as to avoid conflict of interest.
Prescribing needs to be separated from dispensing and pecuniary interest rules developed to regulate this process.

This would not prohibit investment in any other space or business segment in the same environment.

Education would be the main input required for this clinical space, both for practitioner and patients (in the form of a mini seminar/workshop) and would require a separate space to consulting offices for this activity.
Clinical collaboration with public or private hospitals would be sought both for training and research potential and the development of outreach services (such as Pharmacy-in-the Home).

The building housing all these micro-practices is liable to be above average to normal pharmacy size and probably multi-storey.
It is likely to be a training pharmacy for pharmacy students and newly graduated pharmacists, and could develop close ties with pharmacy schools even engaging in research projects that would advance the whole of pharmacy practice.

Above all, a group pharmacy micro-practice model could substantially reduce financial risk (through business corporate structure and having participants share the investment risk by providing part, or all, of the capital requirements for their “space”).
This shared risk model is more likely to find investment acceptance with banks and other financial institutions

It would be a large pharmacy but would still retain the small business model independent culture that needs to be preserved.
It would concentrate its expansion and investment potential to a single site rather than looking to expand as a chain enterprise (but does not exclude this possibility) concentrating on quality of offering rather than quantity of outlets.

It would support existing Location Rules and encourage new opportunities that might be negotiated in the form of public/private partnerships with public health agencies.
It would seek to play a pivotal role within a patient-centred neighbourhood construct, operate extended hours and create a same-day home delivery service within its local catchment.
Investment in the “neighborhood” model would need to be directed towards structured health precincts where all forms of health services could co-locate for patient convenience. This would represent an additional investment opportunity that could attract pharmacist capital as well as other health disciplines’ capital.
Health precincts could be strong enough to locate in lower cost areas, because collectively they would generate large patient traffic volumes that each health discipline could draw from.
The need to locate in expensive shopping centres would reduce and again a health precinct can become a shared risk investment conserving capital and costs for an entire health community, including the patient component.

In summary. pharmacies should become micro-practice models involving a number of independent pharmacists specialising in separate segments of pharmacy practice under one big roof, but allowing for a major investor pharmacist to own and coordinate the whole of the business aspects, leaving specialty development to each of the participants involved.
In turn, that pharmacy to be located in a health precinct involving multiple health disciplines practising collaboratively and supportively.
This would provide a business model that would preserve the personal culture that independent professionals aspire to and one that patients prize, while simultaneously bringing benefits of scale that larger business models can deliver.
The best of all worlds.

2 responses to “Micro-practice – Future Direction for Pharmacy”

  1. You can’t have it both ways. Location rules are the primary reason pharmacy is dead in the water. Investment requires deregulation. Pharmacy will wallow and continue to be a pseudo medical retailer in the community setting until the shackles of the great majority of pharmacists and financial capital are broken.

  2. The reason Location Rules came into existence in the first place was to create an even distribution of PBS services.
    This was at government insistence but it caused unintended fallout for our young pharmacists.
    A common problem with centralised government initiatives.
    Now the PBS as a product has ended its life cycle.
    What didn’t happen was a renewal process by pharmacy leaders who failed to grasp the opportunity to enhance the Location Rules to expand the range of public/private partnerships in areas of public health – a role that would have suited a pharmacy environment.
    Pharmacy would not be dead in the water if it had astute leaders who will position themselves to build on existing resources in an evolutionary manner.
    This is why we have the King Review – a centralised attempt to find a PBS replacement.
    While it is a pain in the butt it also represents an opportunity for pharmacy leaders to suggest a wide range of possible solutions that are compatible with government ideology and policy.
    Pharmacy can have it both ways if our leadership proposes win-win solutions and genuinely work at it.
    Despondency only sets in when you realise that pharmacy leadership is stuck in a vacuum and needs member stimulus to kick-start creation and innovation.
    Pharmacy financial capital should not be broken but should be given stimulus and direction so that investment provides adequate financial return that can flow through better employee wages and conditions, as well as providing better and expanded services to the public that can be funded internally.
    What we have under CPA agreements is a situation going nowhere because both sides are so entrenched in old style thinking, all they can do is waste energy in scapegoating one another.
    We need an explosion of ideas to blow up the “logjam”.

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