Your Dispensary – Core Business Could Evaporate

This year will be “crunch time” for most community pharmacies who have not yet decided on adopting disruptive technologies as a means of improving the “bottom line” of their pharmacy.
I am thinking specifically the decision to purchase a robotic dispensing machine.
It is almost a “no-brainer”.

Robotic dispensing equipment has been available to pharmacy for nearly 20 years in most western economies, with improvements in price and efficiency gradually taking place over that period of time.
Australian pharmacy has always thought of itself as being an early adopter for technology, but in terms of robotic dispensing, it has been slow to change because of the reasonable financial returns available through the PBS.

Now the party is over.
Both the pharmacy life cycle and the PBS product cycle coincided with a hard landing in 2012 and we can see quite starkly the failure of pharmacy professional leadership to expand pharmacy core business during its stewardship of the last pharmacy business cycle leaving a large “hole” to fill and no immediate resources on hand to bridge the gap.

Just making the decision to purchase a robotic dispensing machine will simply put you in “catch-up” mode, quickly followed by a range of social, management and marketing decisions, with almost all of these processes falling on top of each other and with little room to move.

First is the staff displacement.
In a single-pharmacist dispensary, nearly 90 percent of that pharmacist will be available for forward pharmacy activity with 10 percent remaining with the dispensary as the final quality control check.
Also, 100 percent of a dispensary assistant becomes available.
Where do these people go to and what will they do?
Without appropriate planning there will be major pharmacy unemployment issues if they are simply “let go”.

This type of displacement should have been completely unnecessary if pharmacists had been trained to deliver clinical services and dispensary assistants converted to clinical assistants. I2P has been writing about this for 15 years!

So the first management decision ought to be to institute appropriate educational systems to develop the needed skills – and I can tell you from previous experience that it will take a full 12 months to have displaced staff up to productive levels.
If you need help in finding suitable trainers, please contact me on (02) 6628 5138 and I will put you in touch with some appropriate people.

The second decision is to identify what new streams of revenue that could be integrated to sustain the business over its transition process.
Look around and see if you can become agents for various service industries or look at reviewing your retail activities to see if you can expand certain product areas.
Functional foods might be a good start being complementary to existing nutrition and diet offerings, being just one example.

The decision to invest in a robotic dispenser is basically a decision to adjust to the poor returns from PBS, (now a permanent feature), by increasing productivity and profitability.
So the next socially responsible decision would be to improve the salaries and wages of all of your staff, particularly pharmacists.
And ensure that your management planning includes an intern pharmacist each year, because we are already losing quality people to other industries.

While community pharmacy is a business and has to run at a profit, it is also the “face” of pharmacy and has a wider social responsibility to be a good employer as well as embracing and supporting colleagues engaging pharmacy practice in its various formats.
Find a way to collaborate with each other before you even think of collaborating with other types of health professionals.

There are also consequences in the long-term through becoming involved with disruptive technology, specifically the purchase of a robotic dispensing system.
First, you have to undertake an assessment of your professional practice area.
You cannot simply squeeze in a robotic machine in a space designed for other types of work flows.
This has to be planned for and corrected through a partial or total refit of your pharmacy – even relocation to new premises.
These decisions will impact on your business model immediately and into the medium-term future.

With the development of clinical services, there has to be an expansion of clinical spaces – not all of which can be immediately productive.
So another long-term management and marketing decision that you need to have your head around right now.
Concentrate development and investment in your pharmacy in the direction of a large, even multi-level pharmacy, rather than in the direction of a chain entity.
Even chain-type pharmacy groups will have to pause to adjust to the new paradigm pharmacy.
Think strategically in terms of the loss of location rules, the loss of pharmacist ownership rules and the introduction of global pharmacy conglomerates.
Think of the worst of all situations and decide what model of pharmacy would withstand that type of disruption and survive well into the future.

Well it might be that the purchase of a robotic dispensing system could herald the start of some good strategic thinking beyond the initial purchase.
Robotic equipment not only reduces overheads but it increases capacity.
Already “hub and spoke” dispensing systems development is occurring in Europe and shortly the UK, where a robotic dispensing system is set up as an independent service provider and a number of pharmacies feed into it.
Because the pharmacy of the future will be the one with the lowest overheads, Australian pharmacists have the opportunity to plan now for all the possible disruptions ahead, simply by setting up hub and spoke management systems that not only include dispensing, but could also include bulk buying, delivery services to patients, Dose Administration Aid packaging, cloud administration services – and the list goes on.
Pharmacists can collaborate as individuals around cost reductions.
This is not a competitive issue.
Costs can be conserved collectively leaving each pharmacy to create its own point of difference through their own local area marketing systems.
That is where competition would centre itself.

Think further as to who would become investors in hub and spoke service models, and how would those investors be geographically managed and located.
If you think about it, if government abandoned location rules, member investment could be adopted under those same abandoned location rules, which would then determine where pharmacies can geographically be developed.
Much like market group membership in a franchised market group.

Future pharmacies will have to be collaboratively managed for costs otherwise global conglomerates would overwhelm them, so there would not be too many new entrants to pharmacy who could co-locate with an established pharmacy and survive, without a sustainable resource to back them.

Pharmacist ownership of dispensing and all of its associated supply chain processes must be aggressively fought for in Australia.
The fight seems to have been lost in New Zealand where open ownership is now being considered under a three-year licence system, which has to include pharmacist oversight.
This is a weak model of pharmacy care that most Australian pharmacists would reject and 94 percent of New Zealand pharmacists already oppose.

But when you make the decision to purchase a robotic dispensing machine, the marketing decision is then to find sources of new prescriptions other than PBS versions.
It seems to me that the PBS may be returning to its original model – that is one where only life-saving drugs of a specialist nature may be listed.
All other drugs of a general nature may be let go.
Here is a further opportunity for a “hub and spoke” system that can organise a pharmacopeia that could include all of these drugs and negotiate with drug manufacturers to pay for a listing through an advertising charge and a low purchase cost.
Promoted to GP’s it would provide a packaged solution for a drug lost due to it no longer being PBS listed.
This type of system could help soften the transition from PBS to non-PBS and contain costs for patients in the lower socioeconomic demographic, which is rapidly increasing by the day as people increase their lifespan.

Other prescriptions may be found by including compounded prescriptions in your mix, or prescriptions written by internal clinical pharmacists (S3 or compound varieties).
Veterinary scripts may be another source that could increase through collaboration.
The more you think through the problems that confront Australian community pharmacies, the more opportunities you will find.

Independent pharmacies are still thriving in the US or UK despite the numerical increase in corporate pharmacies and their vertical investment reinforcements, such as pharmacy benefit managers and health insurance.

So don’t desert your profession just yet, but do ask your leaders to represent you appropriately.

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