UBC Phar400 Guide to Pharmacy Management
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This document provides a high-level overview of pharmacy management in Canada and British Columbia. It discusses key topics such as the types of pharmacies, pharmaceutical logistics and supply chains, the four controllable parts of a retail pharmacy business, and customer experience. It also examines future developments, issues, and opportunities in the pharmacy industry.
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UBC Phar400 Guide to Pharmacy Management
- 1. UBC – Phar400 | Pharmacy Management retailSOS.ca | Gerry Spitzner January 11, 2013
- 2. Objective; High level view of the Pharmacy business Thoughtstarters Definition of value Pharmacy business in Canada and BC Retail Pharmacy types, and main differences Pharmaceutical Logistics and Supply Chain 4 key controllable moving parts of retail Pharmacy Customer Experience Future Developments, Issues and Opportunities retailSOS.ca | Gerry Spitzner 2
- 3. The key to business survival... Creating, engaging and keeping customers. retailSOS.ca | Gerry Spitzner 3
- 4. Healthcare is a business and always will be...but Pharmacy is an art; and always will be. ◦ Health consumers spending fewer discretionary dollars. I.e. Government, 3rd party, patients/customers. ◦ Prescription drug costs escalating. ◦ Count on facing predictable uncertainty at an accelerated pace. ◦ Crazy competition. ◦ Increasingly demanding customers. ◦ Fickleness trumps loyalty. retailSOS.ca | Gerry Spitzner 4
- 5. In today’s world, business is built on relationships. ◦ People do business with people they know, like and trust. ◦ Put relationships first – then reap the long term high quality business growth that follows. ◦ Consider the life time value of a customer rather than just as a single one-time transaction. Think customers for life. ◦ Listen to customers; understand why, how and what they want to buy, rather than how you want to sell to them. retailSOS.ca | Gerry Spitzner 5
- 6. Why should the business come to you... rather than someone else? retailSOS.ca | Gerry Spitzner 6
- 7. What problem does my professional service solve? What am I solution for? Why does it matter? ◦ Your project is not about selling something; rather it is to fulfillan intention. ◦ Fulfillinga customers intention is a motivator to buying. ◦ Value is in the applied benefit of the benefit. ◦ Never about what you can get; always about what you can give. retailSOS.ca | Gerry Spitzner 7
- 8. retailSOS.ca | Gerry Spitzner 8
- 9. retailSOS.ca | Gerry Spitzner 9
- 10. A function of the bundle of perceived benefits offered at a given price. retailSOS.ca | Gerry Spitzner 10
- 11. Confidence is the #1 factor ◦ in determining what, from who and where customers buy... quality is #2, service is #3 selection is #4 and price is #5 retailSOS.ca | Gerry Spitzner 11
- 12. retailSOS.ca | Gerry Spitzner 12
- 13. How can you?... Help them save money Save them time Make them feel safe Make them feel special retailSOS.ca | Gerry Spitzner 13
- 14. High Level Overview of Pharmacy practice in Canada and BC retailSOS.ca | Gerry Spitzner 14
- 15. retailSOS.ca | Gerry Spitzner 15
- 16. retailSOS.ca | Gerry Spitzner 16
- 17. retailSOS.ca | Gerry Spitzner 17
- 18. Total prescription market Canada; $27.2 billion in 2011 Generic drugs accounted for 25 % ($5.4-billion). Generics were dispensed to fill more than 60% of all prescriptions. Average cost of a brand-name prescription in Canada is now $73.76. Average cost of a generic prescription is $25.04. Estimated for every 1 % increase in generic drug utilization in Canada; savings = an additional $260 M. In the US generic drugs are dispensed to fill 80 % of all prescriptions. Source;IMS Brogan and IMS Health ,a firm that tracks the pharmaceuticalindustry retailSOS.ca | Gerry Spitzner 18
- 19. What are the main types of Community Pharmacy and the details of how they work? retailSOS.ca | Gerry Spitzner 19
- 20. Health Authority Associated Pharmacy ambulatory care pharmacy, cancer drug pharmacy, HIV drug pharmacy, hospital pharmacy, corrections facility pharmacy, addiction Community Pharmacy “full mix” retail pharmacy, Health Centre, simply a dispensary, consulting pharmacy, compounding pharmacy, veterinary pharmacy, central fill pharmacy, mail order pharmacy Other Pharmacy nuclear pharmacy, military pharmacy retailSOS.ca | Gerry Spitzner 20
- 21. Departments and Products Professional Services Alternative medicines (NHP’s) Vitamins/OTC’s Orthotics and mobility aids Wound Care HBA Cosmetics Electronics Food and Groceries Post Office Greeting cards Books and Magazines Consultations Private Consultations Medication Management Blister Packaging Medication Reviews Patient Education seminars Disease state screening Chronic Disease Mgmt Immunization Refill services Delivery services LTC and Group homes retailSOS.ca | Gerry Spitzner 21
- 22. 4 Main types of Retail Pharmacy Corporate Pharmacy Franchise Pharmacy Banner Pharmacy Independent Pharmacy retailSOS.ca | Gerry Spitzner 22
- 23. Wholly owned by a large company Manager is an employee of a chain Pharmacy Pharmacy is a department managed by a Pharmacist Managers are paid a salary and compensated with performance incentives Grocery stores fall into this category Rexall, Wal-Mart and London Drugs retailSOS.ca | Gerry Spitzner 23
- 24. “SDM | Associate” concept Own the business but not the physical assets No capital investment or capital risk Guaranteed minimum annual income and Benefits “Share” in profitability Support services in all areas of Operations Many “masters” Associate agreement is a renewable 3 year deal Retained equity requirements Franchise agreement restricts or outlaws certain activity All inventory comes from own warehouse retailSOS.ca | Gerry Spitzner 24
- 25. “Medicine Shoppe” concept Own the business and the physical assets Franchise fees Trademark rules Required program participation Full Pharmacy ownership Capital investment required Ongoing Sales and Biz Dev support Custom marketing strategy Training and Professional Development Preferred Supplier agreements retailSOS.ca | Gerry Spitzner 25
- 26. What is a banner Pharmacy? ◦ Key features include: Looks like a chain Independently owned and operated Working together Sales/promotions, contracts Buying group Menu of services Fees or membership dues Own profit and loss centre Owners often have more than one store Sometimes shareholder in wholesale Pharmasave, Peoples Drug Mart, IDA, Remedy’sRx Guardian, Pharmachoice, Medicine Centre retailSOS.ca | Gerry Spitzner 26
- 27. Main differences from franchise and banner ◦ Key features include: No name affiliation Independently owned and operated Often belong to a wholesalers IND program Entrepreneur Self-management Creative freedom Not having to answer to others (especially regarding the pharmacy focus) Financial independence and high risk retailSOS.ca | Gerry Spitzner 27
- 28. A complex process from manufacturer to patient retailSOS.ca | Gerry Spitzner 28
- 29. retailSOS.ca | Gerry Spitzner 29
- 30. Wholesalers ◦ In BC; 3 national & 1 regional that distribute Rx and front shop ◦ McKesson, ABC, K&F, and uniPHARM ◦ Primary suppliers to Banners and IND’s ◦ Secondary suppliers to Chain DSD; ( Direct Store Delivery ) ◦ Select Generic/Brand suppliers, some Front Shop categories Self Distributors; Chain ◦ SDM, London Drugs, Save-On, Safeway ◦ Note: they also draw from local wholesalers, especially narcotics retailSOS.ca | Gerry Spitzner 30
- 31. How wholesaler upcharges work in BC... ◦ For Rx; MALP (AAC) cost plus 8%, 5% for high cost drugs ◦ MALP for Generics is 35% of the equivalent Brand ◦ Prompt payment (cash discount) of 2% ◦ Loyalty allowances range between 3% to 5.5% ◦ Net net upcharges range between ½% and 3% ◦ Depends on volume and loyalty ◦ Urban; 11 deliveries per week for Rx and 1 or 2 for Front Shop ◦ OTC and Front Shop net upcharges vary greatly and usually rebates are provided for achievingagreed to volumes retailSOS.ca | Gerry Spitzner 31
- 32. There are a lot of moving parts to all retail businesses and they are crucial to customer experience . retailSOS.ca | Gerry Spitzner 32
- 33. Doctors Patients and Customers Staff Nurses Doctor’s Receptionists PharmaCare & PharmaNet College of Pharmacy Municipal Landlord Banker Accountant Bookkeeper Lawyer Contractors Head Office Neighbouring tenants Canada Revenue Agency Provincial Government Loss Prevention services Employee Relations & HR Payroll services WorkSafe BC Technology providers Retail Insurance providers 3rd Party providers Wholesaler Manufacturer Suppliers Other Suppliers Delivery Services Competitors retailSOS.ca | Gerry Spitzner 33
- 34. Three broad areas to every Pharmacy business; Finance ◦ Monitoring,analysis, cash flow, P&L Marketing ◦ Ideal audience and services communication Operations ◦ Delivering the promise and customer experience 34retailSOS.ca | Gerry Spitzner
- 35. Patient/Customer Experience Profitability Inventory management Pricing Merchandising Staff Receiving Loss Prevention Wages and Benefits Staff Schedules Training Supplies Information Technology Computer hardware Policies & Procedures Computer software Cash flow Sales Revenue Sundry Revenue General Expenses Fixtures Repairs and Maintenance Occupancy costs & Utilities Advertising Marketing retailSOS.ca | Gerry Spitzner 35
- 36. Inventory ◦ It is all about flow - keep goods flowing Merchandising ◦ Any practice which contributes to the sale of products Staff ◦ The quality of an employee's work experience has a direct impact on the quality of the customer's experience. Pricing ◦ Setting competitive pricing is an art form retailSOS.ca | Gerry Spitzner 36
- 37. It is all about flow - keep goods flowing. retailSOS.ca | Gerry Spitzner 37
- 38. Choosing An Effective Inventory Management Strategy ◦ aware of the state of stocked inventory at any time ◦ system to easily monitor the coming and going of product Spatial Needs ◦ specific items; type of storage location where product is kept Maximize Profit ◦ items in inventory may sit for long periods of time due to lack of demand. This is not only a wasted expense; it also takes up valuable room in the stock room that could be filled with faster selling items which would draw more profit. retailSOS.ca | Gerry Spitzner 38
- 39. Software Systems ◦ Complete inventory checks and keep track of every item that comes in and out to identify errors, thefts, losses, and any other discrepancies. ◦ Use auto-replenishment features in the technology to re-order Labeling and Identification ◦ Make sure that all items are properly labeled. ◦ Incorrect or incomplete labeling can lead to several problems; including wrong identification by your software, misplacement when restocking the inventory, loss of the item, or inability to find it for shipment or shelving later, incorrect pricing to customer retailSOS.ca | Gerry Spitzner 39
- 40. Merchandisingis any practice whichcontributes to the sale of products to a retail consumer retailSOS.ca | Gerry Spitzner 40
- 41. Closely related to inventory Plan-O-Grams Service Levels What is a facing? Keep merchandise fresh and clean Search for outdates Signs and promotional shelf talkers Pricing labels Promotional merchandising Cross merchandising for profit retailSOS.ca | Gerry Spitzner 41
- 42. The quality of an employee's work experience has a direct impact on the quality of the customer's experience. retailSOS.ca | Gerry Spitzner 42
- 43. Hire for attitude and train for skill One of the key drivers of the employee experience is how the staff feels about their colleagues. That's why teamwork at the store level is such a vital component of a store's success. The key to effective teamwork is leadership. There are four actions that will create a more effective team. retailSOS.ca | Gerry Spitzner 43
- 44. 1. Stop drama in its place. ◦ Nothing tears apart a team more quickly - or more quietly - than drama. 2. Regularly communicate your assessment of your team's teamwork. ◦ Share what you see are the strengths and areas of improvement needed in teamwork. 3. Don't enable poor performance and unacceptable behavior. ◦ Teams begin to splinter when the majority feels that one or more individuals aren't contributing to the team. 4. Recognize and celebrate effective teamwork, behaviors, and results. retailSOS.ca | Gerry Spitzner 44
- 45. In the Front Shop and the Pharmacy retailSOS.ca | Gerry Spitzner 45
- 46. What’s the difference between mark up and margin? ◦ Markup is % of profit on cost ◦ Marginis % of profit on selling price Frequently used terms ◦ Gross profit percent; GP% ◦ Gross profit dollars; GP$ ◦ Gross margin percent; GM% ◦ Gross margin dollars; GM$ retailSOS.ca | Gerry Spitzner 46
- 47. Pharmacare sets a maximum price for brand & generic ◦ Maximum price applied during PharmaNet adjudication MALP (AAC includes upcharge) plus fee; $10.00 The professional fee is the entire gross profit Reimbursement for clinical services ◦ Med Reviews, Immunization, Rx renewals, adapting Rx’s, therapeutic substitution, Plan B capitation fees, rural incentive program retailSOS.ca | Gerry Spitzner 47
- 48. What makes a positive customer experience in healthcare? retailSOS.ca | Gerry Spitzner 48
- 49. How did you make the customer feel? ◦ Service has more impact on customer loyalty than any other function of a Pharmacy business. Customer loyalty is not a tactic but a way of doing business. ◦ Never let your business processes dictate your customer experience. Ask; don’t tell. Listen; don’t talk. ◦ How can you hear your customer when you are busy telling them something? retailSOS.ca | Gerry Spitzner 49
- 50. Serve customers, don’t just provide customer service ◦ Customer service is what the organizationwants to supply to the customer; it is governed by policies and rules intended to serve the business. ◦ Serving customers, on the other hand, is driven by what the customer wants. The control position is in the customer’s hands; the organization is in the responsive position. Customer service is an attitude not a department retailSOS.ca | Gerry Spitzner 50
- 51. Why maintaining trust is a marathon; not a sprint. ◦ In today's world, whether you are talking about marathon times, or ingredients on a label, or a product's health benefits, or whether something is organic or not, or what an item's environmental profile happens to be, you have to get it right. ◦ The big stuff, and the little stuff. In part, because if you get it wrong people are going to find out. But most of all, because gettingit right is what people expect. Get it wrong, and you risk eroding people's trust. retailSOS.ca | Gerry Spitzner 51
- 52. For Retail Community Pharmacy – Chains, Banners and Independents retailSOS.ca | Gerry Spitzner 52
- 53. retailSOS.ca | Gerry Spitzner 53
- 54. Supermarkets, mass merchandisers, mail order and Pharmacy chains are likely to keep competition keen for the independent Pharmacist. The Government's plans for pharmacy include an enhanced role for Pharmacists. The aging population and ongoing shortage of physicians will strengthen the demand for Pharmacy services. ◦ Community Pharmacy will be the centre of health care and Pharmacists will focus more and more on disease management. retailSOS.ca | Gerry Spitzner 54
- 55. Government Drug Reforms Drug Shortages Costs are escalating faster than increases in revenue 3rd Parties looking for ways to control Rx drug costs Plans more complex; patients don’t understand them. Reimbursement Rates ◦ In BC – more than 45% of prescriptions are paid by Government; most of the rest is covered by a 3rd party insurer like Blue Cross, GWL, Assure and NIHB; there is very little “cash pay”. retailSOS.ca | Gerry Spitzner 55
- 56. Key Industry Stat ◦ Per capita usage of prescriptions is climbing among all age groups, ranging from 4.21 Rx/year among those aged 0-39 years up to 41.82 Rx/year for 60 years and up. Fee for Service Patient Care ◦ Medication Reviews, Home delivery, home consultation, patient charge accounts, disease management programs (diabetes, asthma), LTC, Group Homes, Workplace health, immunization, medication adherence, Hearing centres, home health care retailSOS.ca | Gerry Spitzner 56
- 57. Want a copy an electronic copy of this of this presentation with bonus slides? ◦ Email me; gerry@retailSOS.ca To your business and professional success, thank you for your attention. Questions? retailSOS.ca 57Gerry Spitzner
- 58. Follow Twitter: @passion4retail Connect LinkedIn: Gerry Spitzner Web: retailSOS.ca Blog: gerryspitzner.com Email: gerry@retailsos.ca Online Biz Card: gerryspitzner.tel Online Biz Card: retailSOS.tel retailSOS.ca | Gerry Spitzner 58
- 59. retailSOS.ca is a Vancouver-based retail consultancy guiding and supporting Pharmacy owners to create, engage and keep great customers by doing the right thing extraordinarily well. Gerry Spitzner works as a management consultant with community Pharmacy owners to achieve results by aligning their vision and implementing marketing strategy with operational execution. Drawing on 35+ years experience in drug store multi-site retail operations, Pharmacy ownership and the Pharmaceutical wholesale supply-chain; Gerry brings the leadership, knowledge and market awareness of ownership and business development to Pharmacy owners to achieve growth objectives. retailSOS.ca | Gerry Spitzner 59
- 61. A few basic acronyms and frequently used jargon in retail Pharmacy retailSOS.ca | Gerry Spitzner 61
- 62. AR/AP = Accounts Receivable/Payable P&L = Profit and Loss statement POS = point of sale POP = point of purchase WMS = warehouse mgmt system SKU = stock keeping unit MOM = minimum order multiple CPG = consumer package good IND = independent retailer RDA = Retail Display Allowance retailSOS.ca | Gerry Spitzner 62
- 63. UPC = universal product code QR = quick response code PO = purchase order GMROI = Gross Margin Return On Investment CRM = Customer Relationship Management DSD = Direct Store Distribution EDI = Electronic Data Interchange EDLP = Everyday Low Pricing OTB = Open-to-Buy POG = Plan-o-gram retailSOS.ca | Gerry Spitzner 63
- 64. HHC = Home Health Care DME = Durable Medical Equipment OTC = Over The Counter NHP = Natural Health Products HBA = Health & Beauty Aids LTC = Long Term Care AAC = Actual Acquisition Cost MALP = Maximum Allowable List Price U&C = Usual and customary ( refers to fee ) retailSOS.ca | Gerry Spitzner 64
- 65. PharmacyU ◦ http://pharmacyu.ca/ Pharmacy Podcast ◦ http://pharmacypodcast.com/ Drug Store News ◦ http://www.drugstorenews.com/ Chain Drug Review ◦ http://www.chaindrugreview.com/ Canadian Healthcare Network – free registration ◦ http://www.canadianhealthcarenetwork.ca/ CACDS – Canadian Assoc of Chain Drug Stores ◦ http://www.pharmacyworx.com/pharmacy-students/default.htm retailSOS.ca | Gerry Spitzner 65
- 66. How do you start a movement of change? It starts with leadership. Gerry SpitznerretailSOS.ca 66
- 67. Are you ready to start a movement? Are you ready to charge for the time it took for you to get your education and the time it’s going to take you to keep it up? Are you ready to make the public aware of the great things Pharmacists do? Are you ready to create, engage and keep great customers? 67retailSOS.ca | Gerry Spitzner
Notas del editor
- Happy to answer your questions at the end of each section. Or stay afterwards as long as you like.Use your handouts to write down any a-ha moments you have; if you want an electronic copy of this presentation along with my speaker notes... I’ll give you my email address at the end. I’ll send you the long version with extra content and slides that go into the sections with more depth; also includes a resources slide with working links.
- My goal for you today is to provide 30K ft view of retail and the Business of Pharmacy to help you get started on your clinical service project. We’re going to cover this stuff...One of the main challenges you will face in presenting the business plan for your clinical service project is presenting a business case. Your idea might be great but it needs to be viable; that means there must be both a need and a market; and it has to make money. Explain need and market...use example of electric cars.In order for there to be a market. There has to be value for the end consumer or payer of your clinical service idea.
- What is the real purpose of a business? Every time I ask this question; the immediate answer I get back is “To make a profit”.But I think this is wrong; profit is merely an outcome. I believe the real purpose of a business is to create and keep a customer.If a biz successfully creates and keeps a customer in a cost effective way, it will make a profit.If for any reason, a biz fails to attract or sustain a certain number of customers, it will experience losses. Too many losses will lead to the demise of the enterprize.In the new business reality; a Pharmacy that continuously relies on only current customers for its economic success is not going to grow. The way to grow and succeed is to keep attracting new people into your store, and the best way to do that is to meet the needs of your ideal customers by engaging them and creating a relationship with them. And then make sure to keep the ones you’ve already got.Of course, the sustainability of the business is profit; and in every business profit is in the repeat business; not the first or one time transaction; again; that is just an outcome; creating new, engaging and keeping customers is the key to repeat business and long term business survival.
- Important insight; one of the main challenges you will face in professional practice and presenting your clinical service project is understanding the convergence of the art of medicine and Pharmacy with healthcare as a business.The healthcare situation is at a tipping point with pressure on rapidly increasing prescription drug costs. Govt drug reforms; 3rd parties directing their prescription business and people without drug coverage under financial pressure; all this is converging at the same time as we grapple with the challenges of a new global economy.Unpredictable events challenge traditional business management techniques; the application of old thinking is a recipe for disaster. We simply cannot assume the future will be an extension of the past.Pharmacy competition is intense. Customers have choices available to them, provided by a glut of Pharmacies.Customers feel empowered. They have a right to expect certain things from the companies they do business with and they’ll fight to get what they’ve been promised.Today, customers will leave you in a heartbeat for a better offer when value isn’t unique. They vote with their feet and won’t tell you when they go elsewhere.
- Never has it been more important to be distinctive; to be different; in the Pharmacy marketplace than it is today.All things being equal people do business with… KLT. All things being unequal; people still do business with people they KLT.Consider marketing. It’s a vital aspect of customer awareness and running a successful business, but lately its practices have been taking a beating. And why not? Do you like getting cold-called just when you sit down to dinner? Having your mailbox clogged with offers you immediately toss? Do you listen carefully to the ads that interrupt your favorite TV show? Not!!!If these experiences are marketing, you-and your customers-probably, prefer whatever’s the complete opposite.In the changing landscape of B2C relationships using a “pull and stay” approach rather than a “push and pray” approach will lead to loyal long term clients.“Push and pray” is the old marketing paradigm which assumes that messages sent out blindly and broadly will magically lead to loyal, long term customers.“Pull and stay” uses an approach that brings the right customers through listening and engagement, enabling the business to build trusted relationships and position it as their logical choice; when the customer needs you.
- In the business of Pharmacy; with so much competition, customers have a lot of choices of where they can take their prescription; their prescription and their healthcare give Pharmacists the opportunity; to engage them in professional services beyond dispensing. First things first; in order to provide professional services the Pharmacist has to have the right customer in front of them; therefore; this is THE question that really matters and it comes from the patient’s perspective.It comes down to the perceived value the Pharmacist holds in the customers mind.What is it that people are saying about the Pharmacist, and what do they think about the Pharmacy business or professional services offered? Especially when the Pharmacist isn’t there. What will they tell others, and will they refer the Pharmacy to others?Why should the business come to you? What are you known for?Overall for your clinical service project; you need to answer this critical underlying question.
- But first; start with why, and answer these three questions.In order to survive uncontrolled chaotic market forces, your project team needs to create relevant and compelling reasons why customers should buy dispensing and professional services from you. As a patient or customer why should I care to do business with you? The Prescription is the traffic generator; and brings the right ideal customer to the business. Patients are seeking to fulfill some intention. What does that mean? On the surface, usually it means they came in to get their Rx filled but there is an underlying reason that motivated them to come to the business. There usually is something in their unspoken action and life that brought them to the business.Value is in the applied benefits of the benefit; for example take a Diabetes patients or a Mom with an asthmatic child. (these are applied benefits). Never about what you can get...My personal example, here???
- In recent surveys I’ve noticed patients and care givers describe the Pharmacist as a trusted resource; I’ve heard and seen the words “medication expert and medication problem solver” show up on a regular basis to describe Pharmacy practice. Government already gets it; to them the applied benefit of the benefit is obvious and measureable. Problem is the public doesn’t quite get it yet. And that’s where you will need to focus attention in your presentation; how you will make the public aware of the great things your clinical service idea provides? How will it benefit them; directly. How will you cut through the traditional marketing clutter to engage patients to use and repeat buy your professional service.Your team will need to get their attention with a clear message and then tell them in very clear and specific terms why they only have one choice, and that choice is you and your professional service. This requires that your presentation team develops and communicates a value proposition to the market that has an applied benefit and value.
- I want to come back to “Healthcare is a business” for a moment; compensation for professional services is recognized in the Blueprint for Pharmacy.Are you prepared to show the business a profit from your clinical service idea? Does that make you uncomfortable?Your clinical service project must show that it is viable and sustainable; which means it can stand on it’s own in terms of cash flow and profitability to the business. You need to show that it is compensated fairly and the market is willing to pay.However, first the consumer or person who pays for your professional service, whether that be government, 3rd party payers or the public, has to see what’s in it for them first; what’s the value to them of your clinical service project. What’s the benefit?The secret is dialing into everyone’s favorite radio station; WIIFM.So, just how do you “dial into” payers, patients and customers to see value.
- People will pay more for benefits they see value in. For example, it’s a proven fact in retail that people will pay 7% more; unquestioned; simply for good service.Value is the immunization factor. When there is no difference in value people buy on price alone.Perception is in the eyes and ears of the beholder; it means different things to different people.Perceived benefits by customers are the applied benefit of the benefit.
- Consider the order of these motivating value factors from a recent retail study; relationships are 2 of the top 3 and they are perceived benefits. There is a strong element of perception in quality and selection as well.So often, people assume ‘price’ is the only way to compete but it’s usually not the most important, unless of course the business is positioned that way.Position your presentation in everything you say and do as the most credible and believable supplier of your professional services to your ideal customer. With confidence. Patients and customers believe what you believe; and if you demonstrate that you can fulfill their intention to do business with you better than anyone else they will refer you to others and they will return. Then back that up with value up front; not “value added” after the sale. “Value added” is perceived by customers as nothing but a promotion if not done up front. I.e. Why didn’t you give it to me in the first place before I spent my money with you?Give value first, don’t add it later; like after the first, second or third sale. Give the same level each and every time.
- Trusted relationship is the number 1 consideration when choosing a pharmacy; price doesn’t even make the list.But this just gets patients in the door; what motivates them to stay, come back and refer you to others?I sent you a similar US survey in the recommended pre-reads; did you notice that price didn't make that list either?
- There are four basic ‘currencies’ in all peoples lives that are motivators to buying, which create desire and value.When you understand the 4 “currencies” in peoples lives, there are 100’s of ways to COMPETE and WIN.Desire is the firstmotivator that creates action. Value is the second motivator.Desire…means that people want it; and need it; and can use it; and can afford it; and are willing to buy it; NOW. And “It” refers to any product or service.To the extent that you...Understand the customers stress better than your competitors; then make it go away better than your competitors; in other words fulfilling some intention the customer has; better than anyone else. And then communicate that powerful message effectively; ...you will become their preferred Pharmacy supplier! And that’s what you want; so you get the repeat business.To recap and summarize...The prescription they are filling is the transaction; the need to have it filled is the intention.The value is fulfilling the applied benefit of the benefit. Learn and understand that... and you have the perceived benefits well covered and they may become your patient for life.
- Let’s shift gears...to a high level view of the Business of Pharmacy.
- Usually it’s to fulfill some intention; drug stores are not the kind of place people come to browse.
- These stats are as of Fall 2012.They are indicative of the size of the total prescription business in each market.
- Some BC Pharmacy Fast FactsImmunization; what do you think that number might be now that we have a flu outbreak?Key healthcare/Pharmacy leaders in BC.
- The challenge we are facing right now is to control health spending in Canada while maintaining high standards of patient care and it is indeed daunting. There is a lot at stake. Available money to pay; balanced with optimal patient outcomes.Prescription drug coverage and the way we pay for pharmaceuticals, however, should be a priority, where costs can be better controlled with no negative impact on optimal patient care. A clear resolve is being undertaken by governments to extract more value from the $27-billion spent on prescription drugs, emphasizing the increased use of lower-cost generic therapies.If the use of generic drugs in Canada were equal to U.S. levels, additional savings to Canadians would indeed be significant.Saving patients time and money, helping them understand their covered benefits and keeping them healthy through adherence could become a major value contributor to the public, 3rd party payers and government perception of the great things Pharmacists do.
- Break...when we come back; focus on retail Community Pharmacy.
- Overall; there are 3 main types of Pharmacy practice.I’m going to focus on community Pharmacy...
- Within community pharmacy it’s all about a balance of Products and Services; and there is a clear distinction between the two.They are both important; because they “play off” each other. How you market them to your ideal customer and deliver them in a cost effective way determines success.
- Within community Pharmacy; there are 4 main types.Going to cover business set-ups, ownership and support of…Retail Community Pharmacy is one of the toughest sectors out there… The business is complex and it’s a balancing act between professional ethics and business ethics; with a professional oath, regulatory requirements, government involvement,more than 90% of the revenue comes from a combination of 3rd party payers, customers are fickle, margins are often razor thin and competition is fierce. Needless to say; it is very unique in the retail sector…
- Proven Formula with Admin and Buying support. Recognized iconic Canadian retailer; valuable trademark.Balances creativity and entrepreneurship with the discipline of running a drug store within the scale and breadth of offerings they have.“stick to the game plan book”
- Skin on the table; there is a cost to get in.Proven formula; operations and marketing support.Emerging down the middle is Target Pharmacy and their franchise system. A hybrid model of the SDM and Medicine Shoppe concepts.
- Encourages creativity in the company, entrepreneurship, and risk taking.
- Successful IND’s practice a delicate balance between discipline, execution, creativity, and entrepreneurship.All the while with a finger on the pulse and life-blood of the business; cash flow.
- Wholesalers are in the middle of it all and are the Pharmacists key connection to product distribution from the suppliers.Most brand and generic companies use wholesalers to distribute their products.
- There are 3 main Logistics channels... or ways to get products to the door of the store.
- There are differences to pricing in every province...here’s a high level view of how it works in BC(Generics of course is going to drop to 18% of brand for the top 6 and 25% for the rest by April 1st 2013 and then other than the top 6, so far the rest will drop to 20% by May 2014.)Net netupcharges are very negotiable and depends on the Pharmacy’s commitment to purchase volume from their primary wholesaler. Usually for a defined period of time.The Chain and Banner groups negotiate hard; they have a ton of business to direct.
- One the big moving parts of every business is the people you interact with; most of your patients and customers will never see or know of your relationships with most of these people. But building long term relationships with all these people is really important to delivering a memorable customer experience because they help a Pharmacy business to grow.Especially the relationships with Doc’s and patients or customers.
- There are a lot of moving parts to retail Pharmacy and cost effective Asset Productivity is key to a positive customer experience and ultimately profitability.There are 4 key ones...
- These are all directly controllable and are all related to Finance, Marketing and Operations in some way.Inventory; One of the two most controllable expenses; the other is wages through the staff schedule.Merchandising; closely related to inventory. Each facing is labelled for pricing and inventory management. A facing is each sku by type and “flavour”; each molecule in Pharmacy and their “home” on the shelf. Crucial to inventory replenishment and profitability.Staff; Give me 5 minutes in a store and I can usually tell you how well the staff feels about working there, the quality of the leadership team and the value of the overall customer service and experience.Pricing; there is a reason it’s at the bottom of the slide. There is nothing that impacts bottom line profitability and sales more. We’re going to take a closer look.
- One of the two most controllable expenses; the other is wages.4 top or key parts to inventory management...
- Merchandising; closely related to inventory. Each facing is labelled for pricing and inventory management. A facing is each sku by type and “flavour”; each molecule in Pharmacy and their “home” on the shelf. Crucial to inventory replenishment and profitability.
- Give me 5 minutes in a store and I can usually tell you how well the staff feels about working there, the quality of the leadership team and the value of the overall customer service and experience.
- The other of the two most controllable expenses
- Competitive pricing in the Front Shop is an informed art form. Since the retail shelf price is a prime consideration. Know your basic retail math.To price products, you need to get familiar with pricing structures, especially the difference between margin and markup.Markup and (gross-profit) margin on a single product, or group of products, are often confused. The reason for this is that when expressed as a percentage, margin is always figured as a percentage of the selling price, while markup is traditionally figured as a percentage of the seller's cost.Mark up is % of profit on cost and margin is % of profit on selling price.In retail Pharmacy industry; wholesalers use markup and retailers use margin to set prices.All these frequently used terms are confusing and interchangeable at times but always come down to markup or margin.GM$ sometimes referred to as GP DollarsRefer and use the pre-read for further explanation.
- This can get pretty complicated but generally...pricing in the Pharmacy works like this.Ingredient cost plus dispensing fee = patient pays. On every Rx receipt.Why I think it should be called “professional fee”. Not a dispensing fee.Other sources of Pharmacare revenue include; Med Reviews (60.00 or 70.00), Immunization (10.00), Rx renewals (10.00), adapting Rx’s (10.00), therapeutic substitution (17.20), Plan B capitation fees (43.75 per serviced bed), rural incentive program. 3rd party payers follow a similar formulary system; but the level of coverage depends on the payer. Too complex for this discussion.
- How the customer feels is a perception and it’s based on their overall experience.It’s the reason people come back and refer you to others. Create, engage and keep great customers by giving them a great experience. Each and every time.Loyalty is not a tactic driven by points or low prices.Loyalty is the desire to defend someone when they are not there to defend themselves.Ask and listen. Find out what they want; ask them; find out to fulfill the intention they have to do business with you. Serve customers; don’t simply provide customer service.
- My perspective is to serve-not service-customers.Attitude is in the way you say it...How can I be of service to you, today? Sounds better; Rather than... How can I help you? Or “Next”.
- People do business with people they know, like and trust.You earn trust; always over time and it builds the relationship for loyal long term customers.Deliver your promise each and every time; it takes a long time to earn trust and just one screw up will erode it considerably in the perception customers have of you. It’s all about the experience they just had with you. And their perception of that experience.
- Right now...In retail Pharmacy there is a lot of change occurring and change is always messiest in the middle.However, change also represents opportunity.Looking at change as an opportunity is a matter of your outlook and attitude.It’s the difference between Now What?And What Now?
- There are a number of developments which may, in the long term, lead to changes in the way community pharmacies operate.
- Re 1st point...However; Small = nimble. IND’s and banners can and are moving to the new Pharmacy business model of patient care; faster than chains and big box Pharmacies.Even though competition is keen; IND’s implementing Clinical practice opportunities have a competitive advantage because it’s easier to implement for them. Less red tape etc. Etc. I.e. silo-management at chains.First mover advantage...There will be more enhancements to the role Pharmacists play in keeping people healthy.Demographics and the doc shortage trends means professional business opportunities for community Pharmacy.Government has recognized that Pharmacists are the most accessible; under utilized; healthcare professionals we have.
- In the recent 2011 Trends and Insights report survey; the top two issues Pharmacists said they are facing are Drug Reforms and Drug shortages.External agencies or 3rd party payers are making deals to direct their chronic care business. Ie GWLAlmost 55% of the $27 Billion market are re-imbursements controlled by external agencies. When a Pharmacy business knows and understand them and can explain and communicate them to the patient it can be an applied benefit of the benefit.I believe...benefits and coverage should be the role of the tech. Not the Pharmacist. Unless of course there is special authority involved.Balancing these business issues with optimal patient care is challenging the bottom line. However, a Pharmacy business that relies solely on filling scripts is a declining business model. When a business is in decline the tendency is to squeeze the expenses to make the required bottom line. In order for the business to grow; providing clinical professional services beyond dispensing is the key and it means attracting new customers.
- Alberta has proven to be a good model. It reimburses for a much larger number of professional services and the economics seem quite attractive to Government and Industry.For every tax dollar invested in Pharmacist patient services; there is a $4.00 savings to the healthcare system.The demographics of an aging population and market trend of more scripts combined with fee forservice patient care present great opportunities for delivering reimbursed patient centered care in other provinces; including BC which is closely watching the AB model.Right now and into the future...What if we had a healthcare system that kept people healthy? The key to a successful Pharmacy business will be “first mover” advantage to implement professional services that keep people healthy and feeling good. Make the customer feel great and they will come back and they will tell others.Remember, the most profitable customer lies in the repeat business they provide not in the one time transaction. Give them a reason to come back and tell others. Relationship and trust. Pull not push.
- To your business and professional success, thank you.
- Before we get started here is the language of retail...a few basic acronyms and frequently used jargon; not an all inclusive list by any means but these are used a lot.
- AR/AP key financial terms related to cash flowP&L; learn to read this key docPOS is the technology used at the cash register (till) to manage the sale; but it is also linked to the stores replenishment systems. Often confused with POP.POP is the stuff hanging on shelves such as coupons, shelf danglers and shelf talkers; ceiling and window signs, or any instore promotional signage from MFR’s or corp marketing initiatives.WMS also known as Workforce Management SystemSKU; stock keeping unit, is often referred to as “skew”. In Rx often referred to as molecules and skew for strengths.MOM’s are basically case packs or inner case packs. The minimum order requirement for a sku.CPG; term often used in the grocery/drug store channel to describe Branded items, but not meat, vegetables or Prescriptions.IND; those retailers that can make buying and mix decisions at store level. Their own profit centre.RDA; commonly used term by front shop suppliers especially magazine and greeting card suppliers. These are essentially rebates. Makes the space they use very profitable per square foot.
- UPC; go to www.gs1ca.org for info; sometimes referred to as bar codeQR codes; the square box with the squiggly lines; usually directs you to a website; go to http://www.qrstuff.com/ to createPO; referred to as (pee-oh); the doc that most retailers use to place the order with a signature.GMROI; “Gem-roy” is a key product measurement at chain stores GMROI calculation is GP$/Avg. Inventory at cost; during a defined period of timeie 6months or 1 yearCRM; software to track and engage customers online and offline. Data mining, loyalty card users, Target Red Card, SDM Optimum.DSD; direct store delivery. Supply chain term.EDI; PharmaNet, connections with suppliers, method of payment, online ordering, “intranet” connections.EDLP; front shop pricing term, competitive price list, items that set pricing image of the store. Ie TylenolOTB; budgets set by department for inventory management. Sets a budget to buy to make sure right amount of inventory is purchased for the anticipated or projected sales.POG; space productivity, set by category managers, merchandising for profit, sets the right number of facings per sku.
- Are there any acronyms you’ve heard that I’ve overlooked?
- First Follower: Leadership Lessons from Dancing Guy
- Re: TED talk provided in pre-reads....Discussion? Comments?