It’s just not cricket


cricket bat and ball on grass

Wearing varieties of beige may have worked for a former Australian cricket captain, but a beige pharmacy won’t survive or prosper, say Bruce Annabel and Mal Scrymgeour

Cricket is an iconic sport in Australia. It was while discussing this very sport that we were reminded of the late cricket commentator and former Australian cricket captain Richie Benaud, famous for his excellent commentary, distinctive voice, skills as a cricketer and leader, and, perhaps most famously, for his attire.

It depends on your perception of colour, but Richie Benaud’s sports jackets were variously called white, cream, bone, off white, ivory or, most often, simply beige.

The dictionary describes beige as a dull, boring colour. It means something no one notices. Unfortunately, that is often a good description of the average pharmacy service.

Standing out

It’s rare to find a pharmacy with service levels you remember and prefer. One of us is a frequent pharmacy consumer and has had experiences spanning many decades that support the ‘beige’ descriptor.

Taking three S4 prescription medications means many pharmacy trips, most often to a traditional community pharmacy. Occasionally a visit to a hard discounter such as Chemist Warehouse for a script repeat is undertaken to compare the service levels and overall experience. That means about four different pharmacies are patronised over a typical year and many more when travelling.

It’s interesting to determine why there isn’t a higher level of loyalty. Here are the top 10 reasons that the loyalty is ‘spread’:

  1. Convenience: The nearest means a time saving.
  2. Service: There is no discernible difference—the service experience is essentially the same.
  3. Experience: Often is just being greeted by a pleasant well-meaning assistant who takes the script and asks if his preferred brand is wanted, or sometimes “have you had this before?”.
  4. Substitution: Sometimes prescription and medication items requested are automatically substituted, which is presumptive and may betray his trust in a brand and/or the pharmacy. This is a powerful reason to go elsewhere next time.
  5. Inaccessibility: Pharmacists almost always make themselves inaccessible, leaving the advice and engagement activities to assistants including script in and out, minor ailments and meeting requests. Pharmacists will reactively ‘come out’ from the dispensary, rarely placing themselves in the most accessible place that suits the patient, i.e. out the front.
  6. Advice: Never has he been asked about medication management, advised in relation to side effects of drugs or offered advice about improving efficacy or a CMI for any item.
  7. Education: Despite having suffered asthma all his life, inhaler technique has never been discussed or an asthma action plan mentioned, nor has he been consulted about condition management.
  8. Supply chain. Pharmacies, supported by their wholesalers, do a brilliant job maintaining medicine supply, and in an increasingly difficult environment, that we health consumers take for granted.
  9. Opportunity: Pharmacy as stockists, dispensers and convenience distributors of his medications (S4, S3, S2) is very valuable and advice can be sort if requested. The drugs dispensed have given him longevity after several almost fatal events and a lifestyle he could only have dreamed of many years ago.
  10. Differentiation: His service experience at Chemist Warehouses is virtually the same as traditional convenience-located pharmacies except:
  1. there’s no switching from the requested brand;
  2. stock intensity, dominated by brand leaders, is very high meaning no stock-outs;
  3. non-PBS prices can be cheaper;
  4. every staff member is very pleasant to deal with; and
  5. waiting time is no worse and a pharmacist will ‘come out’ upon request.

These ten points summarise the beige experience one mostly receives. And it’s just not cricket. When it should be hitting sixes and fours all day long, it is swinging and missing.

Keeping your form

The point is, because service isn’t leveraged, location is the differentiator. If convenience is all you’ve got, then lowest price discounters and alternative channels that disregard location are a real threat.

Like a coach telling a cricketer they are out of form and are in danger of being dropped, we must tell traditional pharmacy that ‘beige service’ isn’t enough. Being proud of beige service is like being proud you turn up to work. It’s not enough. A cricketer needs to score runs. So do you.

The definition of service can be messy because it is subjective. The debate stops now. Here’s the rule—if it doesn’t move the KPI dial, it isn’t valued. What is ‘the KPI dial’? It’s the big metrics: sales, margin, number of patient visits (a proxy for patient satisfaction) and EBIT.

If your version of service doesn’t move those metrics, it is beige. If you were a cricketer, that would mean not scoring runs and you’d be dropped from the team. The only reason some of you haven’t been dropped is that you own the team.

The difficulties presented by SARS CoV-2 (that gave us COVID 19) have changed the rhythm of business. While there’s still time, pharmacists should be planning on how best to deal with the recession that will come when government welfare tapers off.

There will be hard decisions some owners will be forced to make. In the recession of 1989 to 1992, those that planned came out the other side in great shape. Equally, those that didn’t, didn’t.

The critical objectives

Our July 2020 article, ‘A bat out of hell’, set out three critical objectives to survive and thrive—patients, productivity and average retail health sale per patient.

One of the most important strategies to achieve this is giving every patient a meaningful, or multi-coloured health experience, in stark contrast to the ‘beige service’ style.

The 7CPA provides modestly increased dispensing remuneration which is great, but your future success will demand a non-beige patient experience in a difficult environment. In other words, the 7CPA provides remuneration but it’s your job to attract the patients otherwise the deal produces little.

Improving the patient health experience is achieved by increasing the number of non-dispensing pharmacists working ‘out the front’ tasked with delivering patient professional service(s).

The cost is covered by swapping roles with assistants (who retrain as dispense technicians) plus the high-income productivity income gains professional service pharmacists deliver—it’s all about cultural beliefs followed by patient health oriented behaviours.

Crunching the numbers

We have found, after looking at the data, that these pharmacies have become superb health retailers delivering superior returns compared with soft discounter ‘retailers’ and traditional community pharmacies, in general summarised in Table 1.

Table 1: Pharmacy health ‘retailers’ outperform traditional pharmacies

 

Soft discounters

Traditional

Help patients

Sales ex HCD

$5,300,000

$3,900,000

$3,350,000

Scripts processed

76,177

72,163

64,747

Customer visits

132,293

91,248

76,349

Retail health sale per customer

$10.98

$10.41

$14.66

Services income

$34,764

$41,133

$133,371

Gross margin (GP%) ex HCD

34.4%

35.9%

44.8%

GP$ + services

$1,858,000

$1,432,000

$1,634,000

Wages

$723,000

$583,000

$652,000

     Incl. pharmacists

$185,000

$171,000

$321,000

     % pharmacists

26%

29%

49%

     Av pharmacist wage/hr

$35.71

$37.50

$43.75

     No. of FTE pharmacists

2.6

2.3

3.7

     Rx per pharmacist hour

14.8

16.6

18.9

     Professional services/phcist hr

$6.80

$9.46

$17.98

Wages/income % (GP$ + services)

38.9%

40.7%

39.9%

Net profit (EBITDA) $

$319,000

$350,000

$531,000

     Net profit/sales % ex HCD

6%

9%

16%

Dispensing scripts, selling medicines and reacting to requests while containing costs and buying well are hygiene elements that don’t move the KPI dial.

Ask whether the professional service health experience you offer is beige or is it honestly good enough that patients will consistently travel past several pharmacies to come to yours. If they don’t, you are beige.

Poor pharmacy service is just not cricket. Whether you will hear Richie saying “gone, caught behind, that’s silly cricket”, or “glorious shot, straight to the boundary, that’s a century”, all depends on whether you find beige acceptable or not. 

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