It’s time for a revolution


pharmacist shouting call to action

The community pharmacy revolution is here. Join now or run away, warns Mouhamad Zoghbi

The community pharmacy is fighting to survive.

Aggressive price disclosures cost the average pharmacy $90,000 in net profit before tax last financial year, according to the Pharmacy Guild of Australia, though many pharmacists I have interviewed recorded losses greater than $150,000.

Meanwhile, expenses are higher than ever. A study conducted by Business Monitor International finding that purchasing costs now account for 65%  of a pharmacy’s expenses.

Other expenses include wages and salaries (almost 17% of expenses), utilities (7%) and rent (3%), leaving the profit margin of the average pharmacy at just 7%. (And if 7% is the average, it doesn’t take a scientist to realise that many pharmacies are running at a loss.)

Overheads are part and parcel of many industries, yet with wholesalers cutting down payment times significantly, pharmacies have to cough up the cash much, much earlier than they used to.

To solve these issues, over time more and more pharmacies have turned to the retail model – slashing costs and pushing discounts to bring in more business.

This retail strategy is destroying the community pharmacy.

Once upon a time a pharmacy’s focus was on improving the health of their patients and the community, the moment the ‘community pharmacy’ became the ‘retail pharmacy’, we lost the true essence of the community pharmacy.

The moment that patient numbers, up-sells and the bottom line became more important than building a genuine connection, listening to questions and reassurance, the idea of the ‘community pharmacy’ lost its value.

At that moment, the ‘community pharmacy’ became replaceable with any large discount chain or supermarket.

With the rise of the retail pharmacy, no value is placed on the pharmacy serving a deeper purpose, the pharmacy nurturing its staff and providing a nourishing culture for them, or the pharmacy genuinely supporting patients. Instead, the focus is making the sale.

Health is now a commodity and it is only available to the highest bidder.

And things are only going to get worse with the $1 discounted co-payment in full swing and the proposed deregulation of the industry intended to further ‘stimulate competition’.

This is despite Stephen King admitting in his speech at APP that the current pharmacy model is not sustainable!

The result? Pharmacists only ever make short-term gains, like an up-sell, rather than building a genuine relationship and helping the customer improve their health, and retail pharmacies will continue to cannibalise each other as they compete for every last cent.

There is a fundamental difference between economists and health care professionals – economists focus on saving costs by enhancing competition, while health care professionals find ways to improve the health of a patient (not a consumer or customer).

But if we continue to take the retail focus of the economist, nothing will change.

 

It’s time for a revolution!

It’s time to cure today’s ailing pharmacy industry.

It’s time to go beyond amputating your sense of purpose, your team members and your level of service.

It’s time to de-commoditise health and reinvigorate the pharmacy industry’s culture of care.

Having worked with thousands of pharmacies in my years as a nurse, pharmaceutical sales rep and entrepreneur, I’ve discovered a secret pharmacy community.

This community believes in caring for the health of others. This community believes in creating loyalty by valuing the lives they touch. This community believes in collaboration. This community believes that unless we all win, no one does.

And the stage is now set for this community to rise and reclaim their rightful leadership – for the community to reclaim the community pharmacy.

It will be a rocky road. To navigate this terrain, we need leaders who are not focused on politics and power. We need leaders who are focused on health, community, collaboration, and a win-win for all.

Whether you are a pharmacist, health care professional, pharmacy assistant, manager or student, we need you!

We need you to support Amy, the single mother struggling to raise her sick baby and keep her pharmacy assistant job.

We need you to listen to John, a much-loved grandfather who walks through the doors once a month to pick up his prescription and chat about his grandchildren.

We need you to diagnose the real problem when Sam and Leila, two devoted parents struggling with fatigue and sleepless nights while working full time jobs, come in for something to help their feverish daughter sleep.

We need pharmacy leaders who are prepared to look beyond the short-sighted tactics of discounts and patient poaching, and will instead turn their attention towards improving the lives of Australians every day.

This is the key to revitalising our industry, one pharmacy at a time.

 

Mouhamad Zoghbi is the author and founder of ‘The Prescription For Pharmacy,’ specialised in the training and development of pharmacy teams and leaders. His goal is to create high performance pharmacy environments based on enhancing pharmacy communication and selling skills that improve health outcomes and increase profitability.

He invites pharmacists seeking change in the health care industry to e-mail on mouhamad@theprescriptionforpharmacy.com with your name, profession, position (Pharmacy owner, assistant, student etc phone number and why you feel there is a need for change.

He is organising a national pharmacy forum that addresses the everyday struggles of pharmacies and their teams and provide tangible solutions to the everyday problems pharmacy is facing.

Visit www.theprescriptionforpharmacy.com for details.

 

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9 Comments

  1. Jospeh Kingsley
    04/05/2016

    Hello, I have now read several of your articles and a few paragraphs of your book.
    The community as well as the pharmacy industry should be 100% supportive of your thought leadership and methodology. I am very touched as a patient, very enthused as a health professional.
    You should consider certifying pharmacists as “community friendly”. You should also propose programs for them to help them balance their business as well as community obligations.
    The passion, sincerity and truthfulness of your cause should be adopted and supported by pharmacy governing bodies and even NSW government. Best wishes.

    • Mouhamad Zoghbi
      05/05/2016

      Thank you Joseph,
      It’s an uphill climb.
      Pharmacy has been reliant on government remuneration for a long time, dispensing scripts was very profitable in the past, unfortunately this is no longer the case. As a result, most pharmacies did not prepare for this significant loss of income, then they were hit with more reforms such as the $1 discounted copayment. Now, pharmacies are weighing up their ability to sustain their livelihood and the dream of living a respectable quality of life has become a nightmare that barely pays the wages and debts. There must be a new approach beyond the discounting and promotions which only eat away more of your profits and spiral into a financial calamity.
      Pharmacy needs a new mindset, a new vision that focuses on creating patient loyalty instead of customer retention, because loyalty is defined as a customer who buys from you REGARDLESS OF PRICE and that can be implemented if you invest in training your team in what I call empathetic based selling instead of upselling and companion selling. (I will write an article about this method)
      Thanks again Joseph

  2. Glen
    04/05/2016

    Glen

  3. Glen
    04/05/2016

    I love everything you write Mouhamad. The trick is getting paid for all this! We use to get paid $80 for a box of lipitor 40mg now we get $10-15. How we plug this shortfall in profit is the question nobody can answer. And it isnt by boosting OTC sales…to get best deals on Otc lines you need to order 48 of everything and you always get stuck with stock at the end of the month which then dents your cash flow.
    The whole reason why pharmacy was profitable in the past was because we sold fast moving, high margin medicines…now with price disclosure we don’t.

    • Mouhamad Zoghbi
      05/05/2016

      I feel your frustration, a significant loss in income is going to affect many things in your life.
      On the other hand, there is a solution, and that is based on a law called ‘The law of three’ which states that 90% of your income is based on 3 things within your pharmacy. If you focus 90% of your time on them, you will gain significant increases in your income.

      78% of pharmacy owners I have personally interviewed account these three aspects for 90% of their income:

      1. Patients/Customers

      2. Pharmacy Team (Pharmacists, assistants etc…)

      3. Products and services

      Now, with a direct hit in product profit such as the $80 Lipitor example you gave, the place to recover these losses is by boosting other parameters within your three laws.

      For example, creating value added guidance and support to your community by reaching out to high schools on the effects of drug abuse, churches on family health tips, local sports clubs on the use of analgesics in injuries etc… This in turn creates communities that recognise you as a professional who genuinely cares, which translates to an increase in your patient/customer base and eventually your income.

      Secondly, train your team to look beyond the obvious symptoms patients present, for example a parent coming in with a teething baby, the first thing 85% of pharmacies do is go for the pain relief and mouth gels, but these are things that parents have already tried, so you need to look beyond the band aid fix and go for the hydrating ice block, the teething rings (which collect dust on shelves) …BUT… the parents are coming in not only because of their child, they’re coming in because they can’t sleep, their exhausted and tired and are in need of an energy boost for the day or a good nights sleep during the night, this is where you recommend a whole new range of support for them such as vitamins for energy and sleep products for better rest while parents alternate caring nights.
      Glen, when this is done consistently, can you see how you can recover the losses and actually increase your income?

      I’ve written a whole book about this and can go on forever:)

      I hope I have given you some value in this response and please let me know your views, I’d love to continue this conversation on this platform so we can all learn from each others experiences.
      Thanks Glen:)

  4. Concerned pharmacist
    04/05/2016

    Have you thought about maybe asking the lynch pin of all of this, your pharmacist, how they feel? Chances are they are not doing your business many favours feeling overworked, undervalued and underpaid. Until you fix this, there is no point trying to alter community perceptions.

    • Mouhamad Zoghbi
      05/05/2016

      Hello,
      I agree, you have every right to be concerned.

      Within the past 2 weeks alone I listened to 63 individual pharmacy owners in Liverpool, Mt. Druitt, Auburn, Granville, Ryde, Chatswood Central Coast and The Hunter.

      This is what the linchpin literally said about what frustrates them:

      “People asking for discounts”

      “Shrinking margins”

      “Staffing issues”

      ‘Time poor”

      “Incompetent staff who need constant reminder to up-sell”

      “Having to do non-pharmacist duties”

      “Competition is killing me”

      “My customers don’t care about service anymore, they only want the discount”

      “I don’t know if I can continue like this”

      “Customers waste my time then buy from supermarkets and discount pharmacies”

      “I don’t understand what a professional service is anymore, how to implement it and fu(#!ng get paid for it”

      “Customers are disloyal”

      “I can’t make things happen the way I want them to”

      “I don’t care about the Guild and PSA, they’ve done nothing for me”

      I am just as concerned as you are, this is why I have written a book that is given away for free and conducted over 200 individual interviews this year alone to understand how I can support a struggling industry.

      Many of them had no idea about the deregulation review and did not know what was happening beyond the four walls of their pharmacy because they have no time to read, or take a simple lunch break without having baskets flashed in their faces.

      To fix this, you need to alter your own perception before you alter a communities perception.
      “One can not change what is in a community unless each individual changes what is within oneself” The Quran.
      To move forward we need to shift our mindset from what we are doing today and challenge the status quo because if the industry continues this path, we will see 82% of pharmacies contemplating on closing their doors.

      Finally, when this fundamental shift occurs, then my business The Prescription For Pharmacy, The Care Project by Vanessa Lontos, the Health Destination Program and every business who cares about improving the profession will flourish and so will pharmacy.
      Thanks for your comment, please feel free to respond to my reply.

  5. Dominique
    05/05/2016

    Dear concerned pharmacist
    From my understanding of Mouhamad’s work it is all about the pharmacy team as a whole to enable the whole pharmacy to interact and work together in a more cohesive fashion, and this definitely includes the pharmacists as they are such valued members of each team :-). You are absolutely right in your statement regarding the pharmacists being overworked, undervalued and underpaid although I believe this goes for the whole team! I feel as someone from the industry that if we really open our eyes to what is ahead (de regulation) we have a very high probability of changing the fate of our industry which is presently looking very grim, we just need to look at the US and Europe to see what happened to them and learn from their experience. However we need to remove the blinkers we have put on and start looking for outside assistance to move to the next level of healthcare for our communities

  6. Neil Johnston
    05/05/2016

    Mouhamad is very articulate and is able to speak as an external observer to the pharmacy profession.
    Therefore he “spots” the difference more easily than someone working in the daily grind.
    He also comes from a caring profession and is able to measure the diminishing care content that is leaving pharmacy.
    As a management consultant I have researched the issues that are of current concern and would summarise my findings as follows:
    (i) The community pharmacy still represents the best type of model for pharmacy care delivery to the community.
    (ii) The model has become unbalanced because PBS volume and profitability over the past 20 years have been overshadowing the problems within “core” business that were increasing over that same time period with no corrections were progressively made.
    (iii) The good news is that with an investment in a renewal process the community pharmacy will thrive and progress to a stable and job-satisfying career.
    (iv) Everyone is wondering about the “How?” which is a question I can answer simply in that community pharmacy in its entirety, has to be renewed. That will require training the entire pharmacy team as a cohesive unit, adjustments to the configuration of space allocation for goods and services and a decision as to what consumers you wish to attract.
    That will be patients if you want to genuinely remain in community practice or customers if you want to go down the track of retail pharmacy (discounting or warehouse pharmacy).
    Pharmacists tend to confuse the type of consumer they want to attract and this confusion is partly created because most marketing groups are oriented towards customer generation.
    Unless you streamline the niche you wish to service you will fail.
    “Change to win” is the motto you should adopt.
    Mouhamad is also preparing to deliver the “How?” within the next three months so keep in touch with him if you want to get a head start on the competition.

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