Teva Business Advice —
Take My Money – Please
Despite the economic uncertainty of the last three years, I
know conclusively that there has been at least one constant
that, as the saying goes, you could take to the bank: I, and
others like me, have money to spend and an increasing
need to spend it on health care.
Actually, let me add another constant to that: No one seems
to really want to take my money to their bank.
THE BUSINESS OF HEALTH CARE
There can be no doubt that the emergence of big-box
players (e.g., Walmart) and national chains (e.g., Shoppers
Drug Mart) has altered the landscape for those in business
of health care retailing. Nor can there be any doubt that the
often stock-market-driven need for these firms to grow has
caused a blurring of the boundaries between health care
and other products (such as clothes, food and beauty
products). What’s more, health care in general and
prescription-filling in particular are often focused on
building traffic for other merchandise departments rather
than being stand-alone businesses. It’s easier to have low
prices when you don’t have to make direct profit to be
considered a positive profit contributor.
It is smart marketing for these big players. The key success
factor becomes finding a way to offer basic services at the
lowest possible price. This does not mean the service in
these outlets is of lower quality. For the mass market that
has basic health care needs tied to the occasional
prescription purchase, this service is perfectly adequate.
Consequently, a community pharmacy has a difficult time
winning mass, low-priced business unless it is lucky
enough to benefit from a geographic monopoly – for
example, being the only store in a trading area or being the
pharmacy connected to a medical arts building. However,
even geographic monopolies are getting harder to find, as
blog 27 Written by Ken Wong
national chains have strategies for securing medical
building locations and entire real estate departments
looking for territories with sales potential.
Enter Me, My Friends and My Family
Fortunately, there remains some very profitable business
that is still available. Whether or not you can win that
business depends on two key perspectives.
The first key perspective is that no one really wants to buy
drugs or pharmaceutical advice, and superior service is not
why we go to pharmacies. There are three reasons people
go to pharmacies: to continue living, to get better and to
maintain a good quality of life.
We need to ensure that people never forget that. This
doesn’t mean massive ad campaigns with scare tactics
suggesting people will die if they don’t deal with us. Nor
does it necessarily mean boring “public service” education
ads. In fact, it may not require much traditional advertising
at all.
Rather, in this era of scarce family physicians and a
national “epidemic” of chronic diseases, community
pharmacies need to assert themselves as the front line in
the health care system. And please don’t tell me it isn’t
going to happen until there is compensation to do so:
compensation should lie in the stream of business you
generate – provided, of course, you are selling to the right
customer.
This brings me to the second key perspective: You cannot
make much money providing high levels of front-line
service to a customer who makes infrequent purchases.
While they will appreciate the service, unless you can find
a way of billing directly for the service, the infrequent
buyer will not have enough chances to reward you with
their patronage.
Teva Business Advice —
Take My Money – Please
By contrast, the frequent user of your pharmacy is making
regular and frequent purchases. You can charge them less
per prescription for that front-line service and recover the
cost of your service faster. Better still, for progressive
diseases, the frequent user will tend to expand the range of
drugs they buy over time. Even better still, the frequent
user of a service within a family will usually dictate the
behavior of the entire family: When you win the business of
someone with a chronic ailment you win both their
everyday business and that of the occasional user who
might otherwise go to a mass merchandiser.
In sum, you don’t need to be the front line of health care
for everyone (at least not without compensation), but it
makes enormous sense for you to do so for a certain class
of customer.
OPPORTUNISTS OR STRATEGISTS
It seems to me that most pharmacists are, in the language
of business, opportunists and not strategists. They take
whoever has a pharmaceutical need and then they try to
sell them everything they can. By contrast, a strategist
would start with a much more compelling question: Who is
my best customer and what do they really need?
If pharmacists asked that question they’d be less focused
on groceries and cosmetics and more focused on the health
needs of the fifty-plus-year-old. That is the demographic
who either suffer from chronic diseases or are worried
enough about things like diabetes, blood pressure and
other heart conditions that their doctors have them on a
preventative strategy. In addition, the extreme end of that
segment are prime candidates for supplements and the
latest in “medical jewelry.”
BACK TO BASICS
If you want that frequent buyer, you need to earn their
business. As noted above, that means going beyond selling
drugs to recognizing and servicing the reasons they want
those drugs in the first place.
This doesn’t mean that pharmacies should stop providing
– nor that buyers don’t appreciate – services like ordering
from home, daily dose bags for pills and briefings on new
drugs. But anyone can do that and, in fact, machines can
do it faster and cheaper than humans can. This means we
take all the training and experience of a pharmacist and
we use it to compete against a machine. Not smart. And
not profitable.
We need to realize that there are several other services
that serve buyers’ real needs. Lifestyle advice, education,
monitoring, billing and reminder services are just the tip of
the iceberg. We need to expand the role of pharmacists as
health care professionals and to accept that some of those
services may not be tied to the dispensing of medicines. In
fact, many of those services may not be provided or even
desired while in the store.
The technology is there to do it. The business case is there
to do it. And suppliers of prescription and OTC products
would love to help someone do it. So, please… won’t
someone take my money?
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