Is there a future for independent community pharmacy practice?
Are there opportunities for women to be involved in this segment of pharmacy practice?
What are the resources available to assist student pharmacists who want to become involved in community pharmacy ownership?
Ree Hamlin, sales manager for Cardinal Health, Inc., discussed these topics and others during her presentation to Drake University student pharmacists on April 21st, 2011
Importance of Independent Pharmacies
Independent pharmacies have developed into a crucial part of the healthcare system. Communities of all sizes are dependent on the unique atmosphere and individualized attention they provide, and their existence has allowed people to develop lifelong relationships with trusted professionals. Losing an independent pharmacy can be particularly devastating to rural communities whose residents not only depend on the patient care services provided, but the economic impact as well.
Sixty percent of all independent pharmacies will change hands in the next ten years, with many being sold to chains or closing altogether. There is great value in pharmacy ownership, yet many opportunities are lost simply because of unawareness of available resources.
Independent buyers can take advantage of these opportunities, including recent pharmacy graduates. It is possible to own an independent pharmacy while still having the time and resources to have a family and pay off student loans.
Who’s Buying Independent Pharmacies Today?
The average pharmacy owner is 55 years old and is a usually a male who has owned at least one pharmacy for 20- 30 years. The majority of new buyers today in their thirties who were previously employed by a community pharmacy, who have been out of school approximately 5-10 years, and have paid off all of their school loans. In addition to first time buyers, existing owners are also purchasing additional pharmacies so that they can take advantage of economies of scale.
This provides opportunities for new pharmacists, especially since many new graduates have been educated in the skills necessary for ownership. There are currently 36 pharmacy schools across the country offering dual degree programs, such as a combined PharmD/MBA, which provide unique opportunities for students in the field.
In addition, there are several services offered by pharmacy wholesalers, banks, and investment groups to financially support independent pharmacy ownership. Pharmacy wholesalers also provide support by connecting owners and buyers and offering consulting and mentor programs to new owners. These resources create an opportunity for independent pharmacies to quickly turn a profit. In fact, many new owners are able to take out ten- year loans and pay them back in an average of 3.8 years.
Women in Ownership
There is a common misconception that because of the typical 60-70 hour workweek needed to own a pharmacy, ownership would hamper the ability to have, and spend adequate time with, a family. This factor has discouraged the many female pharmacists from considering ownership, especially when working part-time in a retail setting provides a generous outcome and ample time for caring for children. Over 90% of all current independent pharmacy owners are men, despite the fact that 65% of current graduates are female. With the recent shift in graduation rates favoring women, the importance of their participation in pharmacy ownership has been amplified.
Several owners who are women have developed solutions that allow them to oversee the running of a pharmacy while maintaining their family life. A number of women have created partnerships to allow the sharing of hours spent in the pharmacy. With a partner, they can split the work while still having all the benefits that ownership provides. Others have found unique ways to include their families in the work, such as installing nurseries in the pharmacy that provide children with a place to stay during working hours. Owning a pharmacy allows for the flexibility many women need to balance work and home life. No pharmacist, therefore, should be discouraged from becoming a buyer simply because of the work it requires.
The First Steps to Ownership
Pharmacy ownership can begin with the purchase of an existing pharmacy or building a pharmacy from the ground up. Purchasing a pharmacy can be as easy as walking in and asking an independent pharmacy owner if they are interested in selling. While the idea of building a new pharmacy from the ground up can seem appealing, there are several benefits to buying from a previous owner. The pharmacy will come ready with a set business plan, a trained staff, a strong customer base, marketing in place, and good cash flow. This will save an immense amount of time and money.
Pharmacy wholesalers often have an updated list of pharmacies interesting in selling, which provides easy opportunities for ownership. They also know what makes a pharmacy more valuable to buyers, and encourage potential owners to look for sites with:
Junior partnerships, another ownership option, can help transition a buyer into ownership by allowing them to enjoy full management responsibilities at little or no upfront cost. In return for lower compensation, participants can earn equity over time, learn the business, and build customer relationships. Participants evaluate the pharmacy over the period of one year and are protected if they find it different than it was promoted.
Current pharmacy students are encouraged to consider ownership. Ree Hamlin provided the following advice:
· Don’t let the possession of current student loans be a barrier; they will be paid off over time
The future of independent pharmacies depends on the continued interest in ownership. Those considering buying are encouraged to take initiative and pursue options. Support can be found every step of the way.