Originally published in Pharmacy Times
It’s not easy to be independent in any business today, and independent pharmacies face a set of unique challenges.
Emerging challengers, including Amazon, digital pharmacies, and discount card vendors hope to leverage technology to offer consumers a better overall experience. In a recent survey, more than half of health tech experts believe Amazon will be the biggest threat to health-systems' core business in 2023.
What’s more, the retail pharmacy shakeout is accelerating, as smaller competitors sell to larger companies, and larger chains reduce store count. At the same time, CVS, Walgreens and Walmart have all increased their investments in health care sites that compete directly with urgent care clinics, physician offices, and other health care providers.
The underlying business imperative underpinning all these efforts is a drive to improve efficiency and scale. I have no doubt that consumers will vote with their wallets and many of these efforts will re-shape retail.
Yet, there’s so much more to health care than just the dollars and cents. The “care” in health care remains vitally important and the bigger that chains get, the harder it is to serve distinct segments that have very specific needs. Serving smaller niches doesn’t fit well with how the giants work.
There are good opportunities for health care that serve distinct segments in the years ahead and good reasons for independent pharmacies to focus on communities that will value more care and understanding.
Here are a few trends to keep an eye on.
Telehealth is here to stay
Telehealth isn’t a COVID era blip. People who might never have considered telehealth visits tried them during the pandemic and learned firsthand how easy it is to get the care they need without leaving home. As C. Northcote Parkinson famously observed, “a luxury, once enjoyed, becomes a necessity.”
During the COVID era, the regulatory environment also loosened and some changes are becoming permanent. For example, Medicare patients can now receive telehealth services, including audio only services, for mental/behavioral health care in their homes in any part of the country if certain conditions are met. Delivering care via telehealth, especially for segments and communities that face unique challenges, is a specialty worth pursuing.
Diagnostic testing labs like IHD Lab are playing an increasingly larger role in the pharmacy business
There are a wide variety of tests that these labs can perform, and although it’s true that giant health care chains can leverage these labs, it doesn’t mean that these services will become commoditized. For many segments, understanding specific needs and providing better services make a difference.
For example, FDA donor testing for fertility is a community of customers with a very specific need. For a couple spending a minimum of $15,000—and often up to 10 times that amount—in hopes of creating a family, saving a few pennies isn’t high on the priority list. Service, quality, and turnaround time are all critical and building a reputation for providing what couples need will earn you referrals.
Whichever customers you hope to serve, you’ll need to remember that regulations are state-specific. For example, although at-home testing for sexually-transmitted infections is popular (and convenience and privacy are more important than price), regulations require that the patients get care. Good diagnostic testing labs will know all the regulations and be ready to guide you.
Big chains aren’t just competitors, they can also be allies
One of the virtues of being smaller, more focused, and more agile is that you can move faster than the giants can—and that can be something they really value. The quicker a consumer can get a diagnostic test done, the sooner that consumer can go to the giant chain to fill those prescriptions.
If you can get the tests done faster and more efficiently than the chains are able to, chances are they’ll be quite happy to let you win the revenue from testing. In fact, everybody wins: the customer gets a faster diagnosis, you get the testing revenue, and the chain gets more prescriptions to fill.
For independents, it’s simply smart business to focus on the “care” side of health care. In the digital age, communities aren’t necessarily about geography; rather, they consist of people who have unique needs.
As you build a reputation as a resource that not only cares about communities of different people but also understands their needs, word of mouth—and trust and profit—grows at the same time.
Care, not just scale, still matters.
About the Author
David White is the CEO and co-founder of Innovative Health Diagnostics (IHD), an FDA- / EUA-approved, CLIA-accredited lab that offers both at-home clinical tests for individuals and white-label tests for companies / brands for a range of health conditions.