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Case Study: Golden Years
David Dixon
After two decades in the pharmacy game, David Dixon faced the loss of his business. This is how he saved it.
DAVID DIXON

AFTER TWO DECADES IN THE PHARMACY GAME, DAVID DIXON FACED THE LOSS OF HIS BUSINESS. THIS IS HOW HE SAVED IT.

In the community pharmacy world at the moment, you do not need to look very far to see a bleak picture of the future. Nearly every pharmacy article and commentator details the pressure that the sector is under not just to survive but to thrive. So how did it get to this and what does the future hold? How did one of the most respected and valued professions in Australia lose its shine and be struggling to be relevant into the future?

I have been a pharmacist for over 20 years and been a pharmacy owner for approximately 10 of those years. While I am not trying to suggest that I am an expert on the pharmacy industry, some of my experiences over my period in ownership can probably be considered as a microcosm of the community pharmacy industry as a whole.

The first two years of full ownership was ‘business as usual’, but a very steep learning curve as we learnt the ropes. However, storm clouds were brewing and the good times came to a shuddering halt in late 2006. This was when a new shopping centre opened up less than a kilometre away. The owners of this new complex bought the centre where my pharmacy was located in an eleventh hour deal. They then proceeded to shift tenants from our shopping centre to the shiny new establishment and leave a host of empty shops. At around the same time, the first of what was to eventually become four discount pharmacy operators moved to town. In a very short space of time, we lost up to 40% of our customer base and this was also reflected in an alarming drop in turnover. There were not a whole lot of options open to us as we had a very high debt to service and had very few ways of reducing our expenses. The real kick was the looming first tax bill after being in business for two years. It was not an exaggeration to say that we were in a little bit of strife. We realised that we needed a stronger, perhaps health-specific, rationale for people to continue to come to our pharmacy. The way we had been doing business was not sustainable.

At that low point, I had to make this massive decision about where to go from here. It was at this point that I started to develop some clarity of thought. I decided that we needed to completely change our way of doing business. The temptation was there to blame everyone else for the predicament we were in. The old way had ceased to exist and we needed to forge out a different path to a future, not just where we could pay the bills but also thrive as a health care provider. My attitude was if we were going to go down, I wanted to go down swinging. I wanted to see if a pharmacy model could be built that focused on people’s health and what value that we could deliver to our customers. This bravado was certainly not without risks of its own, but I felt that it offered us the best option for the future. We needed to differentiate ourselves to become relevant to the general public.

First, our finances needed to be re-arranged such that we went interest-only for a period. The next step was to undertake a complete store analysis. This was pretty heavy hitting but demonstrated clearly how a lack of focus on health was one of the primary reasons why we were in the difficult situation. A number of departments within the pharmacy werecomplete underperformers and tiedup big dollars and were not delivering on our health promise. All of these underperforming departments were not related to health in any way.

The decision was made to completely remove these underperforming departments and replace them with services, stock and a health offering designed to differentiate our pharmacy from the others in the town. Departments that went by the wayside included fragrance, developing and processing, giftware, cosmetic and skin care brands, and toys to make way for the health care oriented services.

Departments that performed, and were in line with our new direction of ‘health outcomes’, were allocated prime space and the strategy was reviewed. This included areas such as scheduled medicines, nutrition, natural medicine and wound care.

Over time, fee-paying services have been developed and/or introduced that have been embraced by our old and new customers. Each service was developed to fulfil an area of patient need and needed to pay its way. This is a business reality: balancing the need to pay for it, yet providing health services and thus meeting the needs of the community.

To further enhance the patient experience, all our external activities are health-related and focused to reflect in-store activity. This includes a fortnightly pharmacist health column in the local paper, print advertising, letterbox delivery, in-store health promotions and social media. However, the most effective way the community heard about our serviceswas by word of mouth. Excluding prescriptions, we now get referrals from GP surgeries and other allied health professionals for our professional services.

We now have three private consultation rooms and two weight loss booths taking up the vacant space left by the underperforming departments. The Sleep Management service is now the largest department after the dispensary and is growing year on year. Other fee-for-service areas include medical certificates, opioid substitution, and weight loss and diabetes management. These fee-for-service offerings broadened the overall appeal of the pharmacy but yet assisted us to meet its new direction.

These dovetail nicely into the Pharmacy Practice Incentives such as Dosage Administration Aids, Staged Supply, Clinical Interventions and MedsChecks.

Bit by bit, the situation started to improve. First the customer numbers stabilised and this was followed by enough growth to signal that our efforts were starting to come to fruition. This gave us confidence to try some new things and keep the momentum going. Over time, thistranslated to a complete turnaround in all of the key performance indicators. We now have a sustainable health focused pharmacy and have been fortunate to be recognised with a number of national pharmacy awards.

Over time, we have built a pharmacy team who prides themselves on standing out from the crowd. Many of the team have developed new skills often in areas far removed from the traditional areas of pharmacy. The pharmacy now has a strong emphasis on continual training and professional development. The focus is very much on putting ourselves in our customer’s shoes and looking at what solutions can be provided for them. This is in contrast to the previous counter- based transactional approach of doing business.

I hope that this article has given you some insight into where my pharmacy has come from and how we chose to deal with a rapidly changing landscape.

Did everything that we tried work? No.

Did we learn something each time? Absolutely.

The story does not end here. We are forever looking at better ways of doing things and expanding the range of services that we can offer to our patients. As pharmacists, it is all too easy to apportion blame and complain about our lot in life. Sometimes the hardest thing to do is to hold up a mirror and to take a good hard look at yourself. There is more to community pharmacy than just generic substitution and deep discounting. The future is there to be grasped. Community pharmacy is brilliantly placed to be front and centre of this, with our ageing population and the ongoing strain on the health budget. However, this is not going to be handed to us on a platter by the government or our professional organisations. We have to demonstrate our worth as health care professionals and not be afraid to let the rest of the world know about it.

OPERATION INNOVATION: GOOD NIGHTS

How did we become involved in Sleep Apnoea? The answer to this question came from our customer base and looking at what services that they need both now and into the future. Many of our regular customers suffer from Type 2 Diabetes, cardiovascular disease and may be overweight. In conversations with them in-store and also during Home Medication Reviews, one of the regular topics that was discussed was sleep apnoea and CPAP therapy. While I had a basic understanding of Sleep Apnoea, what became apparent over time was how many of our customers suffered from the condition. One of the concerns raised was the lack of expertise in the area and also the need to travel considerable distances to specialised clinics. I recognised that developing some expertise in this field may be an opportunity worth pursuing.

From there, an extensive amount of research was undertaken into the condition, what was currently available and also the at risk population group. A significant proportion of the at risk group were customers that we saw in our pharmacy every day. A number of companies were approached to look at setting up accounts and developing an ongoing relationship. Initially this involved CPAP machine and mask trials and hire after a laboratory sleep study, consumables sales, spare parts and ongoing monitoring. There was a significant initial investment in stock, marketing, staff training and also having the facilities available within the pharmacy to offer a consistent and high quality service. All of this did not happen overnight and took time to develop.

Despite some early success, the main impediment to growth at that stage was the reliance on getting prescriptions from sleep physicians after a sleep study had been completed in an inpatient facility. We were relying on patients coming to us and not going to alternatives either co-located with, or near, where the sleep physicians were based.

With this in mind, the key to really driving the department was to actually conduct home-based sleep studies from the pharmacy. Once again, some research was undertaken and discussions were initiated with a number of companies. The timing was good as Medicare had only recently allocated an item number to a home-based (ambulatory) sleep study as opposed to a lab-based study. The pharmacy partnered with an organisation that contracted sleep physicians, sleep scorers and also had the provider number to undertake home based studies. This partnership works well as what this organisation could not do well was what community pharmacy can. Pharmacy is the most accessible health professional for patients and we have the additional ability to screen at-risk patients.

Once this partnership commenced, the sleep department really started to take off. Patients no longer had to leave town for testing, therefore saving considerable time and money. GPs could now refer directly to us, therefore cutting out the middleman and resulting in improved provision of health services to patients. Patients were also more likely to undertake the study now that there was a local option available. The service has been really well received by the public and other health professionals. The sleep apnoea clinic is now the fastest growing service in the pharmacy and benefits increasing numbers of patients every month. We are now recognised as a destination for sleep management and are providing a valuable service to the community of Gympie.