Closing a Pharmacy
Pharmacies Shutting Down
Several recent examples of pharmacies closing their doors and shutting down have been in the news the past few weeks. As a business person, every pharmacy owner needs to honestly ask themselves if they are reviewing their business objectively. Is their business plan evolving as the economy, marketplace and industry changes? Are they as proficient and experienced in managing and running a business as they are in practicing pharmacy as a profession? Do they perhaps need professional help from an experienced and objective 3rd party pharmacy consulting firm? Before answering, let's take a quick look at two examples and then review the difference between closing a pharmacy versus exiting from a pharmacy practice.
- National Pharmacy in Lincoln, Nebraska shut down and closed its doors after almost 35 years in business. Owner Lynn Leitner stated that he knew for the past several years that closing down was his best option. After review of his 2018 contracts, his conclusion was that an independent pharmacy such as his would be facing an even greater disadvantage versus the large chain stores.It is interesting to note that almost all of the independents in the local area have shut down over the past few years. Wagey Drug sold out to Kohll's Pharmacy, Four Star Drug closed their 3 stores and Neighborhood Pharmacy transformed into a specialty compounding pharmacy (and stopped filling any retail prescriptions at all).
- Marlowe's Pharmacy in Dover, Ohio closed its doors last week. After 56 years in business, owner Jerry Marlowe stated it was time to retire and plans on writing a cookbook and playing with his grandchildren. Founded in 1931 as an independent community retail pharmacy, Marlowe added on a specialty compounding pharmacy almost a decade ago and named it Marlowe's Compounding Center. The entire pharmacy operation was purchased by Medicine Center Pharmacy in New Philadelphia because the addition of the compounding pharmacy made the business much more lucrative to potential buyers. Medicine Center Pharmacy owner Brad White stated that purchasing Marlowe's business “was a natural fit for us".
The Difference Between Going Out of Business and Selling Your Pharmacy
In both examples the pharmacies closed. The difference is that Marlowe had both an exit strategy and a pharmacy business that was appealing to a buyer. In the case of National Pharmacy neither was in place.The closings and the loss of independent community retail pharmacies is now becoming a documented national trend. According to the NCPA (National Community Pharmacists Association), currently approximately 22,000 independent pharmacies operate nationally. This is over a 10% decline from 2001, when the association reported that there were over 25,000 independent pharmacy businesses operating in the United States. Many experts agree that in some instances the pharmacy owners are simply "not the best businessmen" that find themselves forced to shut their pharmacy doors because of a lack of knowledge and/or sufficient planning. Declining reimbursements from insurance companies, reliance on cash purchases, mail-order pharmacies being “pushed ” by insurance companies, and big chain pharmacies moving into local neighborhoods are just a few of the reasons that some independent community pharmacies are not surviving and may be forced to shut down.Despite the national decline of independents noted above by the NCPA, independent community pharmacies still hold about a 30% share of the overall drugstore market. According to a recent article in Drug Channels, independent pharmacy owners are actually doing better than expected. Annual profits again showed an increase, while the average pharmacist owning a single pharmacy in 2013 earned roughly around $250,000. Additionally, the number of independent pharmacies seems to have leveled out and the trend continues to hold steady nationally.
Pharmacy Business Review
The key to success is finding an experienced partner to perform objective and ongoing business reviews of your pharmacy business. When starting a pharmacy business (or any business), one must have an initially sound business plan. As the business progresses over time and the economy, marketplace and industry itself all change, an owner must constantly review where their business is currently at, evaluate its "health" and adjust for the future. A business plan thus becomes a constantly evolving and changing entity in order for a business to remain successful and grow. As the old saying goes "if you're business is not changing, then you will soon enough be out of business". Perhaps the best quote is from Charles Darwin - "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change."For an independent retail community pharmacy, staying in business and growing your business largely depends on having (and keeping) a devoted customer base, plus offering new and perhaps unique services and products. It means taking review of your options and opportunities and adapting quickly. Consider having an objective and experienced pharmacy consulting firm help you.Healthcare Consultants has been helping independent pharmacy owners with business reviews since 1989. With over 28 years of experience and an in-house team of expert pharmacy consultants on staff, HCC can objectively review your current situation and advise you on what changes to make. Plus, HCC has been doing this nationally in all 50 states and can objectively compare your geographical competition, options, strategies and opportunities to prepare your business for the present and the future. Perhaps if you're currently considering your options, now is the time to ask "who can help me"? Or perhaps "who can help me run my business better to grow and increase my profits"? Contact us now online or call us at (800) 642-1652 to discuss your needs.But if you are considering closing or shutting down your pharmacy, Healthcare Consultants Pharmacy Staffing can help you do it right. There are many things to consider and items that must be addressed and taken care of. A few of these include:– Handling the custody of the existing prescription files– Controlled drug inventory records– The names and addresses of who will be acquiring the legend drugs– Documentation and destruction of all pharmacy labels and prescription pads– Confirmation of return of DEA registration and all blank DEA 222 ordering formsAnd these are just few. Plus all closing requirements are required to be performed in writing within a specified time period.If you are considering shutting down or closing your pharmacy in the future, contact HCC today. Contact us now online or call us at (800) 642-1652 to discuss how we can help you.