Perhaps it’s time for many of us to responsibly redraw our boundaries as pharmacists and as business people, writes Ultan Molloy
I remember a story I heard some time back, where someone was selling apples in a market stall. They were getting some help from an apprentice, who they told to put two bunches of apples at either side of the fruit display. Then they were told to put a price of 20c on the apples to the left-hand side, and 50c on the ones to the right.
The apprentice was getting confused and decided to see what he was missing, and why the same apples would be getting different prices. “Why are you putting different prices on the same apples?” he asked the stall-owner. “Well”, he replied, “each bundle of apples is for different people, and I want to make sure that my customers are happy with their choice. The ones on the left-hand side are for the people who want to pay 20c for their apples, and the ones on the right-hand side are for those people who want to pay 50c for their apples”. An important lesson for us to remember when we’re looking at how we are pricing. Basmati rice in Dunnes earlier today was €1 or €7 per kg for me, depending on the brand I picked, as another example. Sure, ‘good money makes good art’, as we know.
‘It’s how much?’
I received an earful from a customer for charging €2 for a box of paracetamol this week. “They’re €1 in Cavan!” she said, and walked out the door, presumably to travel the two hours to Cavan to get her headache sorted out. Interesting that it was Cavan too, isn’t it? My gran was from Cavan, and the legend that she was, she loved taking the mick out of herself and other Cavan people for being tight!
As a final thought on this, I passed the door of a pharmacy from a small chain in Galway city today (Sunday), who were advertising 20 per cent off their fragrances, Vichy, LRP and Benefit ranges. Twenty per cent off a product on a 50 per cent mark-up (33 per cent margin) is essentially giving the customer back 60 per cent of your margin, or profit, on the sale of that product. That 50 per cent mark-up is being generous if you deal with some of our front-of-house suppliers, most of whom fail to understand the margins we need to drive and sustain our businesses.
A case of the squeaky wheel getting the grease, or an empty can making the most noise?
So what is my point here? Well, given that over 80 per cent of medicines dispensed in this country are under Government schemes, and prescription medicines are driving the majority of pharmacies’ business viability, then why are we so obsessed with keeping the price-sensitive minority happy, and sometimes even letting them determine our pricing policy? Medicines are now gone so inexpensive in this country that they’re being shipped out of the country to Eastern Europe and elsewhere, where they’re significantly more expensive, resulting in our supply issues. Not to mention all the chopping and changing of that is confusing and frustrating many patients, as well as ourselves.
Competing on price
In areas of high competition, pricing competition can drive a ‘race to the bottom’, if one was to get involved in it. It’s a lazy and unimaginative approach to winning custom and competing. Given that pharmacy businesses have high fixed costs, not least pharmacist wages at the moment, then why should we be giving ourselves away so cheaply? To drive footfall? For bargain-hunters? Do you really want the ‘give it to me fast and cheap’ brigade as your customer base for your professional service business? With increasing talk of extending professional services and our professional role to have more patient-facing time and engagement, who is going to pay the pharmacist’s wage to cover this? The fairies? I’ve written about professional services vs fast-moving consumer goods in a previous piece, and they aren’t ready bedfellows. If you’re preparing your business to extend your services and increase pharmacist time with patients, then you should be increasing your prices!
So much unfulfilled potential in our profession as pharmacists. It continues to frustrate me. All I can see at the moment is increasing competition for resources (time, attention, finances, etc) in our retail community pharmacy businesses. Someone will have to pay the cost of ‘more’, so I hope that us pharmacists, and those who finally authorise extended services through pharmacies, do more than use pharmacists to beat down payments to GPs who are providing the same or similar services. You’ll remember that GPs were getting in the region of €40 per flu vaccination at the time pharmacists started offering vaccination services, and getting paid €15 for the privilege, with an estimated cost of €1,000 per pharmacist to get certified (pharmacist cover, the cost of the course, travel expenses, and time before and after on pre/post-course materials). You can do the sums on break-even there, and then cost in the time spent on admin before and after the patient administration, pharmacist time to give the vaccine, and counselling time with the patients. GP practices now get about €25, from what I recall. Why €10 more than pharmacists, or their nursing staff, you may wonder? The mind boggles. Perhaps because sometimes people are so keen to prove their value that they under-price themselves rather than owning their own value, and so we’re back to the start. Let’s not do that again. The concept that the pharmacist can deliver extended clinical services has been proved.
Being responsible for your part in the future of pharmacy
I’d encourage you as a pharmacist owner, if you’re reading this, not to compete on price where you can’t do it well (ie, you’re getting a 20 or 30 per cent discount on trade, like some of the multiples), for the sake of your business, your community and your patients in the medium to long term. Community pharmacists are leaving the profession by the dozen because they’re not feeling valued, respected, with time and space to do their jobs for patients, among other reasons I am sure. Can you see how all these things are connected? It’s time for many of us to responsibly redraw our boundaries as pharmacists and as business people.