How pharmacies can keep enviable role with customers

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Pharmacies have long been the front door to the country’s health care system. People choose their favorite pharmacy and make stopping by a habit. They drop in to pick up monthly prescriptions, ask the pharmacist for advice and, of course, snag retail items in the process.

Rodey Wing

But can pharmacies hold on to this coveted position? It’s not a guarantee. From insurance providers to tech companies, third-party players are vying for critical components of the customer relationship that pharmacies currently provide. People can ask doctors questions via online patient portals. Amazon’s PillPack acquisition makes one-click delivery a potentially pending reality. And at a time when service matters most, many traditional pharmacies are struggling from reimbursement pressure and cutting back on staff.

The result is a real and mounting threat to the role pharmacies play in customer health and lives more generally. However, pharmacies can fight back. To stay competitive, they need to recommit to their front-door status by investing in digital tools, taking advantage of partnerships, and personalizing their customer interaction even more.

The two-pronged peril

Pharmacies are facing the dual threat of challenging economics and disruption from health care — and non-health care — interlopers. The risk to the industry is real. A 2019 JAMA report showed that 9,654 pharmacies closed from 2009 to 2015. Independent pharmacies were disproportionately affected; they closed at three times the rate of chain pharmacies.

Prescription sales comprise three-quarters of the average pharmacy’s revenue. However, shrinking reimbursement rates have significantly impacted the bottom line. Payers have been clawing back Medicare-related reimbursements via direct and indirect remuneration (DIR) fees months and even years after the transactions. As a result, DIR fees paid by pharmacies have increased by an astounding 45,000% since 2010, according to the National Community Pharmacists Association. Combined with the shift toward value-based care, many pharmacies find themselves in the unenviable position of trying to do more — or maintain the status quo — with less.

Simultaneously, innovations in health care are providing consumers with additional ways to connect with providers, access information and even purchase prescriptions. Ninety percent of health care organizations offer online patient portals for communicating with doctors and asking quick questions of providers. Health insurers, big tech, and third-party app creators are also moving in, offering apps that compare drug prices and even recommend pharmacies. The latter is a boon for consumers but doesn’t bode well for pharmacies that aren’t finding ways into those ­recommendations.

Investing in pharmacy’s future

With tighter margins, the inclination of many pharmacy leaders may be to cut expenses and hunker down. However, the window for truly being the front door to health care in the future is small — the better defense is a proactive strategy that sets your company up for the future.

Here are three moves to ensure you remain central to your customers’ health care needs:

  • Invest in digital tools. This is truly a situation in which short-term pain can yield long-term gain. Instead of pulling back on operational investments, the next generation of successful pharmacies will invest heavily in digital tools. At the top of the must-have list: CRM (customer relationship management) systems that headquarter all your customer information in one place. Far beyond electronic health records, such software provides a way to formally document and house customer-related data such as health habits, dietary restrictions, cultural preferences and chronic conditions. With CRM, pharmacists and pharmacy staff don’t need to rely on patient anecdotes, or new information gathered at each visit. All the data required to serve and customize an interaction is right there.
  • Explore strategic partnerships. As your company looks to invest in digital tools, consider creative partnerships that take advantage of existing innovations. Venture capital firms have poured billions into digital health technology startups; they invested $7.4 billion into the space in 2019 alone. Meanwhile, insurers and providers are using merger and acquisition activity to obtain digital technology and capabilities in addition to increase their geographic reach. Look for opportunities to increase the power of your digital investment dollars via collaborative technology initiatives. For instance, if an insurance plan is offering its members an app, your company could partner to access those plan participants and provide digital pharmacy services, medication information, product prices, and more.
  • Provide personalized experiences. The reason that people have long frequented their pharmacy is often personal; they like the location and people. The reasons they’ll leave is often convenience or cost — they need a better price or want a more convenient service. If you’ve invested in digital tools, you’ll not only streamline your processes and save your staff time, but you’ll have access to data that makes personalizing their experience easier. For example, your CRM might note that a customer recently turned 40. With that information, the pharmacist can recommend some additional preventive testing that’s appropriate for his or her age, as well as offer a checklist of health actions to take to stay well.

As pharmacies look toward the future, there’s a lot to gain — and a lot to lose. However, one thing’s for sure: Those that do nothing risk becoming irrelevant in a rapidly evolving space. Make smart investments in technology, partnerships and personalization and you’ll ensure your place as the health care front door now and in the future.

Rodey Wing is a partner at ­Kearney, working primarily at the nexus of two fields, consumer health and strategic transformations. He can be reached at



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