Key trends such as consolidation create an opportunity for independent pharmacies with a community-based approach.
It’s not easy being independent in any business today, and independent pharmacies face a unique set of challenges.
Emerging challengers, including Amazon, digital pharmacies and discount card vendors, hope to leverage the technology to give consumers a better overall experience. In a recent survey, more than half of health tech experts believe Amazon will pose the biggest threat to the core business of healthcare systems in 2023.
Additionally, pharmacy retailing is accelerating, as smaller competitors sell to larger companies and larger chains reduce the number of stores. At the same time, CVS, Walgreens and Walmart have all increased their investments in health care sites that compete directly with urgent care clinics, doctors’ offices and other health care providers.
The business imperative behind all of these efforts is a drive to improve efficiency and scalability. I have no doubt that consumers will vote with their wallets, and many of these efforts will reshape retail.
However, there is much more to healthcare than just dollars and cents. “Care” in healthcare remains vitally important, and the larger the chains become, the more difficult it is to serve distinct segments that have very specific needs. Serving smaller niches doesn’t fit well with the way giants work.
There are good opportunities for healthcare serving distinct segments in the years to come and good reason for independent pharmacies to focus on communities that will value more assistance and understanding.
Here are some trends to keep an eye on.
Telehealth is here to stay
Telehealth is not a COVID-era issue. People who may have never considered telehealth visits have tried them during the pandemic and learned firsthand how easy it is to get the care they need without leaving their homes. As C. Northcote Parkinson famously observed, “A luxury, once enjoyed, becomes a necessity.”
During the COVID era, the regulatory environment has also eased and some changes are becoming permanent. For example, Medicare patients can now receive teHealth services, including audio-only services, for mental/behavioral health care in their homes anywhere in the country if certain conditions are met. Providing care via telehealth, especially for segments and communities facing unique challenges, is a specialty worth pursuing.
Diagnostic testing laboratories are playing an increasingly important role in the pharmaceutical industry
There is a wide variety of tests that these labs can perform, and while it’s true that giant healthcare chains can leverage these labs, that doesn’t mean these services will become commoditized. For many segments, understanding their specific needs and providing better services makes all the difference.
For example, the FDA’s Donor Fertility Tests is a community of customers with a very specific need. For a couple spending as little as $15,000, and often up to 10 times that amount, in hopes of starting a family, saving a few pennies isn’t high on the priority list. Service, quality and delivery times are key and building a reputation for providing what couples need will earn you referrals.
Whichever customer you hope to serve, you’ll need to remember that regulations are state-specific. For example, although home testing for STDs is popular (and convenience and privacy outweigh price), regulations require patients to receive treatment. Good diagnostic test 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 giants can, and that can be something they really appreciate. The faster a consumer can run a diagnostic test, the sooner that consumer can turn to the giant chain to fill those prescriptions.
If you can run the tests faster and more efficiently than the chains are able to, chances are they will be quite happy to win you revenue from the tests. In fact, everyone wins: the customer gets a faster diagnosis, you get the test 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 are made up of people who have unique needs.
As you build a reputation as an asset that not only cares about communities of different people but also understands their needs, word of mouth, trust and profit grow at the same time.
The cure, not just the scale, still matters.
About the author
David White is the Chief Executive Officer and Co-Founder of Innovative Health Diagnostics (IHD), an FDA/EUA approved CLIA accredited laboratory offering both home clinical testing for individuals and white-label testing for companies/brands for a range of health conditions.