Smart independents achieve successful expansion through the power of co-branding with a respected name.
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Despite an overall trend showing an increase in the number of independent pharmacies that close their doors every year, new standalone stores continue to appear in communities across the U.S. The challenges these independent shops face include the effect of reimbursements on revenue, the cost of managing inventory, as well as difficulty parsing and acting on crucial profit and loss metrics.
Owners looking to expand their footprint have several options with Medicine Shoppe International (MSI), whether they choose to convert an existing pharmacy, acquire a pharmacy, or open a new store or tele-pharmacy, they can utilize a proven franchise model with a full brand or co-branding plan that works for them. MSI Franchisees benefit from a variety of business solutions that maximize marketing, tap into advantages of scale, and ultimately improve patient engagement and care.
There was a time when independent pharmacy owners found it fairly easy to be successful. Today, the environment is much more challenging, according to Jerry Barnette, managing partner of the Med-Save family of pharmacies and independent owner since 1994. “We’ve gone from competing against the chains to competing against the insurance companies and PBMs. We have to watch everything carefully to determine where we will be six months down the road regarding reimbursements and retroactive adjustments.”
Despite the increasing industry hurdles, after starting out with one store, Barnette quickly acquired four more in five years. “I realized I was really an entrepreneur at heart,” he said, “I enjoyed the growth more than being behind the counter.”
His growing business, however, is guided by old-fashioned values. Barnette feels that the chain mentality puts profits over people and that customer service is ultimately neglected. Instead, he believes in the power of partnership. He now runs 17 independent pharmacies in Kentucky and Florida with the invaluable help of his partners David Ruth, chief operating officer, John McDaniel, chief executive officer, and David Kelly, who is in charge of expansion. Thirteen of those pharmacies are co-branded as Med-Save Pharmacies, A Member of The Medicine Shoppe® Family. An important part of their operating model is to hire a strong Pharmacist in Charge (PIC) at each location, "they are a critical team member and ensure we deliver the service and care consistent with our values," says Barnette.
Barnette had been a wholesale customer of Cardinal Health for many years. In 2014, a Franchise Business Consultant explained MSI's pharmacy co-branding option as the best of both worlds – combining the national recognition of The Medicine Shoppe® name with the local feel and touch of an independent store.
This unique opportunity appealed to Barnette. “I saw it as a strong advantage over other independent pharmacies, while still remaining separate from the chain mentality,” he said. “Adding a new store as A Member of The Medicine Shoppe® Family brand means anyone driving by will know who and what we are.” Ruth agrees. “In our stores, ‘chain’ is a four-letter word, but this partnership gave us a cohesiveness and equity in branding and messaging across our stores.” Medicine Shoppe International's approach to partnering offers more than simple name recognition, however. Valuable built-in services include marketing support, business consulting, financial monitoring, and monthly reporting that would otherwise require time-consuming trials and tribulations.
Co-branding as A Member of The Medicine Shoppe® Family has streamlined and expanded Barnette’s marketing efforts. “As a group, we are seeing an ability to market ourselves better; we are now basically a family of stores,” said Barnette. “The name enables us to market under one banner across Kentucky and as we expand in other areas.”
The operational expertise of Medicine Shoppe International's Franchise Business Consultants and Franchise Development team provides important structure and guidance for pharmacy transitioning. Barnette and Ruth concur that the services and support they receive are second to none. “I knew how to run a pharmacy, but not necessarily how to run a business,” Ruth said. “They help in every direction, at every step of the way.”
The MSI connection is also a boost for owners who are just starting out. “With MSI's help, you could grow your business from the beginning with the sense that someone is there looking over your shoulder,” Barnette said. “Their Franchise Business Consultants provide security in helping you plan, forecast, and monitor your business.” Their Franchise Development team also offers assistance in locating stores that are available for sale, saving pharmacists valuable time in shopping for new business opportunities.
Choosing the right wholesale partner and franchise team is critical. “From the day I came on board, the Medicine Shoppe International Team treated us as partners, and we received great feedback and help through the co-branding agreement. They helped us develop a sense of community.”
The positive experience has been encouraging. “It’s been an evolution for us,” Ruth said. “After we got our feet wet with a few co-branded stores, we saw that it was working well. We decided to increase the connection because of the comfort level we had already gained with The Medicine Shoppe® and Cardinal Health.”
This post is related to:Buying/Selling of a Pharmacy & Franchising