Preserving the Future of Independent Pharmacy
By Charlie Le Bon |
1. More pharmacy owners are thinking about retirement.
More than 37 percent of pharmacists were 55 or older in 2014.1 The idea of retirement for many pharmacy owners is no longer a distant concept. With every passing year it becomes a more pressing concern, particularly for those who feel they have limited options when it comes to exiting their business and preparing for the next stage of their lives. This is why succession planning is essential. When a succession plan is implemented several years before any anticipated retirement, the necessary financial and operational processes can be put in place to facilitate a seamless exit strategy without disruption.
2. There's a new generation of opportunity.
Too often, pharmacy owners feel like the only path for an exit is to accept an offer to sell their prescription files to a major chain instead of first trying to sell their pharmacy whole to another independent owner. What they may not realize is the pool of potential buyers is growing every year. Not only did the total number of practicing pharmacists in the U.S. increase by about 19 percent from 2003 to 2014,2 the number of professional student pharmacist enrollments is also on the rise. In fact, total pharmacy school enrollments have increased every year for the past 14 years,3 proving that the pharmacy profession continues to be a vital career path for future clinicians.
3. The appeal of independence is growing.
In a changing landscape where many chain pharmacies are no longer offering graduates the same lucrative salaries and signing bonuses as they were just five years ago, every graduating pharmacist with an entrepreneurial interest represents a future independent pharmacy owner. In the 2014 National Pharmacist Workforce Study released by the American Association of Colleges of Pharmacy (AACP), surveyors found that independent pharmacists ranked high among pharmacists who noted the highest level of career commitment.4 The same survey showed that when asked about their sense of control in the workplace, those in independent pharmacy settings also reported the highest levels.5 Many independent pharmacists enter the profession because of their commitment to patient care and because they want to be able to personalize that care in an environment they control. Independent pharmacy ownership offers a template and an opportunity to do that, giving a new generation of pharmacy owners a path to career satisfaction.
4. Preserving the legacy is powerful - and possible.
Many independent pharmacies have become local institutions in the communities they serve, with long-established patient relationships, as well as loyal employees who are as integral to the overall quality of the care and service delivered as the pharmacist is. Maintaining that legacy is a key consideration for many pharmacy owners as they begin to think about retirement. It's also a powerful consideration for a potential buyer. Purchasing an existing pharmacy is a path to immediate stability. Starting a new pharmacy from the ground up is like building any new business. It requires a significant capital investment, plus licensing and marketing to build a patient base. In addition, the time it takes to become part of payer networks and get paid by PBMs adds a considerable financial strain for a startup. But through the acquisition of an existing pharmacy, a new owner can count on a predictable level of operating income that has been benchmarked through actual practice rather than future projections.
Additional ConsiderationsIn anticipation of selling, there are several other considerations that should be on the table, including:
- Timeline. What is the proposed timeline for retirement or exiting the business?
- Exit strategy. Is there a transition strategy in place for withdrawing from the business? Will there be a gradual shift or lessening of ownership responsibilities over time? What employee management considerations need to be implemented in advance of this change?
- Value strategy. What things need to be done in advance of selling to maximize the value of the pharmacy? And what is the strategy for implementing these improvements?
- Resources. Have resources been identified to assist with retirement guidance and planning?
Better Choices and Broader Opportunities
Succession planning is a critical part of an overall financial management plan for the future. With proper guidance and implementation, it can open new doors, offer better choices and provide broader opportunities for selling, allowing pharmacy owners to successfully transition out of their businesses and into retirement while preserving the pharmacy's legacy in the community it serves.
1. 2014 National Pharmacist Workforce Survey. Midwest Pharmacy Workforce Research Consortium. April 2015. Available online at http://www.aacp.org/resources/research/pharmacyworkforcecenter/Documents/FinalReportOfTheNationalPharmacistWorkforceStudy2014.pdf. Accessed 11 December 2015.
2. Pharmacists and Pharmacy Technicians: Facts and Figures. Department for Professional Employees, AFL-CIO. December 2014. Available online at http://dpeaflcio.org/programs-publications/issue-fact-sheets/pharmacists-and-pharmacy-technicians-facts-and-figures/. Accessed 17 August 2015.
3. Academic Pharmacy's Vital Statistics. American Association of Colleges of Pharmacy. Available online at http://www.aacp.org/about/pages/vitalstats.aspx. Accessed 11 January 2016.
4. Sederstrom, J. The Changing Face of Pharmacy. Drug Topics. 10 June 2015. Available online at http://drugtopics.modernmedicine.com/drug-topics/news/changing-face-pharmacy. Accessed 11 January 11 2016.