Business

Win back the drug dollars

If you don’t use an online pharmacy, why not? Millennials and just about all other pet owners desire the convenience of home delivery. Start slow and the money will follow. 

Win back the drug dollars
Remember that making a $1 profit from your online pharmacy is better than making nothing.

Growing up in the shadow of New York City, I enjoyed the small-town feel without all the noise and people. From a local business standpoint, the milk was delivered, the dry cleaning was picked up and delivered, a fully cooked turkey was delivered, and prescriptions and other drugstore products were delivered. And then, most of it went away. You had to go to the dry cleaner. Milk delivery stopped. Turkey deliveries continued. Pharmacy deliveries ended, and so did the pharmacy as soon as Walgreens, Rite Aid and similar chains came to town.

For those of you practicing in small communities, savor the relationships you have with your local businesses and don’t forget that you are one of them. For those of you in an urban-suburban sprawl, think about how you can deliver the small-town feel and meet the changing needs of your clients in a high-tech, high-touch, rapidly changing consumer-driven world.

By the way, did you notice that Amazon, Walmart and the like have brought home delivery back to the consumer? How can you compete with them and the plethora of other online pharmacies that threaten another one of your profit centers?

The Not-Too-Distant Past

Well ahead of its time, VetCentric brought a home-delivery option to the veterinary profession over 20 years ago. I sat, listened and engaged and tried to figure out where the company fit into my practice. The VetCentric representative and I knew each other well, but he couldn’t convince me of the need. Neither could a meeting with the CEO. So, despite the increasing number of faxes from the PetMed Expresses of the world, I resisted. If I only knew then what I know now.

Subsequently, as a practice consultant, I remember advising veterinary practices that they needed to do everything they could to get clients to come through the door. If pet owners came in to pick up a bag of food or a prescription, they might buy something else or make an appointment. Get them in. Missed the target there, too.

The world around us began to spin faster, but speedy adoption was never a strong suit of the veterinary profession. As a result, we constantly play catch-up. Today, I would counsel veterinary practices to do everything they can to keep the ever-changing client mindset focused on the clinic and away from the myriad online and other distractions bombarding pet owners.

The 4 C’s of Competition

Currently, the generation with the greatest population and pockets full of money are the millennials. Born from about 1981 to 1996, millennials also are known as Generation Y. Not only do they have money to spend, but they have many different needs and expectations compared with their predecessors. In a nutshell, these are cost, convenience, clarity and communication.

1. Cost

With the internet at their fingertips and their fingertips constantly moving on their digital keyboards, millennials are always looking for a deal. The ease of price-shopping puts veterinary practices at a disadvantage when it comes to dispensing prescription medications. The pharmacy generates on average 28% of a veterinary practice’s gross revenue, but it comes at a price — a measurable 21% of our costs of doing business. That doesn’t include labor, overhead and shrinkage. All this makes creating a competitive price difficult if we want to maintain anywhere close to the above-mentioned margin.

Additionally and historically, we didn’t set pharmacy fees with any science in mind, only profit. In many cases, pharmacy profit was used to offset losses in other parts of the practice — not a good business model.

So, with online pharmacies working on a volume model — the more you sell, the more repeat business you get, the more money you make — can a brick-and-mortar practice compete on cost for the millennials who are looking strictly at price and who are are less stimulated by the relationship? You have to, or you run the risk of pharmacy obsolescence.

2. Convenience

It’s 2:30 a.m., the millennials just got done binge-watching reruns of “Breaking Bad” and they realize they’re out of their pet’s flea product. They want to reorder it now but don’t want to pick it up. They go online, find the company that will give them the best price and receive the product in their mailbox tomorrow.

Can you do that? Can your clients go online to order a prescription refill from you? Or is it still a phone call and your receptionist responding, “I’ll ask the doctor.” And then locating the patient record, finding the doctor who prescribed the medication, getting the OK, entering the OK into the medical record, filling the prescription, calling the client back, and saying the prescription is ready to be picked up or — OMG! — offering to mail it at an additional cost.

How much time and money did it cost you to OK a prescription fill? And by the way, how did you address the convenience factor? How about the cost factor?

The minute the millennial has to call during business hours, you become inconvenient and replaceable. The minute the millennial has to come to your practice during business hours, you become inconvenient and replaceable. What can you do to meet the needs of the changing population of pet owners you wish would get to know you, like you and trust you? Think convenience. Think clarity and communication when it comes to trust.

3. Clarity and Communication

The internet is chock-full of nuts, those so-called experts on everything from particle physics to pet prescriptions. They are readily accessible, 24/7/365. Are you?

To earn the trust of your clients, you have to be the go-to source of knowledge about their pets’ health care. You also need to understand that millennials innately do not trust the health care fields. They grew up reading or hearing about how much human pharmacies gouge people, how insurance companies don’t care about the patient as much as the dollar, and how doctors are beholden to the insurance companies, not the patient. Why would they trust a veterinarian? You must earn that trust.

Clear, concise communication about medications should be readily available to your clients at each visit or online, or sent directly to their attention. You must share why the products you offer are better, how you are competitive with other entities, and how you are available to stand behind and answer questions about their pets’ medications. The online pharmacy they currently use is impersonal at best. You can beat that with education and communication.

Solve the Problem

Over the years, veterinary practices have created so many barriers to an optimal client experience that we have developed a reputation for making people wait, which is inconvenient and expensive. As the marketplace is invaded by more and more non-veterinary owned and operated businesses, it’s time to remove the gatekeepers and become more welcoming. A simple solution to solving consumer need for an affordable, convenient prescription medication experience is to join the 21st century and offer an online pharmacy.

You ask, “But won’t I lose income?” Yes and no. You are losing income already. How much money do you make on each fax you send back with a refill approval? Think profit before you think income.

A well-managed and thought-through online pharmacy can provide a comparable profit for your practice without:

  • The need to order, inventory and stock.
  • The need to fill a prescription.
  • Overhead costs.

Remember that making a $1 profit from your online pharmacy is better than making nothing or losing money when you approve an internet prescription-refill request. Also, you remain in control.

Other Considerations

“But I like to see my clients,” you say. That’s nice, but they don’t always want to see you if they can get something delivered. Are you making them come in for their benefit or yours? If an online pharmacy can improve trust and convenience and provide competitive pricing, they will be happy to see you another time. Oh, and by the way, if the prescription medication fee isn’t included in your estimate or invoice, they might have more money to spend on their pets’ clinical needs, such as lab work and radiographs.

What about client compliance? Your online pharmacy is a compliance-boosting machine! Think about auto-refills for chronic meds without the phone calls. Think about a process to let you know that a prescription wasn’t filled. Think about all the pets whose owners stopped giving thyroid medications because they ran out of pills. These clients can automatically get a refill in their mailbox until the time comes for a recheck and follow-up testing.

Chronic meds, heartworm, flea and tick preventives, and a plethora of other medications that your clients fail to pick up can be readily delivered. Your online pharmacy can advise you if a prescription wasn’t filled, and then you can make a reminder call to the client. How many of your clients never come in for refills anyhow? How often are you aware of their lack of compliance? And what do you do about it?

What about pets who need meds right away? You have options. What about injectables that are long-acting enough that a prescription can be delivered later? What medications are absolutely, positively needed today? You could keep a small inventory for those meds alone.

Is an online pharmacy difficult to set up? We have a few providers of online pharmacy services specific to the veterinary profession. I suggest starting slow. Create a competitive online marketplace for products you are losing to e-merchants — the so-called super products such as heartworm, flea, tick and pain medications. Earn your clients’ trust on these product lines while you slowly build out the rest of the pharmacy to meet the needs for cost and convenience on antibiotics, NSAIDs, corticosteroids, antihistamines, ophthalmics, otics, etc.

A Lemming or a Leader?

According to Packaged Facts, an estimated 12 million households bought pet products online in 2018. The sales were bolstered by competitive pricing and the seemingly infinite number of sellers and products. This number will only increase in the coming years. Similarly, 24% or more of flea, tick and heartworm medications reportedly are not bought through a veterinarian.

You can continue to do what you do and lose market share to big-box retailers and online sellers, who are more convenient and more affordable. You can continue to do the same things and wait for change. You can wait for your colleagues to change. Or you can look through the windshield to a brighter future in which you are in control. It’s not too late.

With every dollar you make through your online pharmacy, you are telling clients that you hear their plea for competitive pricing and convenience. You are assuring them that they can trust you to satisfy their pets’ needs better than somebody they don’t know or know only through a chatbot.

Take the lead — better yet, delegate the research to a manager, administrator or head technician — and integrate an online pharmacy into your product-service mix.

By the way, when he was 38, my dad would call the local pharmacist and have his prescriptions delivered to his house. At 88, my dad would go online to refill his medications and have them delivered to his place in New York City.

It’s not just millennials looking to you for answers. Solve their problems and they will solve yours.

Dr. Peter Weinstein owns PAW Consulting and is executive director of the Southern California Veterinary Medical Association.

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