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CEO Roundtable: Independent Pharmacies

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Springfield Business Journal Editorial Vice President Eric Olson discusses the independent pharmacy landscape with Ryan Baker, ambulatory care director of pharmacy for CoxHealth; Miguel Nuñez, director of Grove Pharmacy; and Melody Savley, co-owner and chief pharmacy officer at Alps Pharmacy.

Eric Olson: Let’s start with what we can’t ignore, and that’s the past 18 months. Industries have changed dramatically during this pandemic. What are the biggest ways the pharmacy business has evolved?
Miguel Nuñez: From Grove Pharmacy perspective, yes, it did impact our company tremendously. Our company has a compounding lab, it has three retail stores for pharmacy and it has a spa. No. 1, the spa had to be shut for three months; it was nonessential. Then, the pharmacy, we actually had to close one of our stores because of one employee working in all three locations contaminated everyone except the people not working that day and in the office. It had an impact not being able to provide the care we normally do, that’s No. 1, and not being able to keep up with the volume and the pace of the business. And that impacts customer service. During the pandemic, everyone is on the edge. You try to calm them down as much as you can. It became very difficult.
Melody Savley: We had a little bit of a different experience. We have a pharmacy that we’ve had for 17 years in the northwest part of Springfield. It’s in a grocery store, so we couldn’t close down. That was not an option for us. What happened is, our delivery skyrocketed. More than double. We had to hire extra help for that. We took our team and divided it up. Half the techs worked up there and half the techs worked at a call center that we moved to our Nixa location. Basically, we knew that if that team got infected, even though we would be short staffed, we would have half of them. We still have six techs working in our Nixa location and we love it. They answer 99% of the calls. People have no idea they’re not standing there in the pharmacy. And they enter 90% of the scripts.
Ryan Baker: So you have the one location that answers phone calls, is that a closed-door facility?
Savley: We have our retail pharmacy up north and we have our closed-door, long-term care pharmacy which fills prescription for nursing homes and hospice, so they’re not open to the public; we have our specialty pharmacy that’s not open to the public. We opened up our lobby of that, right on [Highway] CC in Nixa, and we made that a second retail location where people could come and get vaccines and the COVID test.
Baker: At CoxHealth, it was very similar. The nature of business changed almost overnight. I remember the early days trying to figure out how to bootstrap a lot of this technology and a lot of it has continued to this day. We’re trying to get more toward remote order entry. Because we’re integrated and part of a health system, trying to reach our hospital patients but doing so, you have to keep your distance, it’s only possible through a telehealth application. Microsoft Teams was one platform we used to engage. Business stayed strong. During the initial shutdown we had a closed lobby, but we stayed very busy,
Nuñez: Because of COVID-19, the owner of the shopping strip came to Gary [Grove] and said you are welcome to add another drive-thru. So, we just added another lane to increase convenience to our customers.
Savley: Another thing that happened, and I’m sure happened to you guys, I literally spent like 40 hours on the phone trying to find PPE for our staff, personal protective equipment. And when we did get it, it was astronomically priced. Now, it’s come back down.
Baker: Even as part of a hospital – a lot of that was dedicated to nursing and ICUs – we all had to hunt.
Savley: We needed that to feel protected.
Baker: Being able to meet patients and customers where they are, we’re blessed with one drive-thru. But we have the same physical limitations as a lot of other businesses – getting ways to get to the curbside, different payment methodologies. We ended up getting something with Great Southern Bank. We got a device to do more mobile business, so that really took off. A nice catalyst.
Olson: Is that swiping cards at the car?
Baker: Yes.
Nuñez: Another thing that we did was we bought laptops for everyone in the corporate office. If you have to stay home, then you can work remotely from home so the productivity didn’t reduce.
Savley: All of our pharmacists have (virtual private networks) where they are able to dial into the pharmacy at all times wherever they’re at and fill prescriptions. We’ve been doing that for years. But our accounting staff all stayed at home because they could. It was unprecedented times. But I do believe vaccinations help. In one of our pharmacies, I guess they didn’t really want to get vaccinated, so at one time we were down seven out of 15 of them. And that was tough.

Vaccine rollout
Olson: Let’s talk about the vaccine in terms of the roles your pharmacies are playing with administrating the COVID-19 vaccines. Can you speak to where that is today?
Savley: We’re getting ready for those third doses. We’ve already done about 9,000. Back in January and February, we could only get Moderna. Hours were spent on the phone trying to get these vaccines. We finally got some in February. Once Moderna is approved, and we think it will be this week [Oct. 18-22], for the third dose, we’re going to probably have thousands more. We’ve never stopped. There are still people coming in for their first ones.
Nuñez: When all of these vaccinations started with the COVID-19, the first and second dose, we actually hired temp pharmacists. We started cold-calling and I got in touch with pharmacists, and they were able to supply us with their time, paid time of course, on Saturdays so we did events. We would have two pharmacists at the locations vaccinating. That was very successful for us to have four pharmacists vaccinating at the same time at two different locations.
Savley: We had about six to eight of our technicians that got additional training to become immunizers. They made that possible for the first time through the federal (Public Readiness and Emergency Preparedness) Act. They were so enthusiastic, they loved it. We also have six community health care workers that became immunizers. Legislatively, we’re asking for a lot of that to continue on. We have certain rules in place. We have to have an order with a physician for us to give flu shots. We would like, hopefully, to be able just to do that because we’re pharmacists. We’re totally capable and trained and ready to roll. I think pharmacists came to a shining light, not all, but a lot came to a shining light with COVID.
Baker: Part of what pharmacy and CoxHealth did, we had to raise an army really quickly. We had to train technicians to do things they hadn’t done before. Pharmacy was able to provide a significant amount of labor to these larger teams and that’s part of where pharmacy really shined. We were trying to cover a rising hospital census because all these patients were coming to Springfield. That meant community pharmacies and health system pharmacies could jump in on the immunization effort.
Olson: So, the workforce shortages aren’t being felt as strongly in pharmacies?
Baker: Our hospital pharmacy, certainly, we have our fair share of job postings; knock on wood, our outpatient retail pharmacies are doing OK. There is some turnover with staff.
Savley: I feel fortunate, like you said, knock on wood. The chain pharmacies are having an extremely difficult time. It’s widely posted work conditions are not good.
Baker: We can’t get a hold of certain chains right now. I don’t know where their staff went, but they’re not there.
Nuñez: One of the things we did to keep the staffing that we have, the company bought three highly recommended supplements and the company gave it to each of the employees and we encouraged them to strongly protect themselves. Why? You’re going back to your families and you’re working in a pharmacy and coming together to work every day. You need to protect yourself, your families and each other. The community depends on us.

Pharmacy stressors
Olson: Prior to the pandemic, there were three local pharmacies that closed down in 2020.
Savley: We actually had seven out of the 14 pharmacies in Springfield close from 2019 to 2020.
Olson: That’s a rapid amount in a short amount of time. One of them, probably the biggest name, is Family Pharmacy, closed 23 locations throughout the region. Do you foresee more local closures?
Nuñez: Melody and I are friendly competitors. We help each other in great ways. Their business model, our business model is different. We pursue different business. I think that is great to see among independents. We need to protect each other. We do believe that small businesses need to survive. We have a compounding lab and that helps us in so many ways. Melody and I have participated in meetings where the (pharmacy benefit managers) are the big lions out there.
Savley: The middleman.
Nuñez: They are the ones who determine reimbursement to the pharmacies. If pharmacies today, independents as small as us, don’t look for ways to create other revenues and other sales in your business, your business is going to suffer, and your business can go down because of that. The reimbursement to every prescription out there is very little for the independents because we don’t have negotiating powers. CVS owns their own PBM. It does affect the way we are reimbursed for the claims that we process. We get paid 20, 30, 45 days later after services are rendered.
Olson: That really can extend you if you are waiting that long for reimbursement.
Nuñez: Absolutely. You pay in two weeks your distribution center when you place your orders daily. We have different contracts. You pay in two weeks. You dispense the drugs and have to wait for your payment.
Savley: Four to six weeks you wait. And we’re talking thousands of dollars.
Nuñez: If you are treating (Hepatitis) C with Harvoni, those are $32,000 a bottle. You are dispensing $32,000 today out of your funds, services are rendered, and you’ll get paid in 45 days.
Savley: Cash flow is always a problem. The bigger you get it’s a mixed blessing.
Olson: And if you’re an independent pharmacy on the brink of, ‘I don’t know if I’m going to make it today or this week,’ that could be the death knell.
Nuñez: Exactly. In one location, we have five patients on Humira. That’s a $5,000 box each. You’re dispensing $25,000 in a week, and you get paid 45 days later but you have to pay that bill in 15 days.
Olson: The Missouri Pharmacy Association says that several decades ago the number of independent pharmacies peaked at just over 800. A year ago, that count dropped below 500. Do you see that trend continuing?
Savley: Yes. Until the PBMs are regulated. They are paying us whatever they want to pay us and probably 20% of our claims are below our cost. We keep passing regulations, but it’s Medicare. It’s federal. In Missouri, we can only do so much. It’s the Medicare plan that came out in 2006 and they just got bolder and bolder and bolder. They want to close us all. Their mission is to underpay us so much and we will go and they will buy us up. There’s a lot of legislation out there federally. (President Donald) Trump mentioned the middleman for the first time on TV and they started being a little more aggressive with them and they were going to do something about it but then we got a new administration and they said we’re going to put that on hold for at least another year. The PBM who pays us is also our competition. They own their own pharmacies.
Olson: It’s approaching monopolization.
Nuñez: It is. Any drug that they find that is a great reimbursement for them, they will shut down the local pharmacy, nonspecialty pharmacy. They will shut down so it is only dispensed by mail order.
Savley: It’s kind of like the mafia. If you look at the legislators, big bucks come their way in campaign donations. They get lobbied so much by untruths.
Nuñez: In 2020, 136 pharmacies in the state of Missouri shut down. That we knew of.
Savley: They shut down because of the PBMs. Not because of COVID. What needs to happen is they have legislation so they reimburse us fairly.
Nuñez: They need to regulate them and for them to not be so punitive to the local pharmacies. They have what they called a DIR fee and that is a fee that they determine to charge the pharmacy randomly.
Savley: Since 2006, it’s gone up 93,000%. Last month, our pharmacy paid almost $100,000 in DIR fees.
Nuñez: That’s close to what we pay.
Savley: It takes all of our profit. Basically, pharmacies are barely surviving unless they can come up with some cash payment. That’s why the vaccine was such a big deal. We got paid for those above and beyond our normal prescriptions. The product was free.
Baker: We were paid an administrative fee. Not for the drug itself.

Wellness check
Christine Temple (SBJ): You spoke to the importance of the added services to make the pharmacy business model work. How have you expanded beyond medication dispensing to incorporate wellness services?
Savley: My daughter-in-law is a pharmacist, and she got her accreditation in functional medicine. We started carrying a whole line of professional supplements and she can recommend what is good for you or not and we had a package for COVID. Her goal is to make you healthy. That may be weight loss, maybe blood pressure, get your diabetes under control – we are offering a diabetes prevention program. We’re starting our classes up in November.
Nuñez: In our pharmacy, we do have a pharmacy at the AIDS Project of the Ozarks. We have two pharmacist in our company who are HIV-certified. Every year, they have to renew their license to provide a high standard of care because there is so much complicated with HIV patients. There are medications that can interact. Knowing what to take over the counter becomes imperative for HIV patients. We have to explore other ways where you are actually adding value in health and wellness and enhancing therapy.
Baker: If you can tap into a motivated patient, we all want the same thing, to live a happy, healthy, productive life that’s full of energy. Medications can be harmful if they’re taken too long or taken out of context. Some are no longer needed. There’s clinical inertia and patients keep taking them. We’re there to ask that question, why do we still need this? Also, there’s things like behavioral interviewing where you talk with a patient on what is motivating to them to help them reach their goals because we found it’s getting patients to a healthier outcome.

Excerpts by Executive Editor 
Christine Temple, ctemple@sbj.net.

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