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Independent pharmacies struggle

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Articles - August 2011
Wednesday, July 20, 2011
0811_Pharmacies_03
Prescription drugs comprise 85% of Balo’s business;  the remaining 15% comes from specialty medical supplies, candy, greeting cards and other sundries. // Photo by Eric Näslund

Bob Coulter didn’t get out — he got big and got focused. Nevertheless, his story also helps explain why community pharmacies are on the decline in Oregon.

In 1983, Coulter purchased Red Cross Drug in La Grande, then 18 years later opened Red Cross Institutional Pharmacy, which exclusively serves assisted living and retirement homes — totaling 250 beds. Coulter says he opened Olive Branch, the Enterprise store, because of the “unmet need” in Wallowa County, which has a population of 7,000 people but only one other pharmacy, located in the Enterprise Safeway. It takes about 3,000-4,000 people to support a single pharmacy, says Coulter, adding that Olive Branch broke even after three months — “a short time for a startup.”

According to the NCPA, about 65% of all independents are in rural areas, and the average owner of an independent pharmacy owns about 2.5 stores. A poster child for independent drugstore owners, Coulter is also quick to identify the rural location as a potential drawback for next-generation pharmacy school graduates. “A lot of it is that people don’t want to live a rural lifestyle,” he says. “This is a geographically isolated county.”

The 21st century desire to live in cities is one of the macro forces bearing down on the community pharmacy industry. The health care marketplace is another. In 2006, for example, the federal government began subsidizing prescription drugs for Medicare recipients under Medicare Part D, replacing what had been a cash business for pharmacies. Twelve months later, 1,500 independents around the country went out of business. Most pharmacists have weekly wholesale drug bills to pay, explains Balo. So in the early days, when Medicare plans took about six to eight weeks to reimburse, pharmacies went under. “For the independent, it’s all about managing cash flow,” he says. Today, most Medicare plans take about two weeks to reimburse.

 



 

Comments   

 
James
0 #1 Oregon bought into an invalid method to calculate Acquisition costJames 2011-09-23 09:53:28
Myers & Stauffer conducts a survey approach to determine pharmacist acquisition cost which is invalid by the time the information is collected, compiled and reported. It is skewed in the direction of the chain pharmacies because they report 2/3 of the data. Why not use a real-time system that costs the state almost nothing. Just go to www.pharmabayonline.com
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