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Source: My partner is a pharmacist with an MBA The biggest issue to running a pharmacy independently by far is insurances. When you're not big enough to negoti
by malfist 3y ago
Source: My partner is a pharmacist with an MBA
The biggest issue to running a pharmacy independently by far is insurances. When you're not big enough to negotiate drug prices with the drug companies, or the payouts with the insurance company you get squeeze out in fast order.
Couple of examples, he worked at <big name grocery store chain with pharmacies> and they averaged a revenue of $3 per script. This managed this because they were able to negotiate prices with both the insurance company and the drug companies. For someone not big enough to negotiate, many drugs will cost the pharmacy more than insurances will reimburse. Another example is billing insurance companies. This grocery store paid 5 cents per insurance bill, and rebills were free. When he worked at an independent pharmacy, it cost them $1.50 to bill insurance, and rebills were not free. Keep in mind, the big company was able to negotiate $3 of revenue per script after negotiating. In almost all cases, an independent pharmacy loses money on the vast majority of their prescriptions.
Largely, independent pharmacies stay afloat by taking on massive debt and doing other value add services. The independent he interned at did warfarin clinics and diabetes stuff (not sure what). It's a passion project for the person owning the pharmacy. Not a profit center.
Insurance companies though, they rake in tons of money.
- InSteady 3y agoThe closing of most independent pharmacies and overall decline of the profession is a huge loss to society.
- agloe_dreams 3y agoAnother detail for my Wife who works in insurance billing for some providers is that you have to use a whole stack of tools and processes, often by each insurance company, to make claims and process them. If anything is denied there are a billion weird and wild edge cases that you need to just hunt down and contact companies for. I'm fascinated by CostPlusDrugs. I can't figure out why they started taking insurance.
- alphabettsy 3y agoPharmacy billing is completely different from other medical billing. This is largely not true. The billing is easy, the contracts and getting paid enough are hard.
- phil21 3y agoI recently looked into investing/trying to find a partner to open an independent pharmacy. The idea has always fascinated me and I think there are some cool things you could potentially do. But even if you ignore all the crazy regulation and compliance stuff (a huge thing!) - you don't even get past the "this business is simply not viable" stage. Independents are being squeezed out - you can't even reliably expect to be paid your cost for a given medication. It seems like it could be such a nice, low-key, lifestyle sort of business if you find the right area - but I found no effective way to make it even pay for itself, much less turn a profit or be able to attract any investors even looking to find community projects vs. maximizing returns. Many areas in the US are like this these days. What should be thousands of small little competing shops being eaten up by the oligopoly. Same thing happened/is happening to pretty much all independent physician groups, and is also now happening to dentists. Every single bit of professional autonomy is being slowly eaten away. At this point you can't even do one as a passion project it seems, unless you are independently wealthy of the sort to be able to operate at a loss indefinitely as some form of charity.