Similar to doctors, pharmacists need to be a part of a larger group to afford investments in electronic health record systems and other technology, according to The Institute for HealthCare Consumerism.
Pharmacists also have been squeezed by cuts in reimbursement from state Medicaid programs for the poor and at the same time are feeling the pressure from larger pharmacy benefit managers like Express Scripts, which works as a middleman and pays pharmacies to dispense drugs for their employer clients, according to the IHC.
To move forward and survive in the industry’s current economics, regional pharmacies are making some changes.
Most recently, for example, Stephen L. LaFrance Holdings -- the parent of USA Drug, Super D Drug, May’s and other drugstores -- joined Walgreen, which also owns the New York-based Duane Reade and Happy Harry’s in Delaware. Walgreen, the country’s largest pharmacy chain, has entered into the agreement to purchase some 144 LaFrance stores largely located in the South for roughly $438 million.
“It will provide significant new pharmacy business for us in this region while also enabling us to bring the Walgreens experience to many additional smaller communities where USA drug has developed strong operational expertise,” said Greg Wasson, Walgreen president and CEO.
The deal stands to bring Walgreen more than $800 million in new annual revenue, which the company needs to help it grow after parting ways with Express Scripts Jan. 1 following a payment issues fight, according to IHC.
Interestingly, the Walgreen name in the LaFrance states will give the pharmacies more clout with PBMs like Express Scripts, as well as with health insurers, IHC says.
Speaking of health insurers, being more tech savvy also will help pharmacies get in on the expected membership growth of the Individual/Public Exhange created under Obamacare to provide insurance to individuals and offer subsidies based on income levels.
According to Zacks Investment Research, it’s anticipated that between now and 2019 the Individual/Public exchange segment will experience the highest membershp growth as it benefits largely from the uninsured gaining coverage via Public Exchanges.
“Most big players,” including Aetna and UnitedHealth Group Inc., “recently stated that Public Exchanges continue to offer them profitable growth,” according to Zacks.
So as the big companies insure more people, then aptly positioned and technically plugged in pharmacies also stand to gain more customers.