The veterinary pharmacy

Recent years have been hard on the veterinary pharmacy. Online pharmacies, big box pharmacies and now even discount stores have eaten away at our pharmacy business. And it's not just human medications, it's Heartgard, Frontline and Cosequin.

What is the future of the pharmacy in the veterinary hospital? Many hospitals have teamed up with their local distributors and are now offering their own products online, often price-matching other online competitors. Most distributer web portals will even price-match for you. A little profit is better than none is how the thinking goes.

But is it? Most hospitals that offer an online pharmacy do it as a convenience for their web-surfing clients, they do not prescribe from it instead of their in-house pharmacy if they can help it. They may not even announce the existance of their pharmacy unless they receive a fax from 1-800-PetMeds or a client asks them to ship something to them on vacation.

We cling to our pharmacies. We've had them since the dawn of time, and even as others nibble away at their edges we fight tooth and nail to preserve our piece of this pie. But should we?

A reasonable argument could be made for removing our profession from the pharmacy business altogether, or at least to the bare bones.

Pharmacy income as a percentage of revenue, according to an article in Veterinary Practice News in 2012 has remained unchanged, that in spite of everyone crying wolf about the near death of the veterinary pharmacy, we as a profession have seen no loss in revenue from pharmacy sales. According the article, gross pharmacy sales account for between 27-29% of veterinary sales. The article states that our reaction to the pharmacy threat has been to lower prices to remain competitive and sell more units.

What is not addressed in the article is what our desperate clawing to keep our pharmacy alive is doing  to practice profitability and public perception of value. If I sell more items at a smaller per item profit, am I ahead? Am I behind? What happens when clients buy medication from us only to find it elsewhere for a third of the cost?

We are working hard for every penny we can eke out of every visit right now. Think of the tremendous burden placed on us by our pharmacy. We order it, we unpack it, we log it into the system, we check and recheck margins on it, we house it in valuable real estate near the front of the building, and in the case of dog food, that real estate can be vast, we drop some, lose some, buy the wrong something, or the client never picks up what we bought. We then count out tablets, ring up charges, print out labels, and take the risk of handing out a wrong medication. In case that wasn't enough, we over and under order, causing client annoyance on the one hand and expired products on the other.

Face it, pharmacy is a logistical, expensive nightmare, why are we clinging to it it with such desperation?

Think also of client perception. You have a complicated case come in that needs a work up, hospitalization and a bag full of, at this moment unknown, medications.  You can either present a treatment plan with a 'here be dragons' style of pharmacy add-on that looks like a giant what-if to the clients and can easily raise your plan from $700 to $1000 or more. Do they forego treatments or diagnostics because of that giant unknown staring them in the face?

Your other option is to deal with what is in front of you now and let the receptionist deal with the furious client who paid $700 already and cannot believe that she needs an additional $300 in medications! What thieves we all are!

Neither of these represent what is best for our patient or our reputaion.

Imagine instead, that you adress the contingencies of now, the work up, the hospitalization, various injections and hand her her scripts as she walks out of the hospital. Now we're not theives, we're people recommending a medication, and it is certainly no fault of ours if it's breathtakingly expensive. There will be no negotiating medications versus diagnostics.

We cannot compete for price against the large chain stores. Our product is not superior. So why are we bothering to stay in the fight? Who benefits? The client loses money they could've better spent on treatment or diagnostics. Those treatments and diagnostics help us better serve the pet (and her owners) and are far more profitable for us. The hospital loses valuable consumer trust when the client price shops after the fact. It is hard to see how we gain in this scenario.

Think also of the difference between gross and profit. Pharmacy may account for nearly 1/3 of your gross, but I seriously doubt it accounts for 1/3 of your profit. Big numbers are wonderful to look at, but it's the little number at the bottom that matters. Think of how much money you make doing a $20 anal gland expression, or a $20 Schirmer Eye Test, versus selling a $20 bottle of Rimadyl, or heaven forbid, a bag of  Z/D.

Perhaps the smart thing for our profession is to divorce ourselves from our pharmacies as much as we possibly can. We will have to still keep the veterinary only products, and a few things on hand for emergencies. Think of all the space you just got for free. Your pharmacy area could be that cat only room you've been needing, or the grieving room you designed. Maybe it can house an ultrasound or another surgical suite. Whatever you put there, my guess is that it will have a bigger impact on your bottom line than that $30,000 you have sitting on your shelves.
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