Independent pharmacy franchise: McKesson, ABC, or Cardinal?

[Pharmd77:)]

Thinking about opening an independent next year. Have researched into different franchises and buying groups to leverage buying power and get better PBM rates to try and survive. Was wondering if anyone has had any experience with the 3 main wholesalers and their franchises? Any positives or negatives? Currently looking at Health Mart with McKesson as the most likely one. Thanks!

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[VictorOfHungerGames]

Thinking about opening an independent next year. Have researched into different franchises and buying groups to leverage buying power and get better PBM rates to try and survive. Was wondering if anyone has had any experience with the 3 main wholesalers and their franchises? Any positives or negatives? Currently looking at Health Mart with McKesson as the most likely one. Thanks!

I know McKesson will require a certain amount to be ordered from them each month. I think it's $10,000. Pharmacy First seems to be decent.

 

[CetiAlphaFive]

Thinking about opening an independent next year. Have researched into different franchises and buying groups to leverage buying power and get better PBM rates to try and survive. Was wondering if anyone has had any experience with the 3 main wholesalers and their franchises? Any positives or negatives? Currently looking at Health Mart with McKesson as the most likely one. Thanks!

Who do you know at the companies?

What's your game plan?
High volume?
Targeting high profit?
Nutriceuticals/front end?
Compounding?

Elevate has higher reimbursement but you'll be out of contract for more plans.
Atlas accepts the most plans but reimbursement can be razor thin.

 

[ChalupaBatman86]

Not really my area of expertise but I think I would join a PSAO but without buying a franchise. I always thought pairing with a local charity could be a great business model too. Like a portion of profits from every Rx goes to (local schools, animal shelter, cancer research, the human fund, or whatever). Basically the Tom’s shoes model everybody rips off.


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[VictorOfHungerGames]

Not really my area of expertise but I think I would join a PSAO but without buying a franchise. I always thought pairing with a local charity could be a great business model too. Like a portion of profits from every Rx goes to (local schools, animal shelter, cancer research, the human fund, or whatever). Basically the Tom’s shoes model everybody rips off.


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I'm intrigued. Please explain? How would this play into being a good business model?

 

[CetiAlphaFive]

Not really my area of expertise but I think I would join a PSAO but without buying a franchise. I always thought pairing with a local charity could be a great business model too. Like a portion of profits from every Rx goes to (local schools, animal shelter, cancer research, the human fund, or whatever). Basically the Tom’s shoes model everybody rips off.
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Kinda hard to split up $0.13 for charity. LOL

 

[ChalupaBatman86]

I'm intrigued. Please explain? How would this play into being a good business model?

Local communities like to feel like they are helping local charities. So if you are going to fill prescriptions anyway why not give the business to the pharmacy that gives some of the proceeds back to your kids’ schools. Or shelter puppies. Everybody likes puppies. Slacktivism.


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[ExpressMaiL]

The big 3 typically don't like to make deals with small, new stores unless you order 100k-150k initially. If you think your new store is going to utilize all that product before it expires, you're dreaming. Everyone and their mom will tell you the have the best GPO in town. "We have this many members, we offer this rebate, we give you this, we give you that." You have to sift through everything.

If you want to survive go into non sterile specialty compounding. There's a pharmacy <10 years old in California being sold. Ebitda 2mil, gross 30 mil, ask 13 mil. They do 5000rx/month. Go get a backer and a loan and negotiate down to 10M.

 

[Modest_anteater]

I know McKesson will require a certain amount to be ordered from them each month. I think it's $10,000. Pharmacy First seems to be decent.

Mckesson's franchise is called Healthmart right?

 

[ChalupaBatman86]

The big 3 typically don't like to make deals with small, new stores unless you order 100k-150k initially. If you think your new store is going to utilize all that product before it expires, you're dreaming. Everyone and their mom will tell you the have the best GPO in town. "We have this many members, we offer this rebate, we give you this, we give you that." You have to sift through everything.

If you want to survive go into non sterile specialty compounding. There's a pharmacy <10 years old in California being sold. Ebitda 2mil, gross 30 mil, ask 13 mil. They do 5000rx/month. Go get a backer and a loan and negotiate down to 10M.

You know a lot more about this than I do, but can’t you still place small orders with the second tier wholesalers? Or did they all get bought up by the big guys?


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[PA_dud3]

McKesson is good from my experience. The HealthMart branding Is also very recognizable to a lot of people. Gives it a chain vibe with the independent feeling, in my opinion.

 

[Pharmd77:)]

I know McKesson will require a certain amount to be ordered from them each month. I think it's $10,000. Pharmacy First seems to be decent.

$10,000 isn't unreasonable considering there are a lot of meds out there that go for $2-3k a pop. But im not sure if McKesson franchise has minimum ordering, I'm sure they do.

 

[Pharmd77:)]

Not really my area of expertise but I think I would join a PSAO but without buying a franchise. I always thought pairing with a local charity could be a great business model too. Like a portion of profits from every Rx goes to (local schools, animal shelter, cancer research, the human fund, or whatever). Basically the Tom’s shoes model everybody rips off.


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I initially had in my business plan to donate a portion of the profits to a charity, but since then, I've seen independents close left and right saying the pbms are paying them below cost and such. I may just donate once (if) a profit is realized

 

[Pharmd77:)]

The big 3 typically don't like to make deals with small, new stores unless you order 100k-150k initially. If you think your new store is going to utilize all that product before it expires, you're dreaming. Everyone and their mom will tell you the have the best GPO in town. "We have this many members, we offer this rebate, we give you this, we give you that." You have to sift through everything.

If you want to survive go into non sterile specialty compounding. There's a pharmacy <10 years old in California being sold. Ebitda 2mil, gross 30 mil, ask 13 mil. They do 5000rx/month. Go get a backer and a loan and negotiate down to 10M.

Specialty would be a dream if you had the capital to order specialty drugs plus all the pbms are *stealing* all the specialty scripts from the independents anyways (or not covering them at the independnet pharmacy level) cause they know where the good money is.
And the 3 big players have been big into letting the independents play with them, they have entire branches trying to bring new independents in. I don't think they will require a $100k order for startup either, especially if you are in their franchise

 

[ExpressMaiL]

The only way for a completely new independent to survive is to claim you're God's disciple and are there to fill all prescriptions for a mega church. The only catch is you will never be allowed to see profits, since the money has to go back to the church.

 

[lord999]

It is usually a bad idea to directly sign a deal with a first-tier wholesaler for a first-time buyer as all three of the mains tend to give intentionally bad lock-in terms to someone who does not know how to read the contracts. Might I suggest considering a pharmacy buying group (PBG) that is a step between the two as a starting point? They are much less likely to screw your new store over although there are middleman arbitrage concerns. Knowing McK and Cardinal directly, McK tends to have the best distribution network, but the shadiest internal financing schemes (it is still not clear to even expert industry insiders just how McKesson actually makes their money due to their accounting tricks like Enron). I have heard that Cardinal is less predatory to new independents at the start, but their end terms for a mature pharmacy are much less generous.

The only way for a completely new independent to survive is to claim you're God's disciple and are there to fill all prescriptions for a mega church. The only catch is you will never be allowed to see profits, since the money has to go back to the church.

ROFL! Did you know who owned the Boots's side of the WBA before KKR? Istituto per le Opere di Religione (Institute for the Works of Religion) popularly known as the Vatican Bank. You got that right, when the Church sold Alliance to KKR, all that money ended up disappearing within the Curia, no one publicly acknowledges where that went.

Then again, I support the Unification Church with every sushi roll I eat, so there is something to the idea of Mammon and Church working out well sometimes.

Sushi and Rev. Moon

 

[ExpressMaiL]

I didn't but I'm not surprised. Religion is a powerful entity that can achieve practically anything it wants.

 

[Hels2007]

Yup, that's why one of my back-up back-up plans is to found a cult!