I thought it would be helpful (or entertaining) for anyone interested in owning an independent pharmacy or looking to start a new one to follow along with me as I work to re-open a store starting from scratch with no retail/independent experience. The store is in Florida. I will try and highlight things I learned that I had never been exposed to before. Please feel free to offer advice or ask questions.
I will edit the OP so no one has to constantly scroll down to check for updates.
My Opinion of What it takes/personality and planning
First I would not recommend anyone go about pharmacy ownership in the manor I am attempting, it has been very stressful and hard, but I knew this before hand and was willing to except the good with the bad. My best recommendation is to spend 1-2 years researching and learning everything about running/owning a pharmacy and coming up with a business plan. Anyone that says independents can't compete with a chain doesn't know what they are talking about; the key is to have a strong plan of what you are going to do different than a chain to bring in customers. Research locations, niche services, and demographic statistics and come up with capital, either save money, get investors or partners.
And lastly, you have to be willing to take a risk and handle ups and downs without getting discouraged or giving up also don't let anyone tell you what you can or can't do in life, believe in yourself. I may fail in this endeavor but at least I can say I gave it a shot and didn't sit on the sidelines in the game of life.
Back Ground:
I worked my ass off at a hospital job and wanted more than anything to have a career in hospital management/administration. Unfortunately I learned some painful lessons in corporate politics. I wanted out and knew I had the work ethic, organizational and communication skills and decision making process to run a business and I was willing to take the risk. I believe in myself and I believe in the American Dream. Main goal was to have increased job satisfaction, not money.
March 7th, started looking for other jobs and ownership opportunities.
Previous Pharmacy Store Back Ground and Purchase of assets and leasing space
Found out an extended relatives pharmacy that had recently closed was for sale (pharmacy not actually for sale, assets and a lease is what I bought). Store closed abruptly due to owner health and internal family drama, long story there. Technically I am opening a new pharmacy in the same location the previous one was for more than 50 years.
At this point I knew absolutely nothing about running a retail pharmacy and had been working in a hospital so there has been much to learn.
Basic Plan of Attack to be Successful
Location, location, location. The store is near a busy intersection and no chain pharmacies within a 2-3 mile radius, tons of foot and bike traffic as well. Update the store and offer new front end and Rx products and services. Advertise and constantly seek new accounts/services and stay abreast of latest trends. All things the previous store managers/owners never did. Constantly go out of my way to offer a more personalized and friendly service that patients can not receive at a chain pharmacy. Make everyone have a positive experience at my store.
April 22
Closed on the assets purchase and signed a lease in the building. Approximately 3000-3300 SQ Ft space.
Cost of assists/fixtures: 20K
Lease: 900/month for 2 years, with two 2 year renewal options as same price so a total of 6 years at 900/month.
May 16
Last day of work at the hospital and jumping in full time to work to open the pharmacy.
May 20
Went to the NCPA ownership workshop in Buffalo. I figured this was a good starting point to try and build a knowledge base and figure out what the heck I am doing. Good info, a bit overwhelming because I felt/feel a ton of pressure to succeed so I was extremely focused on every lecture. I would recommend attending if you are interested in pharmacy ownership. City of Buffalo was kind of dirty looking, reminded me of what New York must have been like in the 80s, saw NiagraFalls which was nice.
May 20-Present Day Overview of Activities
I have learned the basics of opening a pharmacy, get a board of pharmacy permit, get DEA permit, contract with a wholesaler, buying groups and 3rd parties, get NPI and NCPDP number(number assigned to store for insurance billing purposes) My understanding of why there are 2 separate numbers issued for billing is this: NCPDP was original organization that issued billing numbers for pharmacies and monitored data, when HIPAA came about the government decided that every healthcare entity, doctors, hospitals, pharmacies needed a standardized number that is the NPI(national provider number) so instead of getting rid of the old NCPDP# we know have both.
I spend a decent amount of time reading, and networking with other owners in the area, meeting with wholesalers/vendors and working on remodel plans. In my opinion meeting with people who have been or are still currently successful is key. The pharmacy ownership world seems to be very tight and many owners have been very willing to speak with me and offer advice and information.
Remodeling
Part of the potential this store has is that fact it has not been updated since the 1970s, no joke. There was still a large portion of the store devoted to VHS tape rentals, the tapes didn't go past the 80s. No one rented these; they were just taking up space. The store is relatively large, approximately 3000-3300 square feet. They had barely any front of the store merchandise, basically empty shelves. No one had kept up with the place and sought new produces and services in 20 years.
So I am updating the look and layout, using a contactor that is a friend of the family so I have to go with their schedule but I am getting a discount so it is worth it. Getting help from family/friends for labor to try and keep remodel costs down.
Estimated remodel cost 15k.
June 6, 7
did demo, removing all the old walls and counters and anything else that was going to be redone, filled two 40" dumpsters, hard days work. As far as the new design and layout, I basically went around to several other independents and chains to get some ideas. The goal is to have the store look newer and updated with that old/small town feel; I did not want to spend a ton of time and money researching the best layout and design. I did want a section of the pharmacy area to be used for compounding, so I included a back room with lots of counter space. Compounding seems to be a great niche that independents can get into that offers much better margins.
Vendor Meetings
So far I have met with McKesson and AmeriSource Bergen; I will probably try and meet with Cardinal and one other before making a decision. Went over what was required from me and the different options and how the process works. Basically the wholesalers need a business plan, cash flow statement, personal financial statement and probably the most important aspect proof that you have working capital, aka cash in the bank and a lot of it around 100K.
The majority of wholesalers seem to offer some type of financing deal for the initial drug purchase, for instance if you wanted to stock the shelves with 40k worth of meds you could finance that over 6 months (just an example).
Learned a ton of stuff that I had never been exposed to before when meeting with wholesalers which makes the process fun for me. I enjoy learning new things, sometimes I feel like I am getting a real life MBA.
June 16th
Had a personal online meeting and demo with Rx30 a pharmacy software vendor. Looks really great and has a ton of features that I believe would be very helpful. Cost could be an issue; I want to keep my costs as low as possible at first. Still going to research a few other pharmacy software management systems. I also will probably need to upgrade the Point of Sale equipment as well, unsure on what I will use. Might try and get used POS equipment.
June 17th
Called a few beer distributors to get information. That is a new product I want to offer, this is based on the location and demographics of the area. I want to have pseudo-convenience store products. Unlike Pepsi or Coke, beer distributors do not lease you a refrigerator to put their products in, this was an unexpected expense. I spent the day driving to several restaurant supply stores and used/refurbished equipment dealers gathering info. So far it looks like a used single door commercial fridge is around 800-900 and a double door is 1600. Still unsure how many refrigerators I will have but I am thinking 2 single doors and 1 double door. Then probably 3 other refrigerators with Coke or Pepsi products. The nice aspect about the beer distributors is that there was no minimum contract about, you can purchase as much or as little as you are selling.
June 18
Met with PPSC rep, a buying group. The world of retail pharmacy seems very convoluted, manufacturers, wholesalers, retail pharmacies and PBMs. Most drugs are bought on a cost minus bases, which sounds so strange, but my understanding is that everything gets screwed up with the manufacturers giving rebates to PBMs and wholesalers and this information is not published so it is hard to determine the actual costs. But basically PPSC is a group that allows you to have greater purchasing power in numbers. They also have rebates depending on your % compliance each month with buying certain generic brands, all very confusing at first but with time it should become clearer.
Week of June 20th
Next Week I am looking at finding some used pharmacy shelving and gondolas for the store. Like I said previously the store was not updated for 40 years so if I can get newer shelving at a decent price I am going to try and do that. I may have a lead to some used equipment.
I may also try and attend the Florida Pharmacist Association's annual meeting. This may depend if the contractor's electrician and carpenter are back in town and ready to start building.
July 5th
Spent last week and this week working on remodel. I try to be as involved as I can with the construction to cut down on costs and learn as much as possible. Luckily the floors in the place are terrazzo but really old and need to be polished and cleaned, found out that can run any where from 2.25/Sq Ft for a diamond grind and polish to 0.75/Sq Ft for a polish and wax.
I have looked at two different pharmacy management systems, BestRx and RX30, several people recommended RX30 but it looks to be more expensive. Both systems have tons of features and modules that can be added such as a nursing home module, they have point of sale equipment also. They both charge for processing of insurance claims, something like 0.07/claim or 0.16/new claim and 0.07/refill. Each also had modules for monitoring reimbursement amounts and flagging anything that was incorrect or low. One interesting feature was for any Rx that needed a prior authorization; the system would automatically grab the correct form and fax it to the MDs office. I still need more education on these systems before making a decision.
I met with a coke distributor; he kind of pissed me off. Came of some what condescending and made me feel like a little kid who didn't know what I was doing. Looks like it is Pepsi's lucky day, not to mention Pepsi has Gatorade, GO GATORS.
Week of July 10
Still working on the remodel, decided to redo the ceiling. This is not only aesthetic but energy saving as well, the lights in the store are very old and the heat they give off probably contributes to the monthly utility bill of 650(YIKES). Not to mention there are 9 ceiling fans that I want taken down, they make the store look cluttered and I like a smooth and seamless look. I need to get a POD and get all the merchandise and office equipment out of the store to redo the ceiling and to polish/grind the floors. The store front windows also have paint/decals/stickers on them; I need to try and removal all this clutter. I want a clear simple window where people can see into the store, hopefully attracting customers with the newer updated look. I want to put castor wheels on all the gondolas also, this will allow me to rearrange the store easily or I can push them out of the way to host large groups like say a diabetes education class or if a club wants to use the space after hours (had my buddy ask if his Linux group could meet there).
I want to advertise on buses and bus stops since the population surrounding the store uses public transit and the bus stops are positioned at busy intersections. I was quoted 200/month for an ad on a bus stop, they didn't have the stop I wanted available so I am going to wait till the store is closer to opening and see what bus stops are open for ads. I have not received a quote yet to advertise on a bus.
This past week I also came up with the idea to fix up or landscape a small median that is in front of the store. I think it would add some curb appeal to the plaza. I am not sure who currently mows the grass(weeds really), but if it is the city maybe I could adopt the median and I am sure that would be a tax write off. I am always looking for ways to make the store stand out and create a positive experience for customers. I try to visit other independent pharmacies as often as I can to learn and gather ideas and one store had like aroma therapy, basically used smell to enhance the experience in the store.
July 28th
On Craigs list I found a CVS that had moved locations and was liquidating many of their fixtures, so I got pharmacy shelving for around $110 per 36" section I believe. I needed some shelving and had not seen many used fixtures so I tried to jump on this one, I think it was a decent deal, at least it was used which is definitely cheaper than new. I also purchased 3 double door refrigerators and 1 double door freezer, this is for selling any drinks or frozen items such as beer, or buying soda from say a SAMS to sell or ice cream or other frozen products. I am going to try and reuse the gondolas/fixtures in the store front that were already there since I am already behind schedule which will put me over budget.
Remodel, definitely taking longer than I originally had planned, the project grew from cleaning floors and painting walls to basically redoing the entire place. The biggest problem with this is the anxiety that it causes me, I do not like being in a state of unknown. I think it is mostly because there is a certain amount of anxiety that goes into starting a business and the longer it takes to get open the longer the feeling of "will it work" persists. I try to keep organized and prioritizing and plugging along.
I did meet with a bus advertising agent and found out it costs 400/month for a side panel and it has a production cost of 150. I really want to target the immediate surrounding area and I think the bus stop shelter, bus panel and print magazine will be my initial advertising plans. I was quoted 900/month with a 4 month commitment for a full page ad in a print magazine. Advertising is pretty expensive, but I believe it is a must do, so I will have to try and make room in the budget for this.
I also try and think of what will draw people into my store, a few examples I have seen are being pet friendly and giving a doggie treat to anyone that brings in their dog, giving a candy or surprise bag for new prescriptions to anyone with children. Also having sales for certain products or partnering with other local establishments for sales on certain days. I tried reading through the city sign codes to find out how big, tall well lit of a sign I can have, not easy reading and not much flexibility, but I think I will try and clean up what is there and then have something new on the awning or overhang of the building since nothing can go on the roof of the building unless it is part of the building structure. I may explore putting some form of display screen in the window to advertise sales or new services; it would only be really functional at night when it could be seen easily from the street.
Aug 3rd
Forgot to mention in the previous update, I got the double door refrig for 1k each and the freezer for 2k. I was quoted 1600k for a used double door refrig in Orando Fl. So that seemed like a decent deal. I am currently working on trying to update the front of the store gondolas. I believe I found a solution, just change the brackets on the current ones and buy used lozier shelves to fit in them, I believe this will save me around 1500 bucks from buying new/used gondolas.
I haven't said much about my business plan or some of my different marketing/advertising ideas because I have become worried about corporate espionage, maybe a bit paranoid but I have heard some stories so I want to error on the side of caution. I will post these up when I have the store open and I am implementing them.
Spent today painting the bathroom and patching holes in the concrete wall. The electrician says I should decide where I want all the wiring in the store this week, so I have to try and plan for now and the future, really I want an outlet, internet, phone and coax every 5-6 feet. Also I would like to try and just make my own security system, I believe there is enough consumer electronic equipement out there to do this. Set up cameras, a computer server, DVR, motion sensors and even an autocall to the police. I really want to be able to check the cameras from my home computer or even phone, I need to find out if there are regulations that dictate having a security company monitor the place. But if this is another monthly cost I can cut out that would be great.
The post office near by may shut down,if so I would love to get a contract postal unit or CPU in my store. I have seen this at other independents and think it would be great to generate traffic.
I will try and post up some pictures in a bit so everyone can get a visual. Not much super new knowledge to give anyone at this time, remodel is going slow. I might try and diamond grind the terrazzo floors myself, a bit risky if I screw it up but will save probably 4k if I can do it myself.
End of August Quick Update
The board of pharmacy permit is in the mail so I keeping my fingers crossed that everything was filled out correctly. I learned that not every law enforcement agency carries the correct finger print cards and many of them only do finger printing at certain times on certain days, make sure to double check before wasting a trip or 2.
Spent about 30 hours trying to grind/clean/polish the terrazzo floors, they look better than before but still some visable discoloration and lines where counters or isle shelving used to be. At one point I used a diamond pad but I still think I needed something harder to really grind off the top layer.
I looked into the contract postal unit. I learned the post office can be a strange place. I figured it would be pseudo government run with lots of policies and rules on how business is conducted. Nope, I get an email in blue marker font with an attachment that doesn't have any official seal or really explain much. I also learned that I would negotiate with the local post master the % cut I would get from the sale of stamps, envelopes etc.
I think I came up with a solution to not have to buy new or used store fixtures. I am going to make them with slatboard and either cut my own shelves and formica or use the premade bull nose shelving for the slatboard.
October 12th
The board of pharmacy application was processed in less than a week much faster than expect and told it would take. I spoke to the board inspector several times on the phone before having the actual inspection. I tried to make sure I would have everything he was looking for and what would happen if I did not. I would recommend using a gut feeling here. Since I spoke to the inspector (not a pharmacist) I knew what to expect and he knew that I was trying to do everything right, when I went to schedule the inspection he said he would be out of town for 2 weeks and his partner (a pharmacist) could do it. I didnt want someone I had not spoken to do handle the inspection so I said screw it and scheduled it for the next day even though I wasn't sure I was ready. I had a feeling the guy I wanted was pretty chill and I was right, inspection passed no problem. Basically ran down a list of questions, made sure I had the correct signs and a running sink.
Next up is the DEA, I filled out the application online this week. It was pretty simple and straight forward, much easier than the board application. I have not heard back yet. I printed out their pharmacist manual to read and have ready incase I get asked a question.
I also started filling out paperwork to get insurance, mostly straight forward stuff. The confusing part is that many of the questions can vary with time, for instance how many employees I will have or services offerd. For example I may start with 1 employee but when things get busier I will add more, no compounding to start but plan on adding that later. I would ask around on who to call for insurance, I had a friend in the industry that gave me the name of someone to contact who did healthcare liability.
I have also been working on getting paperwork to the wholesaler for an opening order. The wholesalers will finance the intial order so you don't have to pay 40-50k up front. The downside is they require lots of stuff, its like applying for a loan. Financial statements, tax returns, banks statements etc. And if you have a partner in the business they will need all that information from as many as you have.
On the actual store build out front most recently I have installed 8 security cameras. I bought these online after doing some research, they have night and day vision, inside and outside cameras. Working at the store takes a ton of time. To me it is like doing a home improvement project for the first time, you think it shouldn't take to long but since its your first time it takes a really long time with lots of trial and error.
The project has been pretty hard so far, I expected it to be but its been different. Really not knowing anything about starting is hard, I had to learn as I went. For instance insurance, I have the same car insurance for 12 years and my home owners was done for me at closing. I had no clue where to start, do I just call up the local start farm agent and say I need liability insurance? I am hoping going through the process of starting a pharmacy from scratch will benefit me in the future, maybe consulting or helping others open stores.
Anyone know anything about importing or exporting medications or medical supplies? I was thinking about this today.
April 12th update
Sorry for going MIA for so long, got busy with several life events at once. Short story is my pharmacy is open, opened end of March. Took much long than I initially thought but I know realize it takes anywhere from 6-8 months to get going. I will try and update where I left off if I can remember the details.
Next up is the DEA, I filled out the application online this week. It was pretty simple and straight forward, much easier than the board application. I have not heard back yet. I printed out their pharmacist manual to read and have ready incase I get asked a question.
The DEA actually took several months to get approved. The inspection wasn't bad, I had heard they just basically want to know you are not going to be a pill mill(since Florida has had so much trouble with this lately) and they did. They asked about how I was going to get business and a few other things to test and see if I had planned to run a legitamate pharmacy. If you do all your homework and read the laws and all the requirements you will be fine also. Security is big with them as well, so layout and design can come into play. This didn't happen to me because I designed things with security in mind but I knew someone who had the DEA tell them to put up security glass by the pharmacy counter.
Now onto something really frustrating. To order control substances everyone knows the 222 forms. Well it can be done online now much like you order all your drugs from your wholesaler through CSOC(everyone calls is sea sauce). But even though you have a DEA license you have to send out more paperwork and jump through 3-4 more hoops to get it live. The computerized ordering seemed harder than the DEA inspection to me. And of course somewhere along the line something got screwed up and I did not know the security question the DEA had and I had to start all over. The DEA swears this security question is on the paperwork I filled out but I had no recollection of it and it was not any of the normal ones I use. I think they mixed something up.
Along the DEA CSOC lines in Fl we have the PDMP(prescription drug monitoring program) and pharmacies are required to upload their controlled dispensing records. This is to prevent patients from doctor shopping and going from pharmacy to pharmacy. I can look their records up which has been a huge help, I look up every patient that comes in with a CII (of course I get about 10 oxy 30mg patients a day that I turn away bc of this). You can see what doctors they have been to, which pharmacies they got it filled at, which drug, how many and days supply and the payment method. This is very helpful. Signing up for this PDMP was a nightmare and I think it has something to do with the DEA paperwork that got mixed but it took about an hour on the phone trying to figure it out. Eventually I just said look I have a BOP permit, I have a DEA permit, I am at my pharmacy and I am trying to do the right thing and use this data base, somewhere along the lines something got screwed up can you please just tell me the security question answer? And they did.
****Very important lesson. Make copies of every single form, contract, if its on paper and you are mailing it somewhere make a copy so you can reference it when they call. You will have done endless paperwork and will not remember what you wrote down.******
****Second very important lesson. Think very carefully about what address you put down on all the paperwork. Since my pharmacy was not open I did not go there every day. Well its logical to put down the pharmacies address for many things but if you are not there when the mailman comes, it gets returned and you waste time and go crazy wondering why whatever agency/company/person/entity doesn't have your paperwork. For awhile between the copies and this I figured I was actually one of the most unorganized people around, until I met several other folks trying to start pharmacies who had the exact same problem.********
I also started filling out paperwork to get insurance, mostly straight forward stuff. The confusing part is that many of the questions can vary with time, for instance how many employees I will have or services offered. For example I may start with 1 employee but when things get busier I will add more, no compounding to start but plan on adding that later. I would ask around on who to call for insurance, I had a friend in the industry that gave me the name of someone to contact who did healthcare liability.
I got liability insurance, it was around 1800-2000 for the year I believe. You will need 1million occurrence and 3million aggregate, all the wholesalers require this. I am still working on workers comp insurance. You do not legally have to have workers comp insurance until you have 4 or more employees. Yes you have to overestimate how many employees you will have at the end of the year, if you have less at end you get money back, if you have more you can pay a penalty. Also working on insurance for the contents of the building for disaster and theft. Funny thing is terrorism is actually on these and you can elect to be covered by it. I of course wanted to know who determines if the act was terrorism or not? A crazy person who drivers their car through the front window or the more commonly know plane crashing.
Read down, this got to long and couldn't finish it in this post.
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