Pharmacists are predicting another promising year for 2012, but it won't be without bumps in the road. Most pharmacists believe the pharmacy industry will continue to prosper in 2012; however, optimism isn't as high as it once was and pharmacists are predicting slower growth, fewer raises, and an increased surplus of pharmacists in the year ahead.
These were some of the findings from Drug Topics' 2012 Business Outlook Survey, an annual survey of more than 700 community, hospital, and long-term-care pharmacists that examines the industry's current climate and future prospects. This year's survey was fielded for 1 week in late October.
Lonny Wilson, DPh, president of the National Community Pharmacists Association (NCPA) and owner of 3 independent pharmacies in Oklahoma, said that pharmacies will be affected in 2012 by Medicaid cost reductions and continued pressure from third parties to lower reimbursements.
"I think 2012 has an opportunity for growth in sales, but certainly with decreased margins," he said.
Despite the challenges of the past year, most pharmacists are reporting a successful 2011, and they expect that trend to continue through 2012. Of the 579 community pharmacists who responded to the survey, 77% said they were expecting an excellent, very good, or good business year in 2011, and 60% expect their net profits for the year to either increase or stay the same as they were in 2010.
When asked about the business climate for 2012, 70% of community pharmacists are predicting an excellent, very good, or good business year.
That optimism extends to health-system pharmacists as well. According to the survey, 71% of the 155 health-system pharmacists who responded to the survey expect an excellent, very good, or good business year in 2011, and 73% predict the same for 2012.
Community pharmacists have enjoyed another relatively successful business year, but the economy continues to struggle and consumer confidence has yet to fully rebound.
Nearly half of community pharmacists (49%) described consumer confidence levels for retail spending as fair, while 28% described them as good, and 18% described them as poor. Similarly, 48% described the current economic climate for all retail businesses as fair.
Overall business view for 2012
In addition, the continuing recession was cited by 77% of community pharmacists as 1 of the negative factors affecting their business this year, along with lower reimbursement from third parties (cited by 71%) and mandatory mail-order programs (cited by 64%). While community pharmacists are predicting a relatively positive business outlook overall for 2012, 35% believe that their net profits will decrease in 2012, and 24% predict that they will remain the same. Of those predicting a decrease, the average decrease expected was 11%, while the 25% of community pharmacists who anticipate an increase in profits are expecting an average increase of 8%.
Growth in the community pharmacy market also appears to be slowing, with 59% of community pharmacists reporting that their company does not plan to open any new pharmacies in 2012.
"The companies are opening fewer stores; they are not expanding the way they normally did before," said James Scanlon, BS, RPh, a pharmacy manager at a Target store in Massachusetts and a Drug Topics Frontline editorial advisory board member. "It's much more calculated. They are spending an awful lot more time picking the right locations and closing poor locations. It's very different than it was 4 or 5 years ago." While the pharmacy industry is not immune to challenges, it has also seen its share of positive influences. Some of the top positive factors in 2011 that affected business were major brand drugs going off patent (65%), medication therapy management [MTM] (29%), and the increase of e-prescriptions (40%).
The majority of health-system pharmacists (71%) believe that they will definitely or probably be able to stay within their budgets for 2011, while 25% were less confident, reporting that they probably would not stay within budget. The average department budget for survey respondents in 2011, including drugs, personnel, and miscellaneous expenses, was approximately $27 million.
For 2012, nearly 46% of health-system pharmacists anticipate an increase to the drug budget compared to their budget for 2011, while 40% expect that the drug budget will stay the same and 12% believe it will decrease.
Health-system pharmacists weren't just staying within budget in 2011; they also reported actions taken by their organizations this year to improve patient care. Some of the more common actions taken during 2011 included increased efforts to reduce drug errors (88%), steps to document pharmacy interventions (62%), efforts to reduce hospital-acquired infections (52%), and reconciliation of medications for incoming and outgoing patients (50%).
According to the survey respondents, health-system pharmacists plan to take the same top 4 actions in 2012.
Doug DeJong, RPh, MBA, FASHP, senior director of pharmacy for Saint Luke's Health System in Kansas City and a member of Drug Topics' Frontline editorial advisory board, said that documenting pharmacy inventions is an important way beyond the dispensing of medications for pharmacists to show their true value as healthcare professionals.
"Historically, we've been tied to that unit of service — the number of drugs that we move — but our pharmacists' true value does not come from just moving the drugs. It comes from the clinical contributions that they make outside of that, and we don't always document those fully. I think in an age of increased scrutiny, people are looking for increased urgency to document," he said.
More hospitals are also embracing technology. According to the survey, 53% of the pharmacists surveyed reported that their hospitals have a computerized physician order-entry system, 52% have a bedside bar-coding system, and 64% are using electronic health records.
Those figures are likely to continue to grow in the coming year. Of those who don't already have the systems in place, 56% plan to install computerized physician order-entry systems in 2012, and 37% are planning to install bedside bar-coding systems.
The Saint Luke's Health Care System plans to deploy a computerized physician order-entry system across the system's 11 hospitals in 2012, DeJong said, noting that while many hospitals have had plans to implement new technology, healthcare reform has helped drive the implementation.
"I do believe this is going to be a big cultural change for medical staff especially, but the long-term benefits of this are going to be enormous," DeJong said. While the pharmacy industry has enjoyed some consistency over the years, several findings from the Drug Topics business survey signal some change as well.
The number of professionals in the field has grown in recent years, and while only a few years ago many pharmacists were reporting a shortage in their states, many are now noting a surplus. According to this year's results, 69% of community pharmacists and 56% of health-system pharmacists believe that there is currently a surplus of pharmacists in their states.
Pharmacists are also less optimistic about raises this year. While last year 50% of community pharmacists believed they would be in line for a raise, this year only 31% expected a salary increase, and 51% said they did not think they'd see one in 2012. Of those expecting an increase, the average increase expected was 4%.
Most health-system pharmacists (62%) believe that pharmacist salaries in their departments will remain the same in 2012, while 27% are expecting an increase and 6% are expecting a decrease. Of those expecting an increase, the average increase expected was 2%. Scanlon believes that fewer companies are offering raises because the supply of pharmacists in the field is growing.
"Life is supply and demand," Scanlon said. "If there are so many pharmacists out there, why do they have to raise salaries?"
No profession is without its challenges. The ones facing pharmacists in 2012 are nothing new.
Community pharmacists identified the same 3 top challenges as they did in last year's survey, reporting that their foremost concerns in 2012 will once again be competition from mail-order pharmacies (cited by 52%), the decrease in state Medicaid rates and Maximum Allowable Cost (MAC) and Federal Upper Limit (FUL) programs (cited by 45%), and competition from chains offering generics at low or no costs (cited by 36%).
Tom Menighan, RPh, MBA, STD, executive vice president and CEO of the American Pharmacists Association (APhA), believes that for pharmacists to overcome these challenges they will need to embrace new roles in providing healthcare services. "I think the fact that major chains and many independents and others are moving very aggressively toward a service model is an indicator that they see the buy-low sell-high model as being broken," he said."We can talk about the continued challenges down that same path, or we can change the dialogue."
Chrissy Kopple, vice president of media relations for the National Association of Chain Drug Stores (NACDS), believes that one of the pharmacy profession's greatest challenges will also be its greatest opportunity. Pharmacists need to raise awareness of the value they can provide in healthcare delivery, she said.
"It is imperative to spur action on the fact that providing one-to-one pharmacist-patient interactions can help improve health and reduce costs," she said. "Services such as medication therapy management, pharmacist-administered vaccinations, health screenings, and education can help keep patients healthier while reducing reliance on high-cost forms of care."
Pharmacy associations are often in the trenches, fighting to help the industry overcome challenges and assume new roles within the profession. According to this year's survey, 43% of community pharmacists are satisfied with the way their pharmacy associations have represented them this year, while 29% were not satisfied, and 28% didn't know.
Among health-system pharmacists, a preponderance (57%) reported satisfaction with their association representation, while 18% said they were not satisfied and 25% didn't know.
When it comes to Medicare Part D, opinions among pharmacists are divided. When asked what kind of impact Medicare Part D had on their business, 31% of community pharmacists cited a positive impact, while 20% believed it had a negative impact, and the majority (49%) weren't sure.
According to NCPA's Wilson, fewer community pharmacists view Medicare Part D in a positive light because the environment has changed over time. When the program began, some pharmacies saw a greater volume of patients at their stores, increased compliance among the Medicare population, and reimbursement rates that weren't very different from the community sector.
"Now, CMS has stimulated competition on the part D side, and our contracts, or our offerings, are lower and continue to be lower; the MAC values have eroded ... So, I think that's why pharmacists are saying there is not a positive impact," Wilson said, adding that audits have also played a role in how the Part D program is viewed.
Marvin Moore, PharmD, the owner of The Medicine Shoppe in Two Rivers, Wis., said that 1 of the advantages of Medicare Part D is that it has opened up an opportunity for pharmacists to provide patients with MTM services. Of the community pharmacists surveyed, 43% reported that they were providing MTM services under Medicare Part D; 23% were paid an average of $1,360 in 2011 for providing the service. However, not all who provided MTM were paid for delivering these services (56%).
Moore, who also serves Drug Topics as an editorial advisory board member, reported that he has heard many pharmacists say that they don't have the time to provide MTM services. According to Moore, it's important to make the time. Independent owners or chain managers may need to reevaluate how pharmacists are spending their days, he said, in order to ensure that the pharmacists' daily tasks are the best reflection of their abilities.
"We've got the training, we've got the skills, we need to do this," he said. "If we don't more fully embrace MTM, then somebody else is going to step into that role."