..Information to Pharmacists
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Your Monthly E-Magazine
AUGUST, 2003

MARK COLEMAN

Medical Centre Perspective

Woolworths & Pharmacy

It is some time since I have submitted an article for this publication, but I was moved to do so when I came across an editorial by well-known Radio 2GB commentator, Alan Jones.
Given that pharmacy is quite often "shafted" by the media, it was a pleasant surprise to see that a media personality was defending pharmacy, and opposing someone else who was "shafting" pharmacy.
Not only that, it was the second time he had commented in pharmacy's defence in recent times.

Other commentators in this publication have made the point that past forays by Woolworths were simply to "stir" and test the waters.
But the current onslaught has the feel of a very determined battle plan that will end up, in the collective minds of Woolworth's executives, with full ownership of a chain of pharmacies, located inside existing Woolworths' retail stores.

But I don't think it will stop there.

Woolworths' marketing strategy has been to run specialty retailing as a separate entity e.g. Dick Smith electronics, and while there is a "fit" with supermarket and pharmacy, because of the retail mix, the specialty healthcare side does not fit comfortably.
Major retail outlets tend to attract "well-person" shoppers, for the simple reason that someone who is not feeling well, or who is looking for some personal advice, will not feel comfortable in a mass shopping environment.
Well-managed patients with chronic ailments will part with some of their prescription business whilst shopping, but they will still want to maintain contact with "their pharmacist".

This is what Alan Jones had to say on the 23rd July 2003:

"Well Woolworths are planning, we are told, to move to the next stage of a long term program to operate a chain of full service pharmacies in conjunction with its supermarkets.

And the government has to stop it.

It's said they have completed the first phase of their pharmacy plan, wrapping up a 12 month trial of a broadened health and beauty offering in two New South Wales supermarkets.

Well that's where is should stay.

We don't want Woolworths dishing out medicine or prescriptions.

So the government has to move here.

This is ridiculous - the establishment in supermarkets of full service pharmacies with dispensaries manned by registered pharmacists.

What next?

We are reaching where it will just be Woolworths at one end of town and Coles at the other and everyone will be wiped out.

The Pharmacy Guild of Australia has opposed the entry of the major food retailers into pharmacy on the grounds that quality of service, range of goods and counselling would be compromised.

And I agree with them.

However, Roger Corbett said Woolworths will be moving to the next stage of its pharmacy expansion, but hasn't put a timetable on it.

Well government better beat him to the punch."

My experience has centred on corporate medical centres and what that has meant to the single unit GP Practice.
Corporate medicine has succeeded in systemising very profitably, those elements of medicine that lend themselves to a form of "mass-merchandising".
It is also a form of vertical integration and cross-fertilisation.

To a certain extent, GP's have resisted corporatisation, but have enjoyed financial and lifestyle benefits when they did incorporate, that have more than offset the more time-intensive personal form of solo general practice.

Those of their colleagues still wishing to preserve their private practices have done so, with difficulty, and have had further salt rubbed into the wound, when they are faced with patients who come to them for specialty information and treatment, but give the "bread and butter" components of their treatment to the corporate practice.

Does this sound familiar?

Why will patients/customers do this?

Because of price and convenience -bulk billing, extended hours, prompt appointments with no waiting.

One of the components of the corporate medical centre, the pharmacy, has had difficulty in developing because of location rules for pharmacies, the fact that pharmacies must be controlled by pharmacists, and the outright opposition of the Pharmacy Guild of Australia.

What seems to have been forgotten here is that Woolworths, in its own right, could open up medical centres, the same as other corporate investors.
And a willing general public would support any such share issue that had the Woolworths name attached.
So just go back up the page when I talk about a "pharmacy fit" with a supermarket environment, and then ask yourself the question, "Would a specialty pharmacy be a good fit with a corporate medical centre?"

There is no doubt about the answer, and there is no doubt that Woolworths would see it as a more suitable strategy to conquer the ownership and location issues with pharmacy, before investing in medical centres.

So one has to ask why the Pharmacy Guild is not looking to a marketing strategy to compete with the newer and stronger forms of pharmacies that will eventually arrive in non-pharmacist hands?
The solo pharmacy practice that is in the majority now, will only be able to provide a marginal service in the face of the opposition that can be expected in the future.

I cannot see any alternative than to have pharmacists form corporate entities and build their strength so that they will have the resources to battle for a majority of market share when Woolworths Rx eventually arrives.
It may be an unpalatable decision for solo pharmacists to have to make, but it is better to make it in an environment where pharmacy legislation still favours pharmacist-only ownership or control of pharmacies.
A pharmacist controlled corporate entity would still have the edge on a Woolworths Rx because of training and attitude.
The environment would simply be "different".

The alternative may be for the future that you will sell out to Woolworths Rx and work for them as a manager or pharmacist-in-charge.
Make no mistake, if you opt for this approach, you will be "screwed" on wages, and you will be subservient to the general store manager, who will put pressure on your professional discretion.

This has long been the experience in the UK and the US, and recent examples have appeared in AuspharmList, the Australian pharmacy bulletin board, where pharmacists have been sacked for simply being professional and patient-orientated or threatened to be "blacklisted" if they did not conform to unprofessional directives.
So it is now "crunch" time for Australian pharmacists and decisions can no longer be put off.
Both the Pharmacy Guild of Australia (PGA) and the Pharmaceutical Society of Australia (PSA) have to demonstrate some far-sighted leadership here, and perhaps it is time for the PSA to emerge from the shadow of the PGA and lay down a variety of practice structures that will give pharmacists genuine options.

Meanwhile, it would not hurt for our pharmacy leaders to acknowledge some thanks to Alan Jones for his sympathetic help.
Perhaps they have already done so, but it would not hurt to build on the experience.
And despite what Alan Jones advocates in the way of government support, I would not hold your breath because of the weight given to economic rationalism.
The only counterbalance is the planned approach to National Health, which currently favours restrictions on ownership and location.
My feeling is that long-term, this approach will eventually be proven to be too unwieldy and a severe restraint on competition, and collapse will be the outcome.
An ideal situation for Woolworths Rx (and others) to pick up the pieces and negotiate a more profitable deal with governments.

What can you do for the moment?
Well, you could approach your professional and political organisations and press them for answers, and you could make a submission to the new Senate enquiry into the Trade Practices Act.
The Senate enquiry is going to investigate whether the Act adequately protects small business against anti-competitive or unfair conduct.
It will also consider other measures to assist small business.
This forum would be a good starting point to register the special nature of pharmacy, and why pharmacy health care needs to be protected, given that Australian pharmacies are considered to be "best practice" models when compared to world standards.
Hopefully the PGA and the PSA will be involved in this inquiry.

Finally, you could also write and thank Alan Jones for his support, as it may be needed again.