Longtime industry veteran Mark de Bruin in July signed on with wholesaler H. D. Smith as corporate VP managed care. Drug Store News sat down with de Bruin recently to discuss the managed care climate for the independent pharmacy operator and how the business of pharmacy continues to evolve.
DSN: What are the challenges facing managed care networks today?
Mark de Bruin: Let me begin by saying pharmacy in general has a tough position in terms of relevance in health care. Pharmacy is typically not thought of the same as the medical profession, and as such, it is not a focal point for healthcare legislation. Secondly, the biggest issue for pharmacy is the reimbursement currently in the marketplace. There’s no recognition of the professional services provided by pharmacy. There is enormous consolidation within the industry, which concerns particularly independent pharmacy but certainly [also] all of pharmacy. … The other concern is just [that] the general business climate for pharmacy is difficult today. The education levels of pharmacists are extraordinarily high; that builds into a factor of tremendous cost for a pharmacy provider. … There is little recognition by the healthcare system about the value that the pharmacist provides. The last concern is that the aggregation of the industry relative to the government … leads to cost pressures for retail pharmacy. That in turn leads to a very difficult business climate.
DSN: The perception of the pharmacist as healthcare provider — is that evolving? Moving forward?
de Bruin: The pharmacist is the best-positioned healthcare professional in the marketplace because of their availability [and] accessibility to the consumer. … The entire economics of pharmacy are based on product delivery. That is not where the value of pharmacy lies; the value of pharmacy lies in the information and the patient care that can be provided. There is very little recognition for that.
DSN: With your experience at both ends of the spectrum — managed care and pharmacy operations — what are some of the synergies afforded through H. D. Smith?
de Bruin: What is unique about H. D. Smith is their focus on independent pharmacy — the independent healthcare professional, locally based in these communities and towns where health care is less accessible. The aggregation of a network by H. D. Smith to negotiate contracts is important. [For example], we can eliminate the administrative burden, which is an absolute nightmare for pharmacy today, relative to contract administration. We also provide the products and services that are important to independent pharmacy to allow them to compete in the larger landscape [dominated] by the large chains. We have [offerings] like reconciliation, quality control, billing of unique claims [and] the ability to look at a pharmacy’s data and maximize their profit. We provide leverage in the marketplace relative to contract negotiation. Those synergies are very important to the independent pharmacy owner.
DSN: How many pharmacies are part of the H. D. Smith network?
de Bruin: We have currently right around 1,100 pharmacies. Of those 1,100, they are the best of the best. They are the survivors of a difficult marketplace.
DSN: How does H. D. Smith differentiate the managed care offering in today’s business climate?
de Bruin: H. D. Smith’s primary focus is on the individual community pharmacy — the local provider on the corner of Main and Main. That focus is considerably different than a focus on the chains. We offer products and services that are not readily available to the individual proprietor. We understand the business. I come from pharmacy; I’ve run pharmacies for a long time. I recognize the challenges. The differentiation comes from understanding the business, from aggregating their volume for negotiating leverage and from providing product solutions that they are unable to obtain themselves.