About the Pharmacy and Drug Store Industry in the U.S

The population is aging, and the occurrences of chronic health conditions are increasing. Therefore, the requirement for legal and safe pharmaceuticals has gone up in the past 30 years.

Pharmacies distribute prescription medicine and OTA drugs to patients. Anyhow, drugstores have the trickier, more varied distribution function as these outlets dispense drugs in specific dosages, follow mandatory storage conditions and methods, and give patients valuable tips.

Drugstores operate at a broad range of places, like communities, clinics, nursing homes, and hospitals. Independent pharmacies, supermarkets, and online drugstores are the other medicine retail outlets. Purchasing from online drugstores is very convenient for people who cannot go out of their residences. Usually, miscellaneous goods such as confectionaries and beauty products contribute to a portion of sales of the kinds of retail stores.

As in the case of other vocations associated with health, lenders consider pharmacists as high-success professions. Therefore, a pharmacist is a ‘good credit risk’ for a lender, which essentially means that the former is likely to repay their loan. Anyhow, it is important to understand the hidden dangers and operational hurdles of pharmacy practice, to get the loan.

The Past And Current Conditions of Pharmacy Financing

The following chart demonstrates prescription medicine costs in the US between 1960 and 2018. Back in 2000, the expenditures amounted in number to $121 million or so. Projecting through the year 2019, the figure is likely to go up, to above $338 million.

Almost everyone regards a pharmacist as a familiar person who they can approach for advice on not just over-the-counter (OTA) drugs but also prescription medication. For instance, many people will remember the pharmacist Mr. Gower from the classic 1947 movie entitled ‘It's a Wonderful Life’. The business of selling drugs is virtually unrecognizable from the iconic and fictional business model as it is much more complex nowadays.

Independent drugstores dispensed around 1.50 billion prescription medication per annum, which accounted for almost 40% of retail prescription drugs. The average private pharmacy saw overall sales of $4 million or so and around $3.7 million prescription sales in each location. More than 26% of private drugstore owners have a holding in a pharmacy or two. The average private community retail pharmacy distributed 64,169 prescription drugs in 2010, around 3,000 more than in 2005.

Pharmacists Have The Admiration And Trust of the People

For years, pharmacists collected copayments from customers, and they produced requests for the amount reimbursements to insurers. Insurance providers were very slow to pay, but pharmacists realized that they would be paid in time. As a reaction to the ‘Obamacare’ act, producers increased drug prices, while insurers started to cut reimbursements for several well-known products. This has forced several pharmacists to fill the void between how much drugs cost and what insurance policies pay.

As per a Business Insider report, Wellmark slashing reimbursement amounts by 50%, meaning a loss of thousands of US dollars for an independent drugstore in Iowa City. Wellmark was the biggest insurance carrier in the US state of Iowa.

The insurer’s move resulted in many headaches for US community pharmacists. Then, the pharmacist concerned requested Wellmark’s CEO to rethink the decision, considering that his drugstore was dealing with patients who were cheaper than those in pharmacies around it. The insurer’s chief executive officer revaluated his company’s drug reimbursement policy, with the interest of private pharmacies in mind. Through the collaboration between both parties, the insurer could amend the rates of reimbursement for private pharmacists, while reducing total healthcare expenses for their customers having insurance.

These are some of the recent developments that show how private pharmacists can provide a higher service quality, thereby better patient results and increasing the net profit of insurance carriers. This form of collaboration establishes a standard for American community pharmacists that can be followed in the future, and it provides another sign of the sector’s longevity. It is a different reason why a pharmacist gets the kind of financing that is advantageous to them after they apply for a pharmacy business loan.

Other Pressures

Besides physical chain store competition, independent businesses also encounter much competition from online platforms such as Wal-Mart and Amazon. Besides being two Fortune 500 companies, these also find a place in the list of the world’s largest marketers.

You might feel that due to such competition, no one would dare to get into the marketplace and like to apply to lenders for pharmacy loans. Unlike what you might feel, independent and family-owned pharmacies know how to flourish among the big-name entities threatening to destroy their business.

Human Touch Irreplaceable For Independent Pharmacists

Big local and national chain pharmacies in several areas may attempt to take the place of corner drug stores, but these cannot replace the all-important human touch.

Every community pharmacist is easily accessible to patients in that people can visit them with or without an appointment. This is among the most lasting qualities of American community pharmacists. Unsurprisingly, private pharmacists have survived the situation of numerous corporate companies and chain pharmacies consolidating. This unique characteristic makes sure that private pharmacies are likely to last for a long period.

Pharmacists Are Responsible For:

• Review and interpret physician directives
• Prepare drugs
• Note contraindications and recommend different measures when treatment options are told to be not used
• Monitor the medication therapies of patients

The above are technical requirements, plus these form a safety net for patients. Customers tend to rely on pharmacists to the same degree as physicians.

As per the National Community Pharmacist Association, the US has more than 22,000 private pharmacists with over 250,000 workers. Around 26% of drugstore owners possess multiple pharmacy locations, which shows that the industry is healthy despite the gradual progress of national retail chains.

Their community integration has assisted the private pharmacist in dealing with inconceivable odds against them in the form of corporate competition. As per the NCPA Digest, private pharmacies donate more than $4,000 to around 10 regional community groups every single year. Several private pharmacies are aware of their customers well enough, plus they know the medical pasts and families of the people. This kind of service is virtually irreplaceable.

Financing The Private Pharmacy – Innovative Sources of Revenue

Today’s pharmacist does more than just distributing drugs. They are more of a specialty services provider.

The Main Trends Converging:

• Progress in the medical research field and treatment
• An aging US population (numerous people born in the ‘baby boom’ period becoming seniors every single year)
• Continuance of specialized treatment options

The process of the trends converging has led to the frequency and growth of prescription drugs for seniors, plus a need for coordinating drug administration and therapy.

Some Of The New Services That Private Pharmacists Provide Are:

Medication Management Post Discharge

Drug administration for people who are either discharged from hospitals or receiving care at outpatient medical facilities.

Prescription Administration And Delivery Service

A different layer of community integration and personal touch, at the same time as catering to groups of individuals having mobility issues.

Sales And Help With DME (Durable Medical Equipment)

Aiding millions of individuals in accessing electric beds, canes, walkers, wheelchairs, and other pieces of equipment that are medically beneficial.

Drug Therapy Management

Educating individuals on their health issues and the drugs they utilize to deal with these problems, for better results.

Immunizations

Improving public health through the prevention of diseases and containment of outbreaks; pharmacists can vaccinate people in every US state.

Comparisons Of Medicare Plans

Guiding seniors on Medicare plans.

Asthma Management

Teaching patients on forms of drugs and ways to utilize these products, plus offering referrals to US physicians to facilitate more engaged medical care.

Smoking Cessation

Helping people who lack the determination to quit smoking to do it, through nicotine replacement goods, continual support, and advice.

Pharmacy Finance Tips

PBA Health identified the accounting errors that pharmacists should not commit, and some of these are as follows.

• Not being aware of your financials
• Failing to have a formal system of accounting in place
• Not being on schedule with both reimbursements and receivables
• Failing to be fully aware of costs
• Not seeking the services of a person specialized in accounting

It is more vital than before to finance your pharmacy business as the function of retail pharmacies evolves while the technology and demographics change. Earlier, it seemed that private pharmacists are unlikely to last for a long time. Despite the expected death of the pharmacists, recent developments prove that there is a resurrection in their value, with a deep effect on patient results and healthcare quality. Modern pharmacists should not only realize the opportunities but also correctly finance their businesses, to tackle the challenges in this ever-growing segment.

Medical professionals encounter financial requirements, as with those who own other kinds of businesses. Pharmacists tend to experience cash flow problems due to slow-paying insurers and disputed insurance reimbursements. They also should contemplate the lofty costs of digitalizing medical records, increasing rents, ever-growing insurance rates, and all other costs involved in operating their pharmacies.

Types of Loans for Pharmacies

SBA Loans

An SBA loan is among the most sought-after forms of financing in several sectors. These provide the optimal terms and interest rates to borrowers who seek term loans. The SBA does not lend money directly to customers; instead, they work with select financial institutions while protecting these lenders from borrower defaults. The organization guarantees a major portion of a business loan, which lets qualified lenders offer people higher amounts on terms that are more advantageous to customers.

It is tricky to be eligible for an SBA loan, plus the product makes the borrower produce much more paperwork than they would like. Anyhow, given the low financial risk in providing business loans to pharmacists, SBA’s loan scheme is a good option to finance pharmacy businesses.

What You Can Expect From The Loan

Loan amount: Ranging between $5,000 and $5,000,000

Payback term: Anywhere between 5 and 25 years

Rates of interest: Starting from 6.75%

Approval Time: Around 6 weeks

Standard Bank Loan

A conventional bank is the primary small business loan source even now. Almost every business will discover that they can get some funding from the institution in which they already do banking.

The bigger national banks typically have loan schemes specialized for pharmacy business professionals. The high rate of success for pharmacies causes loans designed for them to be an appealing proposition for financial institutions. When it comes to financing the business, banks usually provide favorable interest rates. Anyhow, bank loan terms tend not to be as advantageous to people as SBA-guaranteed loans.

What You Can Look Forward To Getting At A Bank

Loan amount: Between $30,000 and $5,000,000

Payback term: As far as 10 years

Rates of interest: Starting from 7%

Loan Approval Time: About 4 weeks

Alternative Lender Financing

Non-bank lending institutions like Fundrly offer loans for pharmacy businesses, with a speedy approval to boot. The institutions often offer shorter loan approval cycles, less paperwork, and lower credit criteria than the aforesaid sources.

Pharmacists must anticipate seeing higher rates of interest and fees, related to the quick approval and lower criteria involved in this form of financing. If you now seek a fast way to finance your pharmacy, then you might be better off approaching an alternative US lender. Always know that these institutions are not bound by the regulations identical to US banks. So, it is a must to peruse loan documents before you agree to the terms and conditions.

Things To Expect From A Non-Bank Lender

Loan amount: Between $2,500 and $250,000

Payback term: Between 3 and 18 months

Rates of interest: Starting from 10%

Loan approval time: A single business day only

Business Credit Line

A business credit line lets you withdraw an amount as per the predetermined limit. View the product as a combination of a loan and credit card, which are designed for business purposes. Similarly to a business-purpose loan, a non-collateralized credit line offers the funding that is useable to cover general business costs. As with the credit card, it comes without any lump-sum payment; you will borrow just the amount you require, plus pay interest on just that borrowed amount. It comes with a revolving credit facility. It is possible to source the credit line from banks or other lending institutions.

Granting it to a person with a marginal risk of default is a potentially costly idea for a bank. In the event of having a solid credit profile, it would be possible to negotiate both lines of credit terms and rates. In this situation, shopping around would be the best thing to do.

What Pharmacists May Expect

Loan amount: Between $10,000 and $1,000,000

Payback term: Between 6 months and 5 years

Rates of interest: Between 7 and 25%

Approval Time: A business day