Staying Independent: Small Pharmacies Get Creative to Stay in Business | General Wellness | Hudson Valley | Chronogram Magazine
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Staying Independent: Small Pharmacies Get Creative to Stay in Business 

Last Updated: 05/04/2022 5:54 pm
click to enlarge Jared Nekos, the owner and pharmacist of Dedrick’s Pharmacy
  • Jared Nekos, the owner and pharmacist of Dedrick’s Pharmacy

When a retail chain pharmacy in New Paltz lifted its mask mandate last year, customers started asking why Dedrick’s Pharmacy hadn’t done the same. Jared Nekos, the owner and pharmacist of Dedrick’s since 2013, still remembers his response: The other pharmacy didn’t consider itself “healthcare.” Making that distinction, at a moment when healthcare providers were still legally required to enforce masks, was clarifying for him. “They look at everything as transactional. We look at it as a relationship. We want your health outcomes to improve. We want your quality of life to improve,” Nekos says. And he believes that same approach defines “most, if not all, independent pharmacies.” 

But that approach is increasingly rare in an industry dominated by massive corporations. Nekos is quick to say that pharmacists themselves are not at fault. Rather, a system plagued by vertical integration—pharmacies merging with insurers and pharmacy benefit managers (PBMs), which determine drug availability and costs—has made it nearly impossible for small, independently owned pharmacies to survive. For some independent pharmacies in the Hudson Valley, thinking outside the box has helped them stay afloat. While their focus on customer service aligns with the spirit of independent pharmacies, they’re also branching out into wellness and proposing new business models. 

The Many Threats to Indy Pharmacies 

The challenges for independent pharmacies started well before COVID-19, but the pressures have only been growing since the pandemic began. Between 2003 and 2018, about 16 percent of independent rural pharmacies closed, and according to the Drug Channels Institute, in 2020 the number of independent pharmacies in rural and urban locations fell to below 20,000 for the first time since the institute began tracking closures in 2010.

Independents lack the resources of mega-chains like CVS, for instance, which can purchase large quantities of prescription drugs at discounted rates from pharmaceutical companies. CVS actually owns a PBM, CVS Caremark, so the company can set its own prices and reimbursement rates. Meanwhile, independents get squeezed. Dedrick’s Pharmacy gets reimbursed for less than what it pays for about a third of prescriptions, according to Nekos. Many pharmacies are also being hit with direct and indirect remuneration (DIR) fees, a Medicare loophole that has allowed PBMs to take back pharmacies’ revenue based on a hazy set of quality measures. Additionally, health insurance providers may implement mandatory mail-order policies, requiring that patients get prescriptions by mail from insurer-owned pharmacies. Nekos says he “lost a ton of customers” recently when the insurer for three local school districts switched to a mandatory mail-order policy. 

There’s been some progress toward reining in PBMs in New York State, where 100 state bills were introduced last year that would provide greater transparency around how PBMs operate. A new law passed in January 2022 requires PBMs to register with the State Department of Financial Services and sets new standards for price transparency and conflict-of-interest disclosures. But even more is needed, according to Nekos and other local independent pharmacists. “We cannot just be prescription-filling professionals. We are not going to win that fight,” says Enrique Reynoso, the pharmacist and owner of Beacon Wellness Pharmacy. “The lobbyists for the big chains and pharmaceutical companies have infinite money.”

click to enlarge Enrique Reynoso, Beacon Wellness Pharmacy
  • Enrique Reynoso, Beacon Wellness Pharmacy

Trading MD Appointments for Pharmacy Visits

Granting pharmacists healthcare provider status, or the ability to be reimbursed for additional services beyond filling prescriptions, could help the plight of indy pharmacies. Although pharmacists in New York State can administer numerous immunizations, they lack the authority granted by many other states to prescribe certain drugs and provide point-of-care testing. California, Colorado, New Mexico, and Oregon allow pharmacists to prescribe birth control, for example, and 39 states permit pharmacists to perform certain noninvasive tests, such as blood-sugar monitoring. New York State Senate Bill S5092, currently in the Senate Rules Committee, would add pharmacists to the list of licensed healthcare professionals able to perform certain kinds of laboratory tests. 

Provider status could benefit independent pharmacies as well as patients, given pharmacists’ depth of medical knowledge (a Doctor of Pharmacy degree takes six years to earn) and accessibility compared to primary care offices, which can have long waits for appointments. In the US, about nine out of ten people live within five miles of a pharmacy, according to the National Association of Chain Drug Stores. 

“Giving pharmacists providership abilities will go a long way for us. It would not only help with the profession, but also the healthcare crisis that we’re in. We have a shortage of doctors and nurses right now, so why not use the healthcare providers that you do have to their maximum ability?” says Reynoso. 

If the pandemic offers any indication, some independent pharmacies could be better positioned for an expanded role as providers than large retail chains. Reports of overworked, burned-out pharmacists and technicians quitting their jobs at corporate-owned pharmacies have surfaced repeatedly over the past year, leading to staff shortages and closures. By some estimates, almost 2,000 pharmacies closed in the US between December 2017 and December 2020. Near the end of last year, CVS shut down about 10 percent of its stores. The Hudson Valley has experienced this trend too. Nekos recounted hearing about a short-staffed CVS in Hudson open only four days per week, a Walgreens in Kingston that closed for the entire month of January, and a decision by Highland Walgreens to shut down on weekends without telling customers.

Keeping Patients from Falling Through the Cracks

Independent pharmacies have not been immune to staffing challenges either, with nearly 70 percent having trouble filling positions as of last November. But those that have managed to hang on demonstrate how pharmacies can provide a critical stopgap for an overstretched healthcare system. Nekos has seen corporations buy up five local independent doctors’ offices since 2013. These shifts often limit how much time doctors can spend with each patient, which may be especially difficult for elderly people newly diagnosed with chronic conditions, like high blood pressure, high cholesterol, or diabetes. They might leave the doctor’s office hoping that a pharmacist will be able to help, only to wind up being rushed through the line at an understaffed CVS.  

“I see an incredibly large frustration from patients, because these cracks keep getting bigger and it’s the patients who end up falling through,” Nekos says. His pharmacy, which opened in 1968, aims to always have two pharmacists on duty, and Nekos says that his business model ensures his pharmacists have “whatever it takes to do the job well,” whether they need more supplies, time, staffing, or management support. The Nekos family has been in business locally since 1901, when they opened a pharmacy in Kingston, later merging to create Nekos-Dedrick’s pharmacy on Front Street. As tense as recent years have been for Dedrick’s, the journey for newer independent pharmacies can pose even greater challenges. 

“To go out and start a new pharmacy, from ground zero with no customers, is a really difficult thing to do,” says Reynoso. “You have to have a good amount of investment put away because you’re not going to make money your first two years.” 

click to enlarge Ed Ullmann, Wellness Rx
  • Ed Ullmann, Wellness Rx

Thinking Outside the (For-Profit) Box

To make it work, Reynoso and other independent pharmacies are doubling down on providing personalized service and, in the case of Wellness Rx, proposing innovative business models. Wellness Rx, an independent pharmacy in Tannersville, also sells natural medicine products and goods by local artisans. The pharmacy has a staff mental health and recovery coach, and provides free Narcan, the overdose-reversing drug. But pharmacist Ed Ullmann doesn’t see a long-term future for the business without some kind of shift. There’s too much pressure from the corporate chain pharmacies—the last remaining independent pharmacy in Tannersville sold to CVS in 2006 (CVS has since closed the branch). “The trend is going to freeze out health care in local communities all over America,” says Ullmann. “There’s no way that these consolidated health systems are going to keep presences in small towns.”

This has prompted Wellness Rx’s decision to make the unusual move of becoming a nonprofit pharmacy, which would let them accept funding from grants and bigger donors. They already have a Patient Assistance Fund, fed by small donations, which helps cover the costs of pharmaceuticals and wellness products for customers in need. Wellness Rx has also established a charitable trust in the hopes of attracting more sizable donations for its nonprofit conversion. Their goal is to raise a minimum of $300,000 to establish a nonprofit called Pharmacy for the Public Good, and an additional $100,000 for their new location in Phoenicia, which could open as soon as this summer. While there are other nonprofit or “charitable” pharmacies in the US, Ullmann says his would be the first to convert from a for-profit to a nonprofit. “It’s the way that I believe you level the playing field: a nonprofit wellness center with a pharmacy. The community will, can, and should support it like a local library,” he says.

Ullmann, who expresses hopes to retire in five years, has had a variety of experiences in healthcare, from being appointed Ulster County Mental Health Director to founding an HMO called WellCare to purchasing a Florida mineral lake to create a rehabilitation spa. He established Wellness Rx in High Falls about a decade ago, but says that market was “too small.” When the Hunter Foundation asked him to head up an independent pharmacy in Tannersville and offered the use of a large space on the ground floor of a Victorian home, he jumped at the chance. Ullmann set out to create what he calls “a culture of service to others,” whether it means covering the cost of CBD oil for a customer who is between jobs or making house calls to deliver medications to locals who lack transportation. 

The desire to connect with customers also motivates Reynoso, an Orange County native. Before opening Beacon Wellness Pharmacy in December 2019, he worked for corporate pharmacies for more than two decades, including as an operations manager for Walgreens. Reynoso helped expand the chain between Westchester and Orange County, but when it merged with the European corporation Boots Alliance, Walgreens no longer felt like a “family business,” he says. When he left the company in 2015, he spent time working for corporate pharmacies in New York City and Newburgh, where he felt powerless to change an increasingly bottom-line-driven atmosphere. At Rite Aid in Newburgh, the chain’s busiest Hudson Valley location, pharmacist technicians were getting burned out and Reynoso couldn’t spend time with customers. He worried that he’d finish his career “not talking to people,” he says. 

When a property on a corner in Beacon caught his eye, Reynoso decided to take the leap. And the community has responded. Reynoso says local legislators pushed to ensure that he could get the necessary licenses to open. He started welcoming customers only a few months before the pandemic started, shifting to provide COVID-19 vaccinations and testing inside the 1,000-square-foot store—efforts that helped financially, although he still longs for providership status. He strives for a “holistic” approach, often talking to people about their diets, telling them about supplements, or helping them change their lifestyle so they can get off certain medicines. In turn, locals have been supportive of his efforts to maintain a work-life balance—even when he had to leave early on a Friday to take his daughter to a dance. 

That same kind of connection with his customers is what makes Nekos “optimistic” for the future of independent pharmacies like his. “What we do is so needed and our passion is so real that we will figure out a way,” he says. “And we will not only survive, but hopefully expand how we serve the community.”

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