COMMUNITY PHARMACIES – SMALL BUSINESS CHALLENGES IN NEW ZEALAND

Authors: Dr Helen Samujh, Department of Accounting, Waikato Management School, University of Waikato, Hamilton, New Zealand Corresponding author: phone:+647 8562889; e-mail: [email protected].

Dr Linda Twiname Department of Strategy & HRM, Waikato Management School, University of Waikato, Hamilton, New Zealand

Mr Andrew Muller, Accounting and Advisory Services. Deloitte, Hamilton, New Zealand.

Summary This paper examines the day-to-day challenges of owner-managers of community pharmacies in New Zealand. Data was gathered by in-depth semi-structured interviews with twelve pharmacists. We find they are excluded from representation at all levels of healthcare decision-making, their professional qualification does not prepare them for pharmacy ownership and pharmacists experienced conflict between their roles as business ownermanagers and health professionals. Although they desire to provide additional healthcare services, the government funding models do not support expansion beyond the traditional dispensary services. Our research suggests that small businesses in highly structured industries require a framework to ensure their voices are heard by policy makers and regulators. This research has implications for policy makers in the primary healthcare sector, educators providing training for the Pharmacy profession, and others who need to balance the demands of being a professional and a business owner. Key words: Community pharmacy, entrepreneurship, health-care, service industry, small business 0

1. Introduction New Zealand community pharmacies, a subset of small business in New Zealand, operate in a tightly controlled business environment. Our research examines the day-to-day challenges of community pharmacists as small business owners in NZ. Small businesses are confronted by a range of operational, financing, market, and regulatory challenges. Worldwide, they are recognised as vital and significant contributors to the general health and welfare of economies, assisting in economic development and job creation (Korsching & Allen, 2004; Muske et al., 2007; OECD, 2009). They are said to account for 67% of employment and 52% of all output in the private sector (ACCA, 2010). Also, they have been signalled as having potential in creating sustainable development (Tilley & Parrish, 2006). However, many fail to survive, particularly in their early years (Birkett, 2000; Ihua, 2009). Traditional measures of failure and success consider only financial aspects (Walker & Brown, 2004). Many writers (Duncan & Handler, 1994; Fenwick & Hutton, 2000; Samujh, 2006; Vos et al., 2007) conclude that money is not the primary motivator in small business and so traditional measures are inappropriate. Community pharmacies provide dispensary services to the Healthcare industry and are assumed to have ‘patient care’ as one of their central motives for offering services. Pharmacists thus are part of the service sector, due to their primary role of dispensing medicines prescribed by general practitioners. The service sector has gained considerable significance as contributions by the sector dominate world economies in critical industries (such as healthcare), yet have received little research attention (Bitner & Brown, 2008). It is suggested that service is the most rapidly growing sector with direct effects on people’s lives (Tronvoll et al., 2011). Bitner & Brown (2008) argue there is a great need for “basic and applied research that addresses service innovation and global service economy issues.” Further, they call (p. 44) for research in the healthcare sector: Everyone knows there is a tremendous need for innovation to improve healthcare and enhance that industry's productivity. Yet at times, the innovations in healthcare seem to forget about the individual patient. ... improvements in healthcare services would require researchers with knowledge of service quality, health economics, technology, customer values and experience, etc. Yet most researchers today, particularly within academic settings, define 1

themselves by their narrow specialties and are rewarded for solving narrow problems, publishing the results in discipline-specific journals. Our research provides an opportunity for pharmacists to share their perspectives on the issues they face in operating a pharmacy and their knowledge and experiences on such as service quality, health economies etc, as mentioned by Bitner & Brown (2008). The literature indicates that community pharmacies are facing a push for change within the industry coming from a policy level as well as within the profession. The change is to move away from a retail and dispensary role toward a patient centred health role integrated within the primary health care sector. Involving pharmacists in patient care would utilise the depth of knowledge and skills they possess (Harrison et al., 2011; Scahill et al., 2011). This push has brought with it many challenges for both the profession as a whole and pharmacy owners such as not being ‘part of the team’ with other health care providers (Harrison et al., 2011), lack of support from funding bodies (Braund et al., 2009) and feelings of inadequacy (Bryant et al., 2009). As well as this push for professional change, there are also challenges from being both an owner/manager and a professional (Ottewill et al., 2000) and from competition from non-pharmacy retailers (Kotey et al., 2011).

2. Literature The literature on community pharmacies is outlined under 3 headings: pharmacists as healthcare providers, changing the mindset, and service provision and remuneration for services provided by pharmacists.

2.1 Healthcare providers The patterns of health care provision is changing with an increasing need for healthcare, through the increase in incidence of chronic diseases and simultaneous reduction in the number of general practitioners (Perraudin et al., 2011). Pharmacists are seen to be the health carer with direct face-to-face contact with the client and may become a health confidant (Kalaria, 2003). The pharmacists may take a complementary role to assist overloaded general practitioners. In reality pharmacists may see more of the client than the general practitioner. It would appear natural for pharmacists to be a ‘patient service’ provider. Many of these claims appeared to be unsupported. However, one study of the structure and processes of pharmacies find that contact with clients by pharmacists is variable. 2

...the degree of direct pharmacists contact with patients varied considerably amongst the participants, and the majority of participants stated that pharmacists counselled patients mainly when it was a new medicine (Hattingh et al., 2009, p. 546). Clients may see an assistant and not a fully trained pharmacist as apparently, dispensary assistants provide a number of client services similar to pharmacists. Harrison et al (2011) find in a 2006 survey of 980 New Zealand pharmacists that although the majority of community pharmacists felt that they were a vital member of the health care team significantly fewer felt that they participated in the team on an equal level to other health professionals such as nurses and doctors. They also find that New Zealand pharmacists believed that the expansion of pharmacists’ roles would be resisted by other health professionals. This finding supports Bryant et al (2009) who in a 2002 survey of 580 New Zealand pharmacists and 565 general practitioners report 60% of the general practitioners felt that the role of community pharmacists should be limited to being “mostly involved in the technical component of dispensing” (Bryant et al., 2009, p.351). Unsurprisingly, only 34% of pharmacists agreed with that statement! It appears as though there is a lack of representation for pharmacists at a policy making and governance level. Scahill (2011) states that while nursing and general practice are represented at a governance level pharmacy is not. This is contrary to macro health policy which asks for “equitable, convenient and high quality health care through technological integration, multidisciplinary teamwork and well supported system-wide change” (Scahill, 2011, p.245). There is also a lack of representation at a higher policy level with the NZ Primary Health Care Strategy and the government publication, Better, Sooner, More Convenient Primary Health Care (Ministry of Health, 2011), does not explicitly identifying pharmacists as having involvement within the primary health care system (Scahill, 2011). The NZ position contrasts with international practice e.g. in the UK the community pharmacies are represented at a policy level by the presence of a Chief Pharmaceutical Officer. No such post or similar role exists in New Zealand. Although the literature calls for an expansion of community pharmacists’ roles there is some evidence that the pharmacists themselves see inadequacy as a major barrier to this expansion. In a 2009 study less than 50% of 580 community pharmacists surveyed believe they are not 3

sufficiently trained and have insufficient knowledge to expand their services into a more clinical role (Bryant et al., 2009).

2.2

Mindset

Community pharmacists generally see themselves first and foremost as healthcare providers and business owners secondly. This mindset means that the majority of their focus is spent on ensuring that their professional standards are maintained, leaving their business interests as a secondary focus (Ottewill et al., 2000). This mindset means that clients are seen as patients rather than consumers, and pharmacists are reluctant to promote retail products as this conflicts with their role as a healthcare provider: I am a pharmacist first; ultimately that’s where my profession is ... the patient’s responsibility is first then the business is second (Schmidt & Pioch, 2005, p.499). The mindset causes conflict in carrying out the roles of being a business owner and simultaneously a professional. A trend has appeared in the UK of the formation of buying groups and branding to create economies of scale to be able to compete with supermarkets and other retailers selling non-regulated medicines (Schmidt & Pioch, 2005). However, the mindset of pharmacists as professionals who are reluctant to engage in anything that might be seen to damage their professional integrity as health care providers creates a major barrier to the use of branding and buying groups (Schmidt & Pioch, 2005). Several articles identified difficulties emanating from the lack of desire of pharmacists to change. There is evidence that pharmacists are not patient-centered, their language indicates a focus on products with very little use of care terminology (Al Hamarneh et al., 2012). Rosenthal et al (2010) call for pharmacists to embrace the change and take up the opportunities and challenges of an expanded role into prescribing medicines. They record instances where regulations have been changed in Britain and Canada and have been taken up only by a few of pharmacists. They believe that pharmacists exhibit such as lack of confidence, fear of responsibility, and risk aversion towards offering extended patient-care services. However, Al Hamarneh et al (2012) and Rosenthal et al (2010) acknowledge that funding and remuneration models need to be developed to adequately compensate pharmacists for the added services.

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2.3

Service provision and remuneration

The views of pharmacy graduates appears to be favourable towards developing their role as health carers in contrast to being (merely) a dispenser of medicines (Perraudin et al., 2011). The literature provides examples of additional healthcare related services that could contribute to better healthcare outcomes. It is suggested that pharmacists could be involved in such as screening and chronic disease management by providing: Pharmaceutical consultations (Perraudin et al., 2011) Prescriptions (Rosenthal et al., 2010) Patient education (Rosenthal et al., 2010; Tan et al., 2012) Co-ordination of care plans (Chan et al., 2008; Perraudin et al., 2011) Computerised pharmaceutical records (Perraudin et al., 2011) Smoking cessation and asthma management (Al Hamarneh et al., 2012) Goal setting, monitoring and review of patient use of medicines (Al Hamarneh et al., 2012; Chan et al., 2008) Tracking of use of prescription and alternative medicines (Kalaria, 2003) Medication review services (Tan et al., 2012) Pharmacists have indicated that remuneration is a barrier to being able to offer routine pharmaceutical care (Braund et al., 2009). The findings of Harrison et al (2011) reinforce this view with 62% of respondents noting that the current funding model does not support innovative pharmacy services. Harrison et al (2011) add pharmacists are open to alternative funding structures to the current model including performance related incentive payments. At the centre of issues about participation in the Healthcare industry is a need to provide adequate funding for pharmacists through “distinctions between the profit margins on medications sole, the fees for pharmaceutical acts and reimbursements for services provided” (Perraudin et al., 2011, p. 5). It appears that the funding system for community pharmacists is seen as a barrier to expansion into other roles. Presently, pharmacists are monetarily rewarded for their ability to consistently follow algorithms for filling prescriptions accurately and efficiently (Rosenthal et al., 2010, p. 40) An investigation into 28 health care payment systems finds that governments are the dominant funding providers of community pharmacists activities and most systems provided payment on an ‘intervention’ basis (Chan et al., 2008). The balance is provided by private third parties (e.g. insurers). Chan et al (2008, p 110) find “remuneration for pharmacists clinical care is a relatively new concept, ...”

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2.4 Summary of the literature Much of the literature found on community pharmacists is centred on the challenges faced by pharmacists on a professional level in terms of re-professionalisation and role conflict. Contradictory evidence exists on whether pharmacists desire to change their businesses from a (traditional) dispensary practice to one that provides a range of healthcare services complementary to other healthcare service providers. Several writers claim that there needs to be a mindset change on the part of the pharmacists for them to be ready to change the range of services.

Further, most funding models are inadequate to provide remuneration for

pharmacists who offer innovative client-focussed pharmacy services. Little research has been conducted on the day to day challenges experienced by community pharmacists as small business owners. Accordingly, our study examines how issues facing community pharmacies affect the individual businesses operations, in the New Zealand setting.

3. The New Zealand Context At June 2011 there were 4444 pharmacists registered in New Zealand, of these, 3223 are practicing members, 221 are interns and the remainder are non-practicing pharmacists (Pharmacy Council of New Zealand, 2011). In accordance with the Health practitioners Competence Act 2003, in order to register as a pharmacist in New Zealand an individual must have gained a Bachelor of Pharmacy from Auckland, Otago or one of several approved universities in Australia or abroad. Australian registered pharmacists can register in New Zealand without sitting any entrance exams (Pharmacy Council of New Zealand, 2007). In addition, at least 44 weeks of practical experience must be gained in an approved organisation as part of an internship program. The pharmacist registration process also involves a law and ethics interview carried out by a practising pharmacist and facilitated by the Pharmacy Council. The interview is designed to assess whether the individual is competent in terms of the cultural, legal and ethical aspects on pharmacy in New Zealand. The interview covers material from a range of areas including competence standards, pharmacy code of ethics, consumer rights, medicine and misuse of drugs legislation and the Health Information Privacy Code. The Pharmacy Council of New Zealand (established under the Health practitioners Competence Act 2003) oversees the registration process as set out above and is also responsible for setting standards for pharmacist education, scopes of practice and professional conduct (Pharmacy Council of New Zealand, 2007). 6

The budget for medicines that people take when they are not in hospital - the Community Pharmaceutical Budget - is set each year by the Minister of Health, on the advice of District Health Boards and PHARMAC. District Health Boards hold that money and PHARMAC works on their behalf to manage the spending. PHARMAC decides what medicines to fund, negotiates prices, sets subsidy levels and conditions, and ensures spending stays within budget. The list of subsidised medicines is called the Pharmaceutical Schedule. (PHARMAC, 2011) PHARMAC, therefore, has a large impact on pharmacies in New Zealand as the list of subsidised medicines and any changes to the list will determine what medicines pharmacies must stock and dispense to customers. Although pharmacists provide services in addition to the dispensing medicines, such as Medicines Use Review (MUR) and adherence support, these services are not included in the national contract; funding is dependent on local District Health Boards (Scahill et al., 2011). Medicines Use Review is a service that can be offered by accredited pharmacists and entails a consultation based assessment of the medicine-taking behaviour of patients although the service does not allow for clinical medication review (Waikato Community Pharmacy Group, 2012). There are also regulations that apply to the business structure and ownership of pharmacies. The Medicines Amendment Act 2003 opened up ownership opportunities of pharmacies by allowing non-pharmacists to own up to 49% of a pharmacy (previously 25%). The 2003 law change allowed an individual pharmacist to own up to five pharmacies rather than just one. These changes led to the growth of corporate investment and management in the pharmacy industry for example, Pharmacy Brands Limited (PBL), incorporated in 1999. Through expansion fostered by the law change, PBL controls one third of the retail pharmacy market in New Zealand through the Amcal, Life Pharmacy, Radius, Unichem and Care Chemist franchises or ‘banner groups’ (Hargreaves, 2011). Of the estimated 900 registered pharmacies in New Zealand, approximately one third of these are under the PBL banner groups (Hargreaves, 2011). Several industry associations operate optional membership in addition to the Pharmacy Council of New Zealand. These offer members services such as professional support, representation and ongoing training. The largest of these is the Pharmaceutical Society of New Zealand with over 3000 individual members (Pharmaceutical Society of New Zealand, 2011).

The next largest is the pharmacy Guild of New Zealand with 636 members 7

(Pharmaceutical Society of New Zealand, 2011). There are also a number of regional based associations that offer the same services such as the Waikato Community Pharmacy Group which operates in the area covered by the Waikato District Health Board (DHB). There are similar community pharmacy groups operating throughout the country in greater Wellington, Canterbury and Manawatu. It is within this regulatory environment and professional support framework that New Zealand community pharmacists operate their small businesses.

4. Method Few well-developed theories exist to test or extend small business research. Blackburn and Kovalainen (2009) review methodologies used by small business researchers and conclude that rather than the popular normative ideological types of research, a more critical perspective is needed. For our study, the outcomes are heavily dependent on data gathered from the field and reflect the needs and perceptions of the researched in their context. Accordingly, a qualitative method was adopted, using a grounded theory methods for data analysis. Thus underlying patterns within the data were developed to explain the studied phenomena (Dick, 2000). Categories of observations and their properties noted by the researchers provided foundations for the patterns and resultant concepts that could be later formed as ‘conceptual hypotheses’. The emergent patterns become the makings of the theory. Through an iterative process of constant comparison patterns in the data were observed (Glaser, 2002). This constant comparison allowed the many levels, diversities and uniformities to be observed within our data. Our research consisted of twelve in-depth semi-structured interviews with community pharmacy owners in August and September 2010 within the Waikato (10) and Southland (2) regions of New Zealand. Each interview lasted between 60-90 minutes. Ethics approval was obtained from the Waikato University Management School’s Human Research Ethics Committee. Potential interviewees, identified using a list obtained from the Yellow Pages. The sample of twelve interviewees consisted of a mixture of independently owned and branded pharmacies ranged in size from 1-25 employees. The taped interviews were transcribed and authentication emails sent to participants to verify the contents of the transcripts. 8

Once verification had been secured, the transcripts were imported into the qualitative analysis software, NVivo 8. This software was used to categorise themes identified in the transcribed interviews into broad categories (59 themes). These initial nodes were then examined for overriding themes and issues and reorganised, merged and reclassified into a series of key categories (35 themes) representing the overarching issues associated with the ownership and operation of small community pharmacies in New Zealand. The interviews were designed to probe key issues experienced by community pharmacy owners in their roles as professionals and small business owners. Interviewers used the five questions as a guide for discussion. 1.

What were your goals and expectations when you started your business?

2. What are the things that get in the way of your achieving your business goals and expectations (challenges)? 3. What are your main strategies that help you to achieve your goals? 4. Do you have any support people/organizations help you to achieve your goals? 5. Any there successes that you have had, that you are particularly proud of? This paper summarises our findings relating particularly to questions two and four.

5. Findings Six major issues were perceived to affect the day-to-day operations of the businesses of our twelve interviewees. These issues related to funding and dispensing policy changes, continuing education requirements, professional support, service and product diversification, and owner management.

5.1 Policy Changes Our interviewees experienced disruptions and service issues from changes in medicine funded and prescriptions timing. Changing in funded medicines provides disruptions to both the pharmacists and clients in a variety of ways. Firstly there is the cost to the pharmacist of the stock left on hand that is no longer funded by PHARMAC. This stock would rarely be moved as clients are unwilling to pay extra money for unfunded prescriptions. “Only those who do not want to change and can pay will continue with unfunded prescriptions.” (R11).

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Secondly there is the issue of medicines that have not been dispensed. “Everything that becomes expired is a cost to us, if a customer needs insulin for diabetes, they would require 3 visits, we order the medicine from the supplier. But sometimes the customer doesn’t make the 3 visits and there is stock in the store, which expires and the pharmacy bears the cost. This happens often.” (R7). The way drugs are tendered and how PHARMAC often chooses to fund the cheapest option that may not be as effective and have more adverse side effects as a more expensive option was also a problem. One example encapsulates the various issues associated with the changes in funded medicines: a liquid drink for clients who are not getting enough nutrition or needed to be fed through the stomach was changed from a pre mixed liquid to a powder form in large tins that clients need to mix themselves. “... now somebody with arthritis or is weak now has to cope with a 900 gram tin which they have to mix themselves and not get lumps in it.”(R12). Further to this, when the tender was taken the only flavour available in the country was chocolate meaning all clients were to be supplied with chocolate flavour regardless of their preference. “When they first swapped over the only flavour in the country was chocolate so we had no choice but to give everyone chocolate because there wasn’t enough initial stock in the country when the tender was taken” (R12). Unrelated to the funding decisions by the public health service, another example of how changes in funding affect pharmacists is the case of a pharmacy that operates on a university campus frequently used by international students. This is a policy change was initiated by the insurance company that covered medical insurance for international students. As a result, many medicines that used to be covered by insurance were no longer covered. Consequently there was a reduction in revenue for this pharmacy. The national change in prescription timing from monthly to three monthly for the majority of medicines also presented problems for pharmacies. We were informed that reactions to medicines are usually identified within a week of taking the medicine consequently, there are

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eleven weeks’ worth of wastage compared to only three weeks under the old monthly regime. This wastage also occurs in the case where clients do not take the entire course of medication. “Once on the eve of Christmas the health board changed the dispensing period and fees from monthly to a period of 3 months (from 3 instalments over three months). This led to a drastic reduction in pharmacy returns as fees for two dispensing sessions were lost. But this was also a loss to the government as people often do not take medicines if they feel they are already better. Thus medicines also get wasted by patients.” (R8). Another issue associated with this is the sheer volume of medication received by clients at one time. For example, three months worth of paracetemol, a potentially dangerous drug, is 720 tablets which is a sizable amount for any person to receive at one time. “Large amounts of drugs being taken home, some of which are potent and poison in the wrong hands.” (R12)

5.2 Continuing Education Compliance costs were considered to be a major challenge in the operation of a pharmacy. These costs are both financial and in terms of time loss from income generating activities. “You have to document the education you have done during the year, you have to learn about something and document how you have used it. Sometimes you get something out of it but sometimes it’s just to get the points. Each pharmacy has to have at least 5 points per year to keep its registration. Each workshop or seminar means spending at least $100-250.” (R8). There were also concerns from one interviewee regarding the motives behind and the quality of the required continuing education. “Pharmacies have expectations about continuing professional development (CPD) which is not easily achievable. It is expensive and often is more likely to hinder provision of quality service than help it ... it is because and CPD agendas are driven by the desire to avoid risk.” (R6).

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5.3 Professional Support The pharmacies interviewed used a number of sources of professional support from within the pharmacy industry. These support services were a mix of industry bodies and banner groups. The following industry bodies were mentioned by interviewees: the Pharmaceutical Society of New Zealand, the Pharmacy Guild of New Zealand, the Waikato Community Group of Pharmacies, and the Pharmacy Council of New Zealand. These bodies offer support to pharmacists in a variety of ways: “I belong to the Pharmacy Guild. I am also a member of the Pharmaceutical Society. The Guild negotiates rates with the District Health Board while the Pharmacy Society supports your professional development through continuing education endeavours.” (R8). Although this support is available, some interviewees did not believe these industry bodies and the system in which they operate in are effective; “Ineffective lobbying by Guild on matters affecting the Chemists in NZ. Ineffective representation - not strong enough.” (R11). “When change is indicated we can lobby and also have own society in each province. [But it is] hard because we have to lobby DHB as well as nationally.” (R12). Also, the cost of being a part of the Pharmacy Guild was seen as a deterrent (by one pharmacist) “As a smaller pharmacy, the benefits to be gained from membership to the likes of the local Pharmacy Guild are not worth the cost at this time... around $3000 membership fee. This money can be used to greater effect in other areas of the business.” (R10). Interviewees identified banner groups such as Amcal, Unichem and Care Chemist as sources of support in the profession. They provide business management and marketing assistance as well as making comparative data available from other pharmacies; “This banner group provided a business manager who helped develop their business plan, and also allowed them to compare their figures with other 12

pharmacies under the same banner, so they can see where they are and where they can be relative to other pharmacies. It also allows them to compare prices, and get an idea of what other pharmacies are doing.” (R5). This support also involves negotiation of contracts for medicines. Branded pharmacies were likely to secure better prices for medicines for its members “Amcal Society ...banner group: they support us by negotiating a better price for the Amcal Group. If you are not a banner group, your cost will be higher.” (R7). However, being part of a banner group was not always considered to be desirable. The ability to meet specific customer’s needs was identified as a advantage of remaining as an independent pharmacy. “No pressure from head office to perform. We can stock things for a little old lady down the street that a banner group wouldn’t because they don’t make a profit from it. We are very much customer focussed rather than sales focussed.”(R12).

5.4 Diversification A common theme among the pharmacists interviewed was the apparent move away from a sole dispensary role in terms of their businesses. One interviewee mentioned that while they were heavily reliant on prescriptions, they were attempting to develop the retail side of the business in order to mitigate the risk of relying solely on prescriptions. A way of achieving this is add-on sales: “Let’s say the goal is to make $20 per customer, a customer may come into purchase an item for $5, we try to get them to buy more products related to what they seek relief from. For example if they have hay fever, we also suggest that they to also buy eye drops.” (R7). Other interviewees identified the opportunity of offering services usually associated with doctors therefore utilising pharmacists’ knowledge and extensive training in ailments and drugs and easing the load on doctors. “Chemists should be allowed to prescribe a certain/limited number of prescription drugs without the necessity to see a doctor. This move would lighten 13

doctors’ loads and be cost effective to the government by avoiding doctors’ consultation fees.” (R11). Private consultation rooms used for diagnosis client conditions in privacy were supplied even although pharmacists are not allowed to charge for consultation services. Further, other services such as free blood pressure tests and blood sugar tests were being offered. Another service offered, that might be charged if endorsed by a general practitioner, is packing weekly medication packs for older clients to help them know what medicines to take and when to take them. “The Government pays a fee to pack if doctors endorse prescription saying they require weekly packs. We also charge $2 a week to cover the blisters that the medicines are packed into. This is a lot of work and good business if prescriptions are endorsed.” (R12). Delivery services within the local community were also offered to clients who are unable to come to the pharmacy to collect their medicines. In order to serve the needs of their clients more effectively and comprehensively, one pharmacist maintains a database of each client’s prescriptions and purchases, which is used to indicate possible drug clashes and known undesirable reactions. “[the database] allows us to check your medication for possible clashes. For example, if someone has high blood pressure we can make sure other things they buy won’t affect their blood pressure.” (R12).

5.5 Small Business ownership As well as the issues specific to the pharmacy industry, interviewees identified a number of issues associated with small business in general. These issues tended to centre on things such as work-life balance, managing staff and lack of business knowledge. In terms of work-life balance interviewees identified factors such as not being able to get sick, multiple roles of an owner/operator and paper work. “A huge amount of time is required outside of business hours. You have to do paper work, continuing professional development, undertake courses, read journals, develop projects and re-engineer the way we do work, incorporate some of the projects which leave you with work life balance.” (R6). 14

Managing staff was raised as an issue by two interviewees as a significant challenge: “Staff sometimes get in the way of achieving personal goals, particularly when they are sick and I have to cover what they usually do, as well as my own responsibilities.” (R5). The conflict between being a business owner as well as a pharmacist also plays a part in pharmacies. “Sometimes personal things get in the way of what I want to achieve in a business sense, as I am a trained pharmacist, and not a business person.” (R5).

6. Discussion Although the issue of inadequate funding models and lack of consultation is the decision making process of PHARMAC was eluded to in the literature (Harrison et al., 2011), very little research has been conducted on how these challenges affect the day to day running of community pharmacies as well as the impact on clients (e.g. the nutritional product). Additionally, the change from monthly prescription timing to three monthly identified by our interviewees also has negative effect for both pharmacies and clients as clients are now receiving potentially dangerous volumes of medication at one time and pharmacies are losing out on dispensary fees and are experiencing increasing levels of unsold and expired stock both of which limit profitability. It is these day to day issues experienced by individual business that illustrate the very real negative effects of policy changes and drug funding decisions on community pharmacies and clients These changes and their adverse effects raise the issue of lack of lobbying power as discussed by Scahill (2011) as lack of voice at a policy making level. It is clear that this lack of a representative of the industry at policy making levels in the form of a Chief Pharmaceutical Officer role means that the effects of decisions on pharmacies and their clients are not given a fair weighting. In addition interviewees also recorded ineffective lobbying by the Pharmacy Guild and the structure of the industry, as barriers to having an effective voice. There are a number of industry bodies such as the Pharmacy Guild, local community pharmacy groups and banner groups all lobbying without a single collective voice for community pharmacists but rather several disjointed voices. Further, lobbying must be done on a local DHB level as 15

well as a national level. Additionally, the membership fee required in order to join the pharmacy guild is cited as a barrier to small community pharmacies as the perceived benefits of membership do not outweigh the cost. All of this points toward a very unorganised and disjointed landscape for the community pharmacy industry lacking a single collective voice and focus and without adequate higher level representation. Although previous studies show that there are significant barriers to the expansion of services offered by community pharmacists in terms of funding systems and acceptance by other professions (Braund et al., 2009;) Bryant et al., 2009) it appears from our interviewees that diversification is taking place despite these barriers. Examples of this include the establishment of private consultation rooms and free blood pressure and blood sugar tests. These practices are limited, however, by the fact that the current funding model is not supportive of these services and that pharmacists are unable to charge for the provision of such services. The call by our interviewees to give pharmacists the power to prescribe a number of prescription medicines without the client having to visit a doctor is in line with prior research (Bryant et al., 2009). This call supports the finding of a working group made up of representatives from nine New Zealand DHBs, The Pharmacy Guild and the Pharmaceutical Society that “the current method of funding based on a fee per item dispensed does not best support the role of pharmacists in providing advice and counselling or the wider role of pharmacists within the primary health care environment.” (Lakes DHB et al., 2009). As medicines are opened up for sale by general retailers and supermarkets, pharmacies are be placed under pressure to compete with general retailers who have the cost advantage of bulk buying (Kotey et al., 2011). In order to mitigate this risk pharmacies have been advised to utilise their specialist knowledge on medicines as a point of differentiation to maintain market share and attract new customers (Schmidt & Pioch, 2005). The literature presents a number of strategies for community pharmacists, but whether these strategies have been adopted is yet to be investigated. As much of the literature in the area of community pharmacies concentrates on clinical and professional issues, the managerial issues associated with owning and operating a community pharmacy are often not considered. Our interviewees identified many managerial challenges that have not been widely identified in previous studies such as work-life balance, managing staff and lack of business knowledge as major challenges in owning and operating a 16

community pharmacy. These challenges are consistent with research which highlights lack of managerial training during the qualification process as a limiting factor for successful operation of community pharmacies in Australia (Kotey et al., 2011). If pharmacists were to undergo managerial training as part of their qualifications, issues indicated by our interviewees may be mitigated to some extent. Australian research indicates the training of pharmacists emphasises the clinical role at the exclusion of management training and so graduates are ill-equipped to manage their own pharmacies (Kotey et al., 2011). This also appears to be similar to New Zealand where the pharmacist training solely focuses on biomedical science, chemistry, population health, social science, pharmaceutics, pharmacology, pharmacotherapy and pharmacy practice, whilst neglects pharmacy management (The University of Auckland, 2011). Some pharmacy owners undertake their own entrepreneurial training, and although no study has showed any financial advantages, it has been shown that such training results in significantly higher job satisfaction (Hindle & Cutting, 2002). The conflict between being both a professional and a business owner is discussed in the literature in terms of reluctance to expand retail and other aspects of community pharmacists (Schmidt & Pioch, 2005). The same conflict arose in our research regarding reluctance to join banner groups. Although five interviewees were members of banners groups, one interviewee was concerned that the types of products stocked and services offered were dictated by head office and a sales focus taken. This interviewee was concerned that the needs of the client would be compromised in the pursuit of profit which is at odds with the duty of a professional pharmacist (which places client’s needs first). The composition of pharmacy ownership and its effects on manager autonomy, decision making and amount of control has been examined in Canada (Dobson & Perepelkin, 2011). Concern had been expressed that the ability of the pharmacists to influence practices would be reduced was somewhat alleviated by the findings. Pharmacy managers currently perceive a high level of authority relating to the setting of practice standards and the evaluation of professional competence; but, with declining autonomy, it is unclear whether professional authority is sufficient to prevent the subordination of both and professional interests to external financial interests (Dobson & Perepelkin, 2011, p. 347-348). The legislation limiting the degree of ownership by non-pharmacists of an individual pharmacy may need to be monitored to see if it effective in preventing interference with 17

client-care provision whilst providing much needed management and financial resources. The choice between joining a banner group (which is profit oriented) or remaining an independent pharmacy business (allowing a more client-oriented approach) is a relatively new aspect to the professional/business owner conflict experienced by pharmacists. The influence exerted by banner groups on decision-making, control, and autonomy of the professional pharmacists has not been explored to date. A push towards involvement in client healthcare appears to be foremost in our interviewees’ minds. Their mindset of being a professional concerned with the welfare of their clients, although causing discomfort with the role as business manager, may well be the best service strategy. It has been found that a focus on services providing customer satisfaction is more successful for business than a focus on costs and operational efficiencies (Bitner & Brown, 2008).

7. Conclusion and Recommendations Our study of the challenges faced by community pharmacists leads us to a number of conclusions and recommendations. The findings from our NZ study indicate: Lack of consultation for changes in funded medicines and the dispensary process. Lack of legislative support to provide services outside the traditional pharmacy practice model Lack of a single collective voice for pharmacies in New Zealand. New Zealand pharmacists have a desire to expand their roles beyond dispensary. Lack of business skills is a major challenge for owner/operators of pharmacies. These findings from our research with New Zealand community pharmacies may not applicable to other countries with differing funding systems, regulations and business environments. As a result of our findings we recommend to the primary health care regulators and policy makers (particularly to the Pharmacy Council of New Zealand) that: 1) The variety of support organisations and industry bodies be Pharmacists streamlined to achieve a single collective lobbying voice. 2) The voice of community pharmacists be incorporated at national policy-making level by the establishment of a chief pharmaceutical officer position.

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3) The funding system for pharmacies be reviewed to facilitate the expansion of the role of pharmacists beyond the traditional dispensing role. 4) Review of services that pharmacists are able to supply with a view to extend their role in healthcare services. 5) The training programmes for pharmacists incorporate business management skills to prepare graduates with the tools to own and operate a pharmacy. Future research may attempt to quantify the financial impact of changes in funded medicines and the change in prescription timing on community pharmacies. The researchers may test a number of tentative theories that emerge from our work, such as: That pharmacists’ experience role conflict in providing health care services. That small businesses in highly structured industries require a framework to ensure their voices are heard by policy makers and regulators. Our research into community pharmacies has been driven by the desire to examine the challenges that community pharmacies face so that policy makers and educators can reduce the barriers to efficient and effective performance that affects the survival of these small businesses. Several of the stories shared relate to unintended consequences of out-of-date regulation or traditions that work against the provision of effective service to the recipients of healthcare services. Our research reveals issues that can arise in professions that are heavily reliant on government funding. This research has implications for policy makers in the primary healthcare sector, educators providing training for the Pharmacy profession, and others who need to balance the demands of being a professional and a business owner.

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