Owning Multiple Pharmacies
Two community pharmacy owners share their secrets for expanding to multiple stores. They describe the keys to their success and what other owners should think about when making this important decision.
Choosing the Right People
“Don’t try to do it alone.”
That’s the most important rule to follow when adding locations, according to community pharmacist Dan Molino. “It’s more important to find the right person to partner with than it is to find a second location,” he says.
Molino should know. He purchased Grassy Sprain Pharmacy in Yonkers, New York, in April 1983. He went on to acquire Le-Mac Pharmacy in 1987, Trotta’s West Street Pharmacy in 1999, and Taconic Pharmacy in March of 2011. Along the way, he also opened Grassy Sprain Long-Term Care Pharmacy. And he says he couldn’t have racked up such an impressive expansion record if he hadn’t surrounded himself with good people.
Of course, finding good people wasn’t always easy. Molino essentially had to “grow his own” to make sure they would be the right fit.
“Every one of my partners is a former employee,” he says. One started as a stock boy at the age of 13, and after serving as a clerk, assistant manager, and then manager, he went back to school to earn a business degree. “Now, he’s a full partner,” says Molino proudly.
“If you’re going to go it alone, my recommendation is to stay in your own store and have fun doing it by yourself.”
— Dan Molino
Another owner, Josh Prohaska of Prohaska Pharmacy Group, agrees that people are incredibly important to achieving success in multiple locations. “You have to hire people with strong roots in the community,” he points out. “And they also need to be willing and able to change.”
Finding the Right Software
However, Prohaska believes that consistent financial management is a critical component as well.
Some background: Prohaska joined his father’s company in 1999, shortly after graduating from the University of Wisconsin-Madison with a degree in business. At the time, the company had six locations. When his father passed away in 2002, Prohaska and his brother, who is a silent partner, “picked up the ball and kept it rolling.” And today, the company has 15 locations throughout northwestern Wisconsin.
With so many locations to monitor, Prohaska says that an integrated system for tracking financial performance is vital. “Most of our people are not trained in business,” he explains. “They don’t necessarily understand the financial importance of each prescription. I understand that.” But that’s one reason why multiple locations should ideally share the same platform: so an owner can manage the stores in a consistent manner.
Picking Your Spot: What to Consider before Making an Acquisition
Both Molino and Prohaska expanded their organizations by purchasing existing stores — the only exception was Molino’s long-term care pharmacy, which he built from scratch.
For Molino, location is a deciding factor when it comes to investing in a new store. So far, his retail stores are all in Westchester County, New York. The problem is that operating in one of the wealthiest counties in the nation comes with a price.
“I want to open stores in nice areas with tremendous per-capita income,” explains Molino. However, so-called nicer areas tend to come with higher taxes, a burden that property owners often pass through to retailers. “So you really have to pick and choose your spot,” he says.
Prohaska hesitates to stray too far from his corner of Wisconsin when deciding to purchase a new store. “We are not going to acquire a store down near Madison,” he says. Prohaska feels that while high-speed Internet connectivity makes it possible to manage stores remotely, he still needs to be present to oversee them well.
All of the retail pharmacies that Molino and Prohaska operate are part of the Health Mart® franchise, although each has its own recognizable community name. That allows the pharmacies to maintain a local connection while still taking advantage of a nationally recognized brand name. “We want to preserve a local, independent feel,” explains Prohaska.
And for both owners, the most important consideration for a potential acquisition is fit — both in terms of complementing their existing collection of stores and meeting specific profit goals.
“It absolutely must be financially viable,” says Prohaska. “In some stores, a single pharmacist running the operation independently can make a go of it. But if you add multiple employees, there’s often not enough business to make it work.”
Managing a Large Organization
When owners go from one store to multiple locations, the day-to-day job they perform changes dramatically.
“When I took over Grassy Sprain, it had a 17-stool lunch counter that had to be open by 6 in the morning,” says Molino. “That meant I had to be [behind the counter] at the pharmacy by 5:30 a.m. and then work until 7 p.m.”
These days, Molino spends most of his time on the road traveling between locations. Sometimes, he misses interacting with customers as a pharmacist. But he loves what he does now, too. He receives a lot of satisfaction from turning around a troubled store and making it profitable again.
“One store was so dark and dingy,” he remembers. “And to me, that is the most important thing. You have to have stores that are clean and brightly lit. The aisles have to be unencumbered. I hate seeing things like cut cases blocking the floor. There are enough venues like that. A pharmacy shouldn’t be one of them — at least, not one of my pharmacies.”
Extended hours are another part of Molino’s customer-centric approach to turnarounds. One of Molino’s stores just expanded its evening hours to 9 p.m. Another is opening at 7:30 a.m. to take advantage of commuting time. “People are dropping their kids off at school and then going to work, and if I open at 8 a.m., I miss that traffic.”
Both decisions have been money makers for Molino, but it’s not just about the revenue. “It’s about showing your customers that you are willing to do what’s best for them, not just what’s best for you.”
Perhaps because he owns so many locations, Prohaska takes a fairly hands-off approach to managing multiple stores. Each store has its own pharmacist manager, who is responsible for first-line problem solving. However, the company also has a “corporate” manager who oversees human resources and basic operations. That person typically handles most issues without consulting Prohaska — unless the problems concern finances or big-picture strategies. “I don’t expect him to tell me every little thing that is going on,” Prohaska says.
|Your Changing Role||Primary Function||Primary Responsibilities|
Remembering the Fundamentals
The bottom line is that independent pharmacy owners who are considering expansion must remember the fundamental obstacles that the industry is facing; and rely on free industry resources like the tools and Ownership Advisors available from RxOwnership (www.RxOwnership.com).
“It’s definitely a challenging business to be in,” says Prohaska. “The pharmacy industry is changing constantly. You have to be willing to adjust to the changes; you have to be willing to take on some technology and to invest in the business.”