The Bottom Line Pharmacy Podcast: Finishing the Fight: What’s Next for Independent Pharmacy

It’s episode 50 which means it’s time to celebrate a milestone! 

In this milestone episode, Ollin Sykes, CPA, CMA, CITP and Bonnie Bond, CPA are thrilled to sit down with the esteemed Doug Hoey, CEO of the National Community Pharmacists Association (NCPA).  

This episode is packed updates and insights into: 

• Payment Reform 
• Finish the Fight Campaign 
• Financial Tips for Independent Pharmacy Owners in 2024 
• And More 

Join the Discussion with Ollin Sykes, Bonnie Bond, and Doug Hoey!

ASK A QUESTION

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More resources about this topic:  

Schedule an Rx Assessment

Press Release – Sykes & Company to Join

Webinar – Finish the Fight

Blog – Top 3 Independent Pharmacy Tips for 2024

Blog – The Changing Pharmacy Dynamics: Unveiling Financial Trends For 2024

If you prefer to read this content, the video transcript is below:

Bonnie Bond, CPA: Well, welcome to another episode of the Sykes Pharmacy Bottom Line Podcast. We have a wonderful guest with us today, Doug Hoey from NCPA, CEO of NCPA. That’s the National Community Pharmacy Association. Doug, thank you so much for joining us this morning. 

Doug Hoey, CEO of NCPA: Yeah, no, it’s my pleasure to be on the show. Thanks for the invitation. 

Ollin B. Sykes, CPA: Yeah, Doug, it’s great for you to be with us today. I’m Ollin Sykes and this is Bonnie Bond, even though it says 007. We’re just glad to have Doug with us today. I think I saw somewhere this is our 50th podcast anniversary recording, Bonnie. Did I see that correctly?  

Bonnie Bond, CPA: It is, and that’s why we wanted Doug on the big event. 

Ollin B. Sykes, CPA: Okay. Absolutely. Absolutely. So Doug, we do these constant… 

Doug Hoey, CEO of NCPA: Is that like a diamond anniversary? Is that 50th? Is that? Yeah. 

Bonnie Bond, CPA: That’s right! I think that’s right! 

Ollin B. Sykes, CPA: Anniversary of podcasting. That’s right. But we’re, we’re grateful to have you with us. And I’m just going to plow right into obviously the topic of the day. And you know, we know Congress is in a state of total disarray right now going into the election. We know you guys have been working your rear ends off on the PBM reform situation. We’re seeing great things, it looks like that are taking place in various states and Doug, we appreciate everything you and the NCPA is doing. Give us the latest on where things  stand because I know that’s what’s on everybody’s minds. 

Doug Hoey, CEO of NCPA: Yeah, I will thank you Ollin for that and congratulations on the 50th podcast. We are, you mentioned PBM reform and that’s exactly right, but to put an even finer point on it is payment reform. Obviously, PBMs do all kinds of bad deeds and we want those corrected in the name of truth, justice and the American way. But equally important and even more important is that payment reform for pharmacies is included in part of that PBM reform. So, where we’re focused, you know, we, NCPA doesn’t negotiate contracts. We’re not a PSAO. That’s not our role. Where we can have influence is on some of the government programs. Medicare, Medicaid. Medicaid’s 15% of the average pharmacy’s business. Medicare is 36% of the average pharmacy’s business. So that’s where we really have focused our payment reform efforts. Medicaid reform is in play in Congress, federal legislation, which would reform Medicaid in all 50 states so that pharmacies would be paid based on a benchmark. And that benchmark is likely to be NADAC plus a fair dispense, well, a dispensing fee decided by your state. Now about a third of the states have already just on their own passed their own legislation. And what we’ve heard from members, they like that NADAC plus a predictable transparent, fair dispensing fee. Yeah, we get that. So, I mean, it’s not going to make anyone rich, but it’s predictable, it’s transparent, and so far it’s been fair. You know, usually what I’ve seen from the 14 states that have passed it that represent about 140 million people in those 14 states, it’s been between about $9.50, $10, and $12. Which for most pharmacies, again, they’re not gonna get rich off of that, but they can make a living and keep on serving patients, helping their communities and be able to pay their employees. So that’s Medicaid. That’s past the House of Representatives status. It’s past the House. We need the Senate to take it up for a vote. We think if the Senate passes it that the President will sign it. But it got stuck in March where Senator Schumer, who’s the majority leader in the Senate, decides what comes up for a vote and what doesn’t. He decided not to bring it up for a vote. The legislation itself doesn’t mean he’s a PBM lover or a pharmacy hater necessarily. We will test him on that over the next six months or so. But it does mean that the legislation was tied in with other things. So, it wasn’t just pure pharmacy piece of legislation. There’s other stuff mixed in with it like a lot of bills and we’re told Senator Schumer didn’t like some of the other stuff that was in it. So, there’s a lot of effort right now and we can get into that if you’d like on encouraging Senator Schumer and the Senate to take it up for a vote between now and the time Congress ends. Medicare, 36% of the average pharmacy’s business, that’s gone through all the committees. It goes through, you know several committees, almost unanimously, Medicare payment reform has gone, is positioned in the House and the Senate to be voted on. It has not been voted on in either. What that legislation would do would require PBMs to offer reasonable and relevant contracts, reasonable and relevant. So my first question when my team told me this was who decides what’s reasonable and relevant? Because I know if the PBM is deciding what’s reasonable and relevant, it’s not going to be reasonable and relevant. 

Bonnie Bond, CPA: It’s not gonna do anything. Right. 

Doug Hoey, CEO of NCPA: So, there’s actually funding in this bill that requires someone, you know, an entity through CMS, which makes me a little nervous, but there is an entity that determines reasonable and relevant. And that entity would have to answer to members of Congress where we think we do have some champions out there who do care that pharmacies are in business, that do care that patients are served, that do care that a taxpayer funded Medicare program is not stifling, choking, and killing small businesses. So we do think that having an arbiter to decide reasonable and relevant will result in something that actually might be reasonable and relevant. 

Ollin B. Sykes, CPA: Yeah. What do you think? What’s your outside guess to the chances of getting that Medicare payment reform through like the Medicaid situation? You think it’s going to be held up in the house for any particular reason? 

Doug Hoey, CEO of NCPA: I think where it could be held up in the House is you’ve got some, we’ll say, you know, you’ve the outliers. You’ve got the ultra conservatives, you’ve got the ultra liberals. And, you know, they get to be so far extreme on either side that they almost come and meet, they almost come and join each other, over extreme views, which is sort of counterintuitive.  

Ollin B. Sykes, CPA: Exactly.  

Bonnie Bond, CPA: Mm -hmm. 

Doug Hoey, CEO of NCPA: The ultra conservatives might say, no, we don’t like reasonable and relevant because that’s the government interfering with the free market. Well, the problem with that view is that  it is not a free market. It’s not a normal functioning market because PBMs have all of the leverage. It’s not a normal, you know, buyer – seller type of relationship where you’re giving and taking and you give the seller takes. I mean, it’s not a functioning marketplace. So that’s kind of the, but that could be their flawed view. And on the ultra-liberal side, they could say, well, it doesn’t go far enough. We need more government control than having, you know, a marketplace decide reasonable and relevant. I do think there’s enough normal people in between. I’ll say normal people by my standards that reasonable people that would say, no, reasonable and relevant, this is just the right amount of marketplace with a little bit of government oversight, because we need a referee in here to determine reasonable and relevant. So, I think it’s got a shot. Medicaid has a better shot. Medicaid has been scored, which means that the accounting, the actuarials by the CBO, the Congressional Budget Office, have said that this Medicaid legislation would save taxpayers over a billion dollars. The Medicare reform has not been scored. Well, that’s not true. The estimates are that it would be budget neutral, that it would be budget neutral. So that helps it a lot that it’s not gonna cost taxpayers anything. So I think it’s got a shot. Medicaid has a stronger shot. We’re gonna be pushing on both of them because we need them both. Get them both, we got 50%. Yeah, we sure do. 

Ollin B. Sykes, CPA: And those 14 states that you were mentioning on the Medicaid front, is Michigan, isn’t Michigan one of those already? 

Doug Hoey, CEO of NCPA: If it is, it’s one of the newer ones. You’ve got big states like California, New York, Alabama was the first state, Georgia, another big population state. If Michigan passed it, it’s been very, very recent. 

Ollin B. Sykes, CPA: Yeah. Okay. All right. Cause I’ve just heard some of our clients talk about the Medicaid, NADAC pricing situation. I was thinking it was Michigan that I heard that talked about the other day.  

Doug Hoey, CEO of NCPA: They may have, they may have, I don’t have all 14 memorized, but. 

Ollin B. Sykes, CPA: Yeah. Yeah. But, but if it is, I do know they like it and they think it’s a fair situation.  

Doug Hoey, CEO of NCPA: Yeah, you know,  some people with a lot of high dollar drugs, specialty pharmacies, they might not like it so much, but the average pharmacy doing 80 or 90% of their prescriptions generics, you know, a lot of Lesentiprills, Metformins, Levothyroxanes, et cetera, Torvastatin, they should benefit from this. 

Ollin B. Sykes, CPA: Yeah. Yeah. And Doug, what do you think? Of course, all this has led to the pharmacy desert situation that we’re all dealing with and with the number of pharmacies that since the first year have bitten the dust for one reason or another. We’ve obviously dealing with a lot of transitions here. But yet at the same time, we’ve got others that are just doing exceptionally well. In fact, I just got off a call with a South Carolina pharmacist and they’re just doing exceptionally well and they’re doing everything they need to be doing on the clinical side. I know that NCPA is just working really hard, especially through the ownership workshop program and other long -term care programs that you guys are doing. Is there anything further we can be doing or pushing to help bring awareness to the public about all this is taking place? It’s really hurting the public. And when you add a specialty GLP-1 situation out there, that’s just kind of hit all these pharmacies and so many pharmacies now are not either carrying it or sending them off to throughout your big boxes to fill them. There’s just so many issues there on that front that, how in the world are you dealing with that day by day?  

Bonnie Bond, CPA: That was a loaded question, Ollin. 

 Ollin B. Sykes, CPA: That’s a loaded question. Boy, it is. 

Doug Hoey, CEO of NCPA: Well, you know, it can be overwhelming, but at the same time, you know, someone in the store level, that’s who the question is better suited for. How are they dealing with it? I mean, we are trying to help them in in so many different ways. The GLPs have had a huge impact. I think to the start of your question, as far as consumers, patients. And we do think that those, that group is a key constituency to try to get our issues over the finish line. We know the pharmacies, our NCPA members have done an amazing job responding to our call, our grassroot calls for action. They sent over 20,000 messages. Our members, independent pharmacists, sent over 20,000 messages to Congress in the first three or four months of this calendar year. When we had our fly-in in mid-April, we had over 300 meetings. And I think in every one of those meetings, the meeting would start with, I’ve heard you. I know what a PBM is. You don’t have to explain it to me. 

Bonnie Bond, CPA: Good. 

Doug Hoey, CEO of NCPA: And so, it’s been effective from that standpoint. I think we need to turn up the heat, though. And turning up the heat, one way to do it, as a member of Congress, their number one objective is to get re-elected. I mean, as soon as they get elected on November 5th or whatever day it is, they start planning for their re-election campaign. So that’s their number one. So, hearing from voters, a lot of voters, obviously pharmacies are voters and their staff are voters, but hearing from a lot of voters, we hope we’ll put more pressure on them. We are in the midst. We’ll be announcing this week the launch of a campaign we’re calling “Finish the Fight.” The finish the fight campaign, it will go to pharmacies and there will be a lot of collateral that we think our pharmacies are going to like and it’s going to resonate with them. But ideally, we’re trying to get those materials in front of consumers, patients, and to get patients and consumers to reach out to Congress. There will be, the collateral will be, we believe, memorable. We hope it’s a little gross and funny so that someone can’t not think about it or can’t unsee it. And it will play in, again, we’ll be sending it to pharmacies and ask pharmacies to put it in front of their consumers and for their patients. We’ll have QR codes for them to give to their patients, to send them right to websites. We’ll have messaging to consumers. So, we’ll have ads on, we’ll do some buys on CNN, MSNBC, and Fox. So, we’re covering pretty much everyone on the political spectrum from left to right and sort of in between. And we’ll also be doing, we’ll be doing other things. And I don’t want to kind of reveal everything because sometimes we can’t control who listens to this. But we’ll be doing other things to activate consumers and patients to get them to encourage them and hopefully get them to call their members of Congress. And we’ll be focused in certain states too. And you can guess some of those states that we’ll be focused on to really encourage those members of Congress. 

Ollin B. Sykes, CPA: Yeah, I think that’s a great idea because obviously the consumers are feeling the pinch. The consumers are being educated by the pharmacists out there on the front lines. And if we could get the consumers to do the same thing maybe that pharmacists done the first few months of this year to bring awareness, that would certainly add to the process without question about that. 

Doug Hoey, CEO of NCPA: Can I add just Ollin and Bonnie just one thing?  

Ollin B. Sykes, CPA: Sure. 

Doug Hoey, CEO of NCPA: So, we did, we hired a PR firm to do this. Our NCPA board has dipped into, a significant dip into our reserves to fund this. When we talked about it as an NCPA board, we said, this may or may not push it over the finish line, but we don’t want to be looking back on January 1st, 2025 and saying, coulda, shoulda, woulda, what if we had just done this?  

Ollin B. Sykes, CPA: Exactly. 

Doug Hoey, CEO of NCPA: So, we, you know, leaving it all on the field.  

Bonnie Bond, CPA: Right.  

Doug Hoey, CEO of NCPA: One of the things in this PR firm, and I just got it yesterday, was they surveyed 1,000 consumers. And what I’m about to say is an important message for our pharmacists, our pharmacy members to hear. It’s not always the most appetizing thing to hear. We asked, this PR firm asked consumers, again, 1,000 consumers, is it important to you that independent pharmacies are getting hurt by PBMs? They phrased it more, more, you know better than that. But yeah, it’s really important to consumers that independent pharmacies are going out of business by PBMs. So that’s good to know, that’s heartening. However, the number one issue for consumers is the price, the price of the drug. That outweighs everything. Because that was another question is, what’s your number one thing and it’s the price of the drugs. So this campaign is not going, it, you know, it’ll, it’s okay to talk about PBMs causing pharmacies to go out of business. We obviously don’t want to ignore that. That’s important. But its number one theme is PBMs are causing your drugs to cost more. PBMs make you pay more for your drugs, which is 100% true. But that’s the emphasis. It’s not help your small business. I mean, we want people to help the small business. We are…Of course, we’re very concerned about independent pharmacies going out of business, but from a consumer standpoint, they care most about their pocketbook. They care about their pharmacy, but they care most about their pocketbook, and that’s what this campaign is going to emphasize. 

Bonnie Bond, CPA: Smart. 

Ollin B. Sykes, CPA: I think it’s a fabulous idea and I agree with the board’s decision to do whatever you can because I think you got a great opportunity now with the awareness. It’s growing ever more so with the public about the PBMs and with what’s taking place in the industry. I applaud you guys for making that move, I really do. No question about that. 

Bonnie Bond, CPA: And like Ollin mentioned, we do still see some store, a lot of stores that are doing fabulous. But Doug, what kind of advice would you give to some of the independents out there that are struggling at this point? I mean, they’re kind of like, what can I do? 

Doug Hoey, CEO of NCPA: Yeah, if they have not gone through sort of the checklist of things that might be obvious, but maybe not obvious. I mean, for you guys, I mean, there’s probably not a literal, maybe even a literal checklist, like have you talked to your wholesaler? Have you talked to your buying group? Have you looked at your PSAO contracts? What kind of, you know, your inventory turnover? Have you looked at your staffing? Are there some you know, staffing changes you could make that would, you know, still allow you to provide services. Do you, you know, you haven’t charged for delivery for your entire history of business. Everyone else in the world charges for delivery now. Grubhub, DoorDash, consumers are used to it.  

Bonnie Bond, CPA: It might be time. 

Doug Hoey, CEO of NCPA: In fact, they’re probably shocked when they’re not charged. And I know, I know, I mean, I was a long time ago in the pharmacy and we charged for delivery. You know, 30 years ago, 25 years ago when I was practicing, you know, people paid it. It was, you know, $2, $2.50, something like that. It wasn’t a lot. But things that you’ve given away for free, are there things, do you need to start charging for those things or do you need to stop giving them away for free?  

Bonnie Bond, CPA: Right. 

Ollin B. Sykes, CPA: Yeah. 

Doug Hoey, CEO of NCPA: I think some of the big things, personnel, you know, talking to your wholesaler, talking to your buying group. Looking at your PSAO contracts. Those would be probably some of the big areas I would look at first.  

Bonnie Bond, CPA: The main ones, yep. 

Doug Hoey, CEO of NCPA: Operating hours. You know, do you need to be open till eight o ‘clock on Saturday? No, no, close at five.  

Ollin B. Sykes, CPA: Or do they need to be open on Saturday afternoon? I mean, it’s just, it’s amazing the number of things that you’ve just mentioned and then some that many pharmacists don’t even look at or recognize that the impact that these things have on the key performance indicators of these pharmacies. And we’re constantly pushing these pharmacists to review all these things that move the needle, like payroll, like how well are you buying? 

Bonnie Bond, CPA: Right. 

Ollin B. Sykes, CPA: What is your, I know you’ve been with this buying group forever and ever and ever, but you need to be reviewing your contracts and looking at what other options there are. Do you need to be involved in clinical services? Do you need to be looking at some of the things that CPESN is working on in conjunction with NCPA? Things of this nature. It’s just, there’s so many things out there that sometimes they just feel so overwhelmed they don’t have time to do it. But frankly, they don’t have an opportunity not to because it means survival in many, many of these cases. 

Doug Hoey, CEO of NCPA: You’re exactly right and I almost turn the question back to you guys and you just mentioned it because you see the books of these pharmacies  

Ollin B. Sykes, CPA: Oh boy. 

Doug Hoey, CEO of NCPA: and so what would be your top five things that you would say, hey, if you could just look at five things, these are the five things that most often is gonna move the needle the most. 

Ollin B. Sykes, CPA: Yeah, yeah. How well you buy is the single number one item.  

Bonnie Bond, CPA: How well you buy is huge. 

Ollin B. Sykes, CPA: Payroll is number two. What’s your rent? 

Bonnie Bond, CPA: Reconciling receivables, they gotta know if they’ve been paid. 

Ollin B. Sykes, CPA: Oh my Lord. If we could just get pharmacies to reconcile and work with their third party reconciliation companies and deal with perpetual inventories and do cycle counts periodically to look at the cash that’s sitting on their shelves, and look at some of their rent contracts they’re paying per square footage. It’s just amazing the things that can move the needle that we’re seeing out there, Doug, that just so many of them are not doing. And you’re right. I mean, we’re looking at those balance sheets first and foremost because everything on a balance sheet affects the P&L. And we’re trying to make sure they’re optimizing their tax situations, which can mean nothing but cash coming into the business properly handled. But it’s a never-ending process of trying to work with these guys and ladies to bring profitability and cash flow to these businesses. And it’s just a… 

Bonnie Bond, CPA: And obviously Those that are diversifying their revenue and finding other ways other than just filling scripts are, it’s definitely a positive. 

Ollin B. Sykes, CPA: No question about that. And there’s so many new things out there. Infusion is a big thing we’re seeing in today’s marketplace. Non-sterile compounding done right is big. Long-term care at home, huge issue. Just on a call with somebody just looking at that. And they’ve already determined that there’s a $10,000 a month incremental gross profit that they can pick up from just moving to that program. I mean, my goodness, why haven’t you already done it? I mean, it’s just incredible the lack of movement in some pharmacies, it’s just those things that make us beat our head against that brick wall behind me sometimes. It’s just amazing. 

Doug Hoey, CEO of NCPA: Well, I think… 

Bonnie Bond, CPA: And there’s still a lot of stores that haven’t gotten into compliance and adherence and packaging and things like that.  

Ollin B. Sykes, CPA: Yeah. Yeah. 

Bonnie Bond, CPA: And so we’re definitely pushing people to do that if they’re not already. But it makes a big difference. 

Ollin B. Sykes, CPA: Exactly. 

Doug Hoey, CEO of NCPA: Well, I think you mentioned just it can be overwhelming. And so I can appreciate that. I mean, there’s just so many things to do. So, I mean, I guess for that, I would say the adage of, you know, eating the elephant one bite at a time rather than try to do all five things. You know, this month I’m going to focus on if it’s buying or I’m going to focus on my personnel and just again, to do that one step at a time. NCPA is going to be launching a program. I think you guys are aware of this, the CORE program. 

Ollin B. Sykes, CPA: Yes, the core program that we’re involved with that, yeah. 

Bonnie Bond, CPA: Mm -hmm. 

Doug Hoey, CEO of NCPA: Yes, yes. So that’s an effort to, for the type of owners we’re talking about who, both the kind who are overwhelmed and also the overachievers, but who want to do even better, but it’s for someone for personal leadership, for team leadership, and importantly, the things we’re talking about today, the nuts and bolts operations of your business, the marketing, but you know, the financial nuts and bolts. That’s what CORE is about. 

Ollin B. Sykes, CPA: The financial management part is the part we’re going to be be in that. You’re absolutely right. It’s a great program you guys have put together, and it’s just now launching. And we wish you the most success with that and happy to participate with that. No question about that. 

Bonnie Bond, CPA: Yeah, I mean, we hate to toot our own horn, but you know, whoever does it, you have to have up to date real time numbers in your financials to know how your pharmacy is even operating to make the changes that you’re mentioning. You don’t know if your payroll is too high unless you have that information and it’s correct. So, it’s so important.  

Doug Hoey, CEO of NCPA: That’s right. Yeah, you need a relative to what? Yeah, that’s exactly. 

Bonnie Bond, CPA: Right. 

Ollin B. Sykes, CPA: Yeah. Well, Doug, we know you’re a busy guy and you got a lot going on. We didn’t want to take too much of your time and certainly appreciate you being with us this short period of time this morning and give us some insights here. Happy that you’ve been a part of this podcast and I’m sure it’ll be viewed by a fair number of pharmacists that we’ll push it out to. So we look forward to seeing you in the not too distant future here. Looking forward to participating in the ownership workshop next weekend. This is mid -June 2024. We’re doing this, but we have the ownership workshop in New Orleans next weekend. We’re looking forward to participating in that because it’s amazing still the number of startups and transitions that we’re dealing with even in today’s market. And there’s just folks out there eager to learn. And you guys have provided the resources for many, many years and decades to help them. And we just thank you for that. 

Doug Hoey, CEO of NCPA: Yeah, no, it’s core to us. You know, McKesson’s a sponsor of that, so we thank them for that.  

Bonnie Bond, CPA: Yes. 

Doug Hoey, CEO of NCPA: And just, we’ll see you all also in Columbus in October. 

Bonnie Bond, CPA: Absolutely. 

Ollin B. Sykes, CPA: Absolutely. Absolutely. 

Doug Hoey, CEO of NCPA: That’s our annual meeting, first time in Ohio in my history at NCPA, which is getting to be pretty long, and first time in Columbus ever. So we’re looking forward to seeing you and all the listeners there at the end of October. 

Ollin B. Sykes, CPA: We look forward to being there and again we appreciate your time today and we appreciate all your efforts. Of you and the board and everyone that works at NCPA, everybody that we work with there is always so very helpful, knowledgeable and we just appreciate everything that’s being done. 

Doug Hoey, CEO of NCPA: We’re here for independent pharmacy. Congratulations on your 50th podcast. 

Bonnie Bond, CPA: Thank you, appreciate it. 

Ollin B. Sykes, CPA: Thanks very much, Doug. Thanks very much.