The Importance of Building Community When Running a Pharmacy

Greg Mitchell is a community pharmacist in New Mexico and long-time member of American Associated Pharmacies (AAP). He recently joined Drug Topics^® to talk about how running a pharmacy has integrated him into his community, hiring practices that expand his capabilities, and the power of joining a cooperative.

Drug Topics: Hey everyone, its Quinn with Drug Topics. We are here with Greg Mitchell from American Associated Pharmacies (AAP) today. Thanks for joining us, Greg. We really appreciate it. If you just want to give a quick overview of who you are, your title, and what you do?

Greg Mitchell: Okay, my name is Greg Mitchell and I own United Drug in Hatch, New Mexico, a family pharmacy started in 1978. My wife and I purchased it in 1990 from my parents. So we've been here a lot of years and have served the community for a long time. I sit on the board of directors for a AAP, which is the co-operative that we belong to and asked to sit on the board of directors of AlignRX, which is a 100% independently owned pharmacy services administrative organization (PSAO).

Drug Topics: Awesome, welcome. Greg, you mentioned that you own a pharmacy in Hatch, New Mexico. Can you tell me about some of the benefits of serving your community as its pharmacy in a rural location?

Mitchell: Well, there's a lot of benefits of owning and operating a rural pharmacy. First and foremost are the relationships you cultivate with your patients. You know, we're still serving patients that walked into our door, May 1, 1978, when we opened this pharmacy, serving a lot of second and third generations of these families as well.

Secondly, is as a result of those relationships, this support that you receive from your community can be absolutely overwhelming at times. In 2006, we had flooding in Hatch, we had about 40 inches of water and mud in our store, the entire town was flooded, the business district. And we actually went in that night and looked at things and we said, you know, I think we're done. This just devastated us.

Well, the next morning at 6 AM, I got a call and they said, "You need to get down here, there's 40 people outside waiting to mud your store out." The community showed up, they got us mudded out, and in 48 hours we were back up filling prescriptions for patients in the Hatch Valley again. And at that point in time, you know, my wife and I looked at each other we said we can't ever leave this community because of the support we have. It's just it's different in a rural area, you're part of the community and you want to make sure you're there to serve them for a long time.

Drug Topics: That's an incredible story. Just just hearing how tight knit the community is to come together for something like that. It's pretty awesome.

Being called a rural pharmacy can have important business implications. Can you share with me the criteria for being legally designated rural pharmacy, and tell me about the differences in PBM or plan contracting and other services that that kind of benefits pharmacies who have the rural pharmacy distinction?

Mitchell: The [Center for Medicare and Medicaid Services] official definition of a rural pharmacy is that it's 15 miles from the next nearest pharmacy. The TRICARE access standard is what Medicare Part D uses to figure out what they've got to have for an access standard, and that is that 70% of the population must have access to a pharmacy within 15 miles. Other pharmacy benefit managers (PBMs) have their own definition; some are down to 10 miles from the next nearest pharmacy.

The benefits in that are that you can belong to a rural network and a PSAO that has a rural network. There might be a little bit higher reimbursements, there might be some things like no DIR fees. Rural pharmacies are treated a little better, for lack of another term, than the Metro pharmacies.

Drug Topics: I imagine that being a rural pharmacy sort of in an isolated area comes with some challenges as well. What are some of those challenges? And how do you kind of cultivate those opportunities to better serve your patients?

Mitchell: Well, as in most pharmacies, staffing is the number 1 challenge. It's more so in a rural area, because it's very difficult to attract talent, especially young talent, to rural areas.

Volume is the biggest financial challenge in a rural area. It's typically a much smaller area. Our count is less than 1500 people; the entire valley—30 miles long—has less than 5000 [people]. Our store was filling 60 prescriptions a day when we purchased it from my family in 1990. The other problem with a low volume is that raises your cost of goods, but we'll have more about how you can solve that later.

And other challenges in many rural areas—[although] luckily, not in my area as we do have a few doctors—but in many rural areas, the pharmacy is the only medical provider in the area.

Here in New Mexico, language is certainly a barrier. We've had to make sure that all of our employees are bilingual. This is really important when you have a high number of people who speak only Spanish. I would recommend that even pharmacies in a metro area have a Spanish speaking technician. I can't tell you how much that does for your business. People really appreciate it when you can do their labels and counsel them in Spanish.

Being in a rural area used to be much more difficult than it is today. Communications have helped change the isolation that we all felt as rural owners. It was really difficult to get timely information back in the day. I mean, for example, you waited for Drug Topics to show up monthly—you know, the actual Drug Topics magazine, that was one of our big sources of information. I was fortunate enough to have been encouraged to run for the United Drugs board of directors and be elected back in 1991. Being able to share information and talk with other owners that are similarly situated helps immensely. The first annual conference that I went to was in Las Vegas in 1991. And that resulted in making three or four invaluable contacts with other owners, as I do every year. It's amazing that some of those owners I still talk to today.

Drug Topics: We're honored that we were such a such a big part of your day to day. So what final thoughts or takeaways do you have for a pharmacy owner if they're interested in learning more about some of the things that we discussed here today?

Mitchell: The the biggest takeaway is to join a cooperative. I've chosen AAP, which is 100% member owned, it's an actual cooperative. The profits are distributed back to the membership based on a patronage dividend every year. Additionally, AAP provides a primary vendor agreement, helping to leverage the total volume across the membership, negating some of the higher cost of goods that a rural owner would pay on his own. Additionally, the largest benefit for AAP to me is that we own API warehouse. The cost of goods at the API warehouse for generics are the same for low-volume stores as well as high-volume stores. So, I can buy for the same price that the guys are buying for that own 40 or 50 stores.

I would also attend all the events, in persons events are by far the best as our annual convention, but leverage the virtual events as well. This information that's being made available to you through the co-op is designed to keep you serving your communities.

The last takeaway is to use a PSAO that looks out for you. I've chosen AlignRX. So, AlignRX was formed as a for public benefit LLC, which is a little different format than what we've seen before. AlignRX is the largest PSAO that is 100% owned by independent pharmacy and we are there to serve the needs of independent pharmacy. So do yourself a favor, join these groups that are looking out for you. That's the way that you can benefit even though you're stuck behind the counter in your community today.

Drug Topics: Wonderful. Thank you so much for joining us today. Greg. We really appreciate appreciate you taking the time to come and talk to us.