Last week, McKesson announced its acquisition of PSS World Medical, a provider of medical products and prepackaged pharmaceuticals to physician's offices and long term care facilities. (McKesson Acquires PSS) According to Bloomberg, there have been 500 takeovers in the U.S. Medical Products industry in the last five years. With this trend towards consolidation, the chances are very good that a clinic in which you work or one you know has been affected by the inevitable changes that occur in any takeover. The McKesson acquisition promises shareholders cost savings of about $100 million within 4 years – what's in it for you?
For dispensing physicians, the sad fact is that as these organizations get bigger, you become less important. The small vendor that you originally hired to help you implement in-office dispensing has been swallowed into the melting pot of one of American's largest corporate organizations. Price models built around purchase volume, type of practice or relationship are now replaced with price models built on earnings-per-share requirements and Wall Street expectations.
At smaller, service-driven organizations like Northwind Pharmaceuticals, we love to see the consolidation. We compete on responsiveness, time-to-market and customized service to our clinic customers. Our competitive advantages fare very well against the corporate behemoths. As a customer of one of these vendors recently consolidated, you might not even know your supplier has sold-out except for some nagging irritants. Your vendor may have been bought-out if…
- you see a sudden across the board price increase
- you see extra fees attached to previous "freebies" (i.e. shipping, technology etc.)
- you see certain products removed from the available formulary (i.e. "Sorry Dr. Jones, we no longer offer phentermine")
- you see changes in sales or support staff, billing addresses or phone numbers
- getting products in a timely manner becomes more difficult
- getting someone to return a call becomes more difficult
- you're required to fill out new documentation: credit app, compliance paperwork or profiling documentation
- minimum purchase amounts increase (in dollars or quantities)
Change is always a challenge. If medication dispensing used to be easy and then started becoming more of a hassle, it is possible that your supplier has experienced organizational change brought on by an acquisition. The good news is that there are options available if you find yourself caught in changes that do not add value to your practice. There will continue to be consolidation among pharmaceutical wholesalers. However, with a little effort, you can find pharma suppliers who are happy to provide the flexible and responsive service you need to maintain the office medication dispensing services your customers expect from you.
