How Chemist Warehouse Hospital Pharmacy came to be

Today marks an exciting day in the next phase in our pharmacy careers as we launch Chemist Warehouse Hospital Pharmacy, a joint venture between Chemist Warehouse and Stuart and I.

With our issues at Icon in the public domain for some months now – well some of them at least – it probably comes as no surprise to find that the provision of their pharmacy management services to our remaining pharmacies hasn’t been the easiest of working relationships to navigate.

After operating in caretaker mode for most of FY22 under the belief that the planned pharmacy transactions would all successfully complete, and then spending months trying to find a way where agreement could be reached to complete the remaining sales, we needed to understand what the ongoing delivery of pharmacy management services by Icon was going to look like now that we were staying around but no longer Icon shareholders.

We got a quick early indication when  our access to Icon systems was cut with no notice last September, and the long held communication and management channels that we’d established to ensure a level of proprietor oversight and control that we were comfortable with altered significantly .

In addition to being a pretty challenging working arrangement, it’s also one that has left us with a deep level of concern around how we are meeting our obligations as pharmacy owners.  We’ve conducted regular site visits to make sure the pharmacy teams have a direct engagement with us, but with heavily redacted reports and no access to any of the Icon pharmacy leadership team outside of a one hour monthly meeting with a single pharmacist (who doesn’t have a direct relationship with any of our sites) it’s not sat well with our view of our professional responsibilities.

This lack of access to the Icon pharmacy leadership team resulted from a ‘request’ that, going forward, we were only permitted to directly communicate with either them, or one of Icon’s accountants – who needless to say has zero pharmacy operational or clinical governance experience.  They would then ‘direct our enquiry to the appropriate person’, source an answer and then provide us with said response.  If I was in a room full of pharmacists I’d like to see a show of hands as to who saw that even remotely aligned to their expectations around their professional responsibilities..  Despite repeated communications pointing out our dissatisfaction with this arrangement and our belief that it was not aligned to our ownership governance obligations, it remains the status quo.

Clearly the situation is untenable, and with Icon continuing to move us further away from arrangements that bore any resemblance to a position we could be comfortable came even close to meeting our obligations as pharmacy owners, our concerns continued to grow.  Icon’s behaviour had also become so unpredictable and so far removed from anything we had previously experienced ourselves, or observed with any other pharmacy service provider in the wider market that we had no idea where their endpoint was going to land, and what risk that placed us under as the pharmacy owners ultimately responsible for all services delivered by our pharmacies.

We needed to find a plan B.  One that met our ownership obligations in a way that we were comfortable with, provided services at a fee structure commensurate with the cost of the services being delivered and the benefits received, and also gave us the scope to re-imagine what a new, innovative and enhanced hospital pharmacy service could look like. Twenty five or so years ago we started with nothing in terms of systems or infrastructure, but starting from scratch this time wasn’t going to be a viable alternative to allow continuity of care to our existing hospital customers and their patients.

One of our long held mantras is that the best ideas are born from tough times, and we’ve been focusing on this as a way of keeping positive throughout the entire situation.   When everything is going along swimmingly the incentive to get out of your comfort zone and into the trenches just isn’t the same, and when we look back on the history of our business lives the game changing moments have always been derived from the biggest challenges.

Stuart is a huge fan of the saying ‘the harder you work the luckier you get’ and for good reason.  As we were working through identifying our available options, it’s fair to say one presented that we hadn’t anticipated, but immediately generated a high level of enthusiasm and excitement.

We’ve long had huge admiration for the Chemist Warehouse founders and what they’ve achieved in completely redefining the community pharmacy landscape in Australia and now beyond.  Those with good memories may recall that we actually sold the majority of our retail pharmacy interests to Chemist Warehouse in the mid 2000’s, following our assessment that we didn’t have the skills, infrastructure or resources to compete with the disruption they were going to bring to that sector of the market. Since then as we’ve watched their growth trajectory we’ve never regretted that decision, or our accompanying one to double down on where we believed our strengths lay in the areas of hospital, oncology and aged care pharmacy.

You can’t achieve the kind of growth that Chemist Warehouse has had, particularly with its accompanying consistent consumer experience, without a highly disciplined approach to systems, processes and training.  They also have great data driven decision making capabilities, knowing the important metrics required to achieve their goals, monitoring those and acting with agility when change is needed.  We have also seen that they are never content to rest on their laurels, they have constantly scanned the landscape looking for new opportunities that not only make sense with their business execution capabilities but also deliver value to their significant customer base. Not dissimilar to the core principles that fuelled our own growth in our chosen market sector.

Unsurprisingly the other thing that was of great interest to us is their deep commitment to pharmacist leadership and the accompanying  governance needs of pharmacy owners.  It’s fair to say this has been tested rigorously by many parties over the years, and it’s also fair to say it sits a long way away from the unacceptably distant model we’ve found ourselves forced into in recent times.

The other element that is of genuine interest to us is the impact that joining forces can have on patients.  Hospital discharge and it’s accompanying information flow is still a source of great frustration across the board in Australian healthcare, and one which the billions spent to date on the various iterations of My Health Record have largely failed to significantly progress in any meaningful way.   We certainly don’t think we’re going to be able to unlock that holy grail in the first instance, but the opportunity to develop a connection point between hospital pharmacies and Australia’s largest network of extended hour community pharmacies is unlikely to be a step backwards on the path to progress.

So some 25 years post the launch of our first challenger pharmacy brand here we go again, this time in partnership with some of the smartest business people in pharmacy globally.    We can’t wait to be part of the change that Chemist Warehouse Hospital Pharmacy is going to create!

Photo Credit AFR Paul Harris

2 comments on “How Chemist Warehouse Hospital Pharmacy came to be

  1. This is the first time I have come to know you but you do write well and your passion for the profession come across strongly! While CWH is famous for cost-effective medicines for the majority of Australians, they have consistently underperformed on quality metrics. I can only hope that your sincere efforts will ensure that a quality clinical and professional service that hospitalised patients need continue to remain a priority. Most decision makers in private hospital settings are ready to compromise quality if a cheaper option is available and this has compromised clinical pharmacy standards in the private space. All the best with your new adventure and I wish you guys well!

Leave a Reply