Keep Your Gloves Up, Competition Happens

By Beacon Staff

Disclaimer – A couple of friends and a few of my Scout troop’s parents work at KRMC. Finally, Northwest Healthcare Foundation (whose primary purpose is to keep the ALERT helicopter in the air, financially speaking) is a client to the tune of $100 a month. $100 is not likely a big enough amount of cash for me to “sell out to the man”, but I thought the client relationship should be mentioned, just in case anyone gets their shorts in a bunch about this column and starts wondering aloud. Transparency is good.

Last week, the Beacon released a story about local pharmacists’ reaction to the new Northwest Healthcare (not the same organization as Northwest Healthcare Foundation, mind you) owned pharmacy that opened at KRMC recently.

We had a similar conversation about a year ago about a similar, but more benign flap in Columbia Falls.

Let’s reposition the story for a moment, using my writer’s crystal ball (noting that I am not licensed by the state of Montana to operate crystal balls), just to give you a little something to consider.

Let’s say KRMC doesn’t start their own pharmacy and a year from now, a reporter somehow finds out that KRMC management had a way to cut their overhead by $250,000 annually and didn’t do so. The result is a story that says patient healthcare charges at KRMC were inflated by $250,000 annually because of ineffective management and purchasing. There are calls for the CEO’s head, and for Congressional hearings for healthcare cost mismanagement.

Does the outrage change? Not much.

Like it or not, competition happens. Sometimes, that competition might even seem unfair. It’s part of being in business, like it or not.

That market is already beat up. Wal-Mart started offering $4 prescriptions. Smith’s and others followed. It’s a commodity business and price pressure is a given. And then there are the insurance companies.

I mean, it’s easy to understand why they might feel like they just got out of the ring with Columbia Falls’ Michael Hader.

But, this quote leaped of the page at me: “opening a retail pharmacy infringes on an area where the community’s health care needs are already being met by existing pharmacies”.

Maybe we should have rules about how many businesses can compete in each niche. Oh, wait. We already have lobbyists and Montana liquor / barber pole laws.

Non-profits compete with for-profits all the time. Church day cares compete with for-profit day cares. The same happens in low-risk, quick-serve health care delivery, legal services and a number of other markets.

And that isn’t the worst of it.

Even the US Government competes with for-profits, and they do it using prison labor. Google “competing against prison labor“, “federal prison industries” and UNICOR, and that’s been going on since 1934.

Here’s a quote from Government Executive magazine about Federal Prison Industries: “Under that system, if FPI wants a particular government contract, private businesses cannot compete for it — even if they can offer lower prices, better quality, or faster delivery.” Federal prison labor produced $678 million of goods for the US Government in 2002. It’s not right, but it’s reality.

KRMC isn’t going to close it. $250k in annual savings is a big deal. That number will rise as prescription drug costs increase, staffing numbers rise and employees age.

So what do you do?

Focus more sharply on what you do, who you do it for and how you do it.

Focus far more closely on the customers you’re serving. Don’t take a single one for granted (there are hints of that in the story, look for and cure them). A commodity business has to expect to be price shopped. Find a way to get yourself out of that position.

The obvious: Specialty markets in your niche, and added value via services that everyone else is too lazy (or unable) to deliver.

Being in business is a lot like being in the ring with Michael Hader. Gotta bring your “A” game.

Want to learn more about Mark or ask him to write about a business, operations or marketing problem? See Mark’s site or contact him at [email protected].