Pharmacies have the raw ingredients for AI but no recipe
Artificial Intelligence in Pharmacies
AI for the benefit of the early adopter in the retail pharmacy industry is primed to become a game changer not only in retail pharmacy but also in the wholesale pharmacy industry given the huge volumes of data that exist and the industry's market dynamics. The future survival and viability of the pharmacy as we know it is under threat from government policy and key discount player(s) and AI can negate the impact of these two factors dependent on speed and scale.
In today’s hypercompetitive environment, the survival of the pharmacy as we know it is dependent on how it uniquely meets and exceeds its customers’ expectations including price. This article will be focusing on how the customer centric value proposition is contributed and supported by the use of technology, data and specifically the application of AI. Unfortunately to date, individual and pharmacy groups have been challenged in delivering exceptional value for their customers (or as I will refer to them ‘clients’) in a financially viable manner. Neither have they had/created the opportunity or capability to be able to leverage AI to address these outcomes efficiently.
To date it can be suggested that pharmacies and wholesalers have engaged technology in reducing operating costs (also dubbed by some as ‘sweating the assets’) in supply-chain and logistics, but this does not represent a strategic differentiator as it can be replicated by the competition and is transaction/volume focused and not customer value outcomes focused.
The pharmacy represents a very accessible and cost (if any cost at all to clients) effective provider of healthcare management services to its clients. The difficulty here is in making the pharmacies and wholesalers financially viable with the decreasing CSO pool of funds available (based on volumes) by government to the wholesalers, that are then partially passed onto the pharmacies in their pricing for the benefit of their clients.
It needs to be noted of circumstances where a client goes to a discount pharmacy chain to purchase medications and OTC products to then immediately go and visit a non-discount chain pharmacy for their health management advice with the discount pharmacy’s branded bag in tow! This example results in reduced basket size, revenue and profitability for the pharmacy providing the health management advice.
Achieving healthcare management of clients can be significantly improved through the correct strategy, people, infrastructure and technology, in specific the engagement of AI to predict and proactively engage with the client for more effective healthcare outcomes. This involves a more customized/unique value proposition, engagement and touch point with clients that also results in increased financial viability of the pharmacy and its wholesaler.
In addition to the benefits to the clients, the benefits of engaging AI by the pharmacy is its engagement to facilitate and/or drive analyzing history and real-time data from the client with apps. These would then notify the pharmacist of potential actions required by supporting the pharmacist’s engagement/touchpoint and decision making process. This will result in reducing the effort required by the pharmacist while also resulting in increasing store visits, increased revenue and more importantly increased health outcomes for the client.
The above mentioned benefits and efficiencies are further compounded when AI is then integrated into the pharmacy’s supply-chain. This results in making clients ‘sticky’ to the pharmacy that in turn makes the pharmacy ‘sticky’ to its wholesaler that in turn results in better health outcomes, increased efficiencies and increased revenues and profitability for the pharmacy and its wholesaler.
The above represents a ‘win – win – win’ scenario and this is before we even begin to evaluate the benefits of AI in new drug development and manufacturing.
AI foundations currently exist in pharmacies to be able to engage AI due to the data they possess in their client management systems, POS system, medication and OTC data sheets.
AI also has the added benefits for clients and the community at large in preventing errors in medication prescriptions, reducing complications, reducing hospital re-admissions and engaging with clients in real time to reduce harm. AI provides the opportunity to allow the pharmacy to move away from dispensing medications (a commodity) to being able to provide a greater range of client care services, deeper interpersonal relationships in a more engaging and financially viable manner for the benefit of the pharmacy and their wholesaler.
In closing, it needs to be noted that in order to succeed in delivering the benefits and value that AI promises there are certain critical success factors that need to be considered. Some of these factors include and are not limited to:
Incorporating AI in corporate strategy development and governance framework.
Truly understanding AI’s strategic importance, value and implementation considerations at the Board and Executive levels.
Having a strong and visionary leader and sponsorship/representation at the Board level.
Not treating AI as a silo, as it resides across the whole organization.
Socializing AI throughout the organization and having the whole organization’s involvement in its design, development and deployment.
Avoid treating AI as a technology project or going the ‘big bang’ approach.
Quality of data being used.