Sweetening The Pill

HPS Pharmacies

This South Australia based operation has ridden the wave of the changing dynamic of medication provision and is poised not only to grow further in the near future, but also to increase its lead in the sphere of corporate social responsibility – and to shout about it.

The HPS story began in 1975 when Bruce Heal began servicing a 28-bed nursing home. The company’s progress was strong from the outset and recognition from professional bodies was quick to follow. In the late 1980s, HPS was asked by the South Australian Health Commission to develop a proposal to address the medication management services to country hospitals. In the mid-1990s it was selected by the Pharmacy Guild of Australia to participate in an application for a grant from the federal government for ‘The Best Practice in Health Sector Program.’ In particular, the company was asked to submit its training programme for trainee pharmacists, to be examined and submitted as a best practice benchmark for the industry.

During the 2000s, HPS established a presence in Queensland, New South Wales, Western Australia and Tasmania and has grown significantly since. The company now boasts a national reach and services over 200 clients. Since 2011, the Chief Executive Officer (reporting directly to the Board) has been Tony Wyatt, a pharmacist with more than 30 years experience in the field. He directs a four-strong team of senior executives. He and Chief Operating Officer Steve Yeo (formerly Regional Director of Financial Turnaround for the Children’s Youth & Women’s health region of South Australia) told us more about the HPS philosophy and view of the future.

The focus is on hospitals and healthcare facilities, says Tony, and dealing with the general public is very different from dealing with health professionals. “Not at the point of delivery, the bedside, but more in the highly specialised counselling that is provided in hospitals. Particularly in areas such as cancer care,” (one of HPS’ core activities is provision of oncology medication, advice and services throughout Australia in both the public and private sectors) “which is a very specialised area that a high-street pharmacist would have little knowledge of.” From the business side, says Steve, HPS’ customer is the facility client (the health institution) rather than the consumer of the product. “Our integration and service quality need to match their expectations and the brand goodwill that they are developing.” There is also, to put it bluntly, a requirement for a greater degree of expertise among pharmacists in health facilities than on the high street, because of the extra complexity of the drugs being used there.

“We believe growth will come from the public sector.” The government is moving more toward what might be called public-private partnerships. “We believe there may be no more state-funded public hospitals built from here on.” None of the states seem to have the resources and the obvious way they can keep improving and keep pace with the more expensive and high-end needs of the hospitals is to look to the private sector.

With Australia’s growing population, there is an increasing pressure on correctional facility demand as well. “Health services in the correctional sphere is moving to a contracted private provider model, and for an expertise within in this setting which we clearly have.”

Steve emphasises that the industry as a whole is under pressure to reduce prices and especially margins, so growth prospects have to be measured in context. “Growth in the pharmacy industry and for HPS will come from expanding our client base and focussing closer on segment opportunities. But we know there will be significantly increasing pressure on the margins that come with the drugs. HPS is uniquely placed because our business is not just about the supply of the box of drugs but about the specialist pharmacy skills as well, which will become even more important as the value of outsourcing increases.”

Tony explains there is increasing pressure to both save money and improve the delivery of medication. To address the latter, HPS personnel work directly with patients to help them better understand their medications and how to take them. “Most re-admissions are caused by medication misadventure – people come home with a bag of medication and can be confused about what to do with it. The government is putting a major emphasis on counselling.”

Reducing costs but maintaining or even improving patient outcomes is the goal and something in which HPS excels with its wide knowledge base; Steve says the company is increasingly in demand to assess practices for clients and make recommendations for improvement. It is an important area for securing more clients for HPS in the future. HPS has a pharmacy model that is commercially ‘ready for integration’ more or less out of the box into any health facility.

Technology will be the key to maintaining profitability, he adds, with the yield per dollar under pressure and a large part of the business tied up in a workforce whose cost is inevitably on an upward trend. There is an enormous logistics management challenge in terms of supply across Australia “and this gives us opportunities in terms of how we use technology to improve efficiency and net profit.” Another key to success is strong ties with HPS’ supplier base. “Many of these relationships have been nurtured now for decades and represent an enormous advantage for HPS in how it can deliver value through to its clients,” says Steve.

Despite the downward pressure on margins, the opportunities for HPS are nearly endless. Tony says the company’s entire structure is geared to assuring steady and sustainable growth, supporting the business development team whilst keeping growth organic. “We have limited resources and it is essential we apply them in the best areas to achieve the best results, so we are very careful about new business. To deliver the kind of service we want to provide, it has to be profitable for everyone and we don’t just chase top-line sales. It needs to be solid, relationship-based business.” The success of this approach is evident in the company’s large repeat customer base.

HPS will launch a new strategic marketing plan in 2013 to refresh the brand and renew the focus on corporate social responsibility – “how we ensure we are contributing back to the society we trade in and minimising our footprint on the environment, and also challenging our supply partners to do the same,” explains Steve. The company also has an active role with several charities; he singles out the Mary Potter Foundation’s Calvary Biography Service, which aims to empower terminally ill patients by giving them the opportunity to record their life stories for themselves and their families, of which HPS is the primary source of funding. This healing program, first trialled in New Zealand in 1993 by Dr Ivan Lichter, is being offered to patients of the Mary Potter Hospice and Central Adelaide Palliative Service. The company has also just pledged a large donation to a major cancer ward upgrade being led by the charity. “A cottage based start-up that is now a very large corporate business, remains in tune with the needs of its clients and the Australian environment.

“The need to ‘put back’ is pretty important to us and we don’t just pay lip-service to it,” explains Tony. As another example, HPS has been working with the country’s biggest methadone project for more than 30 years and is now closely involved in a post-prison drug rehabilitation programme in Victoria.

At the heart of the company is the expertise of its people. In terms of staffing, there is not a current shortage. Tony says pharmacists were in short supply a few years ago (it was necessary to bring them in from Europe on visas) but now, if anything, there is an oversupply. “But because our business is different, we find we are having to train our own, placing students within our organisation to learn in a more hospital-orientated manner.” Pharmacy technicians, though, are certainly in short supply and HPS is making considerable investments in this area.” Steve stresses the overriding importance of good staff: “I can’t emphasise highly enough the value to us of our 140 pharmacists who are trained and skilled to a specialist degree in providing services in a client setting to acutely ill patients. It’s a huge advantage.”

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January 18, 2018, 8:34 AM AEDT

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