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It’s not a secret: For many pharmacies, the traditional fee-for-service model isn’t working.
In an age of unending scripts, dwindling profit margins, and predatory PBM practices, many pharmacies are stretched too thin.
They’re overworked, underpaid, and in many cases, at risk of significant financial loss — with some even forced to close their doors altogether.
As the pressure grows, more and more pharmacies are looking for new ways to deliver care.
New models include the appointment-based care model, the value-based care model, and the relatively new pharmacy membership model.
It’s simple: think of a Netflix-type subscription service, except at your pharmacy.
Patients pay a fixed fee, and they get access to all your pharmacy has to offer, from prescription drugs to specialized services.
In an age of uncertainty, the membership model offers a promising path forward for many pharmacies, not only in terms of profit but also in terms of prioritizing quality patient care.
Read on to learn more about the pharmacy membership model, its success in a real PioneerRx pharmacy, and how you can start your own membership model.
If you’re looking to shift away from the unpredictable, margin-squeezing world of fee-for-service models, consider the pharmacy membership model.
In this model, patients pay a set monthly or annual fee in exchange for a package of pharmacy services. The service offerings are up to you, but they may include, for instance:
Instead of billing per service or prescription, patients — or employers — pay a membership fee.
For many patients, this means better pricing; and for many pharmacies, it means reducing their reliance on PBMs and avoiding the shrinking profit margins associated with them.
Good Shepherd Pharmacy, a nonprofit pharmacy in Memphis, TN, has seen the benefits of a membership-based model firsthand.
GSP primarily serves low-income and uninsured patients with chronic conditions, filling around 50,000 prescriptions annually.
In 2019, GSP partnered with the American Pharmacists Association to launch a pilot program for the pharmacy membership model.
To start the pilot program, employers contracted with GSP to provide prescription services for their employees.
The program enrolled 34 patients for whom 1399 prescriptions were filled, spanning 13 quarterly refill cycles from January 2019 to March 2022.
The membership pharmacy model included 3 primary goals:
The results were striking. As the case study reports, GSP saw significant revenue growth, and employer groups saw savings. The numbers don’t lie.
But for Phillip Baker, Founder and CEO of Good Shepherd Health, it was never about the money. It was about providing patients with affordable prescription medications and serving his community.
In 2021, Phillip joined us on the Beyond the Scripts Podcast to discuss the pharmacy membership model.
Reflecting on making the leap to the membership model, Phillip says, “What we’re trying to do with Good Shepherd, too, is not build some mega central fill pharmacy; it’s to prove a business model that can be repeated. That’s always been the goal.”
Hear more from Phillip in this episode of Beyond the Scripts:
Read the results of Good Shepherd Pharmacy’s case study here.
With a pharmacy membership model, GSP is better able to serve patients without the added cost, implementing a three-pronged approach: prescription price transparency, value-based payment, and lean pharmacy operations.
Here’s how they did it:
As Phillip Baker explained on the Beyond the Scripts Podcast, “The goal has been, and is, to be financially sustainable on the membership fee alone. However, the game — if you will — has been figuring out a pricing that will allow that.”
GSP has tried several different pricing models over the years — some based on age, some on number of prescriptions, others on number of generics, and some based on flat rates for brand-name prescriptions.
As Phillip explains, he’s always open to trying new pricing models and acting as a guinea pig for research.
For the sake of the case study, GSP implemented a group-based pricing model.
Instead of selling prescriptions at the average wholesale price (AWP) minus a discount, GSP charged employers the pharmacy’s actual acquisition cost (AAC) for prescription.
This ensured 100% price transparency and shifted the pharmacy’s focus from volume-based to value-based care — since no revenue was generated from prescription sales.
Instead, the pharmacy’s revenue came from a membership fee paid by the employer.
In the case study, the employer paid GSP a shared savings bonus based on how much they reduced overall medical and pharmacy spending.
The more savings the pharmacy generated for the employer, the higher the bonus.
Finally, GSP removed incentives that encouraged more frequent prescription fills — like dispensing fees and administration fees.
This kept their inventory small and their costs down.
To support its payment model, GSP streamlined workflows and focused pharmacists' time on services like medication therapy management (MTM), chronic care management, and medication synchronization.
Specifically, GSP implemented — and continues to implement — group synchronization, where each member’s chronic prescriptions are filled on a set schedule every 90 days, rather than handling each patient individually.
This synchronization process only happens four times per year, allowing staff to focus exclusively on dispensing tasks for a set period, improving efficiency.
As Phillip explains, “Group synchronization was the game-changer… That’s the thing we do that no one else does that allows us to be transparent about prices. We’re not making anything on the drugs, but also to drive those prices down as low as we possibly can, we purchase everything in one big bulk order — prepaying in some circumstances to get bigger discounts — that’s our secret sauce.”
Phillip goes on to explain that without PioneerRx, group synchronization wouldn’t be possible.
As he says, “We wouldn’t be able to do it on any other system.”
Finally, GSP uses the Optimizing Care Model, which leverages the power of pharmacy technicians to verify products and gives pharmacists even more time to do what they do best — patient care.
The benefits of a pharmacy membership model are numerous, both for pharmacies and for patients. These include:
As independent pharmacy continues to navigate uncharted waters — with price increases, PBM practices, and rising cases of burnout — the pharmacy membership offers a promising path forward.
By prioritizing transparency, value-based care, and operational efficiency, you can better serve your patients — and ensure a sustainable financial future for your pharmacy.
If you're thinking of shifting away from traditional models, consider the pharmacy membership model.
Making the switch doesn’t have to be difficult: PioneerRx offers a variety of features, from customizable workflows to medication synchronization tools, to help you do it.
With the right technology on your side, along with a bit of patience and persistence, you can implement an effective pharmacy membership model.
Learn more about PioneerRx and how we can make the transition to the pharmacy membership model as seamless as possible.
