Published On: Mon, Jul 9th, 2012

Building the chain network of hospitals and pharmacies – By Pharm. Nelson Okwonna

Share This

It was Bonaparte that said: “Leaders are dealers in hope.” By “hope” he was referring to something not yet seen for which the leader tasks himself and his followers that they may perhaps attain. The not-yet-seen dimension of hope could be akin to innovation. It could be an idea of a new drug formulation, new medical device or a business strategy. The leader may not be the inventor of this new idea but he is the individual that perspires till this new idea becomes reality.

With this background, I hope you will understand my thoughts on the Nigerian retail health care industry. It is not necessarily an innovative thought but it is a leadership challenge. It is a challenge that has lived and died in the minds of many pharmacists, doctors and investors. The reason for these abortions, I believe, is for the failure of research and development to deliver the winning strategy. Research and development is not just what we do in the “laboratory”. The best laboratories are in the inner recesses of our minds and in the classrooms of everyday life. In it, many a professional have asked the question: “How can I develop a thriving retail pharmacy or hospital chain in Nigeria?”

Note that we are now researching, the thinking cap can now come out. Thank you.

The need for increased profitability and job satisfaction has made many owners of pharmaceutical premises to seek avenues of improving their reach. There is also the patient-benefit angle to this. Patients would benefit more from successful chain pharmacy or hospital services due to a level of standard of care that would be offered in those premises. With a standardised privately owned chain service provider, the service centres would enjoy an increased level of public confidence. The centre could also have a central patient information system that allows patient data to be accessed from different “service centres” of the same chain.The chain would also buy products at much reduced costs and this I believe would be the ultimate game-changer in the drug distribution system in Nigeria.

Regardless of the motivations to take on this path, however, the challenges are many.

Like I said, this is an idea that lives in my mind. It is not necessarily new. Leadership begs that it doesn’t die there. In a recent Pharmanews management workshop on “Effective Disease Management in Resource-Limited Settings”, Dr. Femi Olaleye proposed that chain pharmacies and hospitals are the solution to meeting Nigeria’s health care needs at the primary and secondary care levels. He proposed that these chains need not maintain an “egalitarian” posture but should rather have the capacity to meet basic needs at these levels of care. He was echoing my thoughts quite clearly.

His proposal begs for leadership. Leaders are saddled with the responsibility of finding “correct” solutions and disproving the greater majority who are avowed sceptics. So, how can this seemingly “doubtful” contraption of a chain pharmacy or hospital work in Nigeria?

One could say that the major reason the chain option has not worked in Nigeria is that the individuals that can make it work have something more profitable to do with their time and businessknowledge. If you have three premises, handling supplies and making a whole lot of money, why bother with many service outlets, pilferage, terrible staff and negative operating environment?

The maintenance cost of such a contraption is not necessarily the cost of petrol but the managerial cost; the headache may not be exactly worth it. The questions then, are:why and how can I create a profitable management system that assures accountability and control at the centre, yet with little complexities? I may not be able to answer the “why”; I will try the “how”.

The first solution is to recognise that the strength of the chain service system is in the chain. The brand must be invested in or it will rise and fall with the whims of the professional managing it. So, the first job of the leader is to create a system that is big enough that it is bigger than any individual. In other words, the chain should stand for something – niche service provision. A pharmacy chain, for example, has to stand for something. The strength of Walmart is in their pricing. You could borrow that.

In a service industry like ours, the professional manager is a knowledge worker and is essential for the smooth operation of the business. In such a system, when well-managed, the brand is strong enough that business doesn’t necessarily rise and fall with a change in the professional manager. Also, since a lot of funds would be required, investors would be a welcome idea. An effective strategy is one that factors all these interests in a win-win situation.

I am biased towards a management system that tinkers a bit with the traditional ownership structure. Considering that management need not bear all the cost of the operation if it can maintain control over the basic structure which is essentially the supply of professional labour, the brandmanagement and the supply of the products, then a modification of the franchise option becomes very viable.

A structure where the franchising firm is responsible for managing the professional labour and product supply, the franchisee is more or less an investor with a degree of management capacity, depending on the arrangement. In this system, the professional manager could get a degree of ownership either as equity (with time) or asa percentage of profit with well-defined exit strategies for both manager and investors. The franchisor seats back to promote the brand, manage the managers and find new investors for new outlets.

Within this framework I am trying to describe or something similar to it, I believe a leader can find the wisdom and strategy to drive this idea. He, like all leaders, must do a little work of indoctrination. He would have to re-educate himself, his managers and investors to make this happen. He would need to be believable, and need remove some of the frills that make the practice expensive to maintain.

Like every good idea (this is my sincere opinion of this), this idea can be found to be bad by experimentation.Remember, we are still in the laboratory. Hope you came with your lab coats?


About the Author


Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Building the chain network of hospitals and pharmacies – By Pharm. Nelson Okwonna