Risk and opportunity.
Bobby Glaze at First Financial Bank sees regulatory uncertainty as a backdrop to which good planning requires savvy investment: Regulatory uncertainty is about context, not a deterrent. “I don’t feel the law changes the outlook from a lender’s perspective,” Glaze explains. As a lender, we will continue to make loans that make sense. We invest in borrowers that come to us with a great business plan, an understanding of the market and the opportunities, and knowledge of the market and the business of pharmacy.”
“At First Financial, we are investing in you as a business owner,” Glaze makes it clear. “We always want to make sure to put our borrowers in a position to succeed and prosper.”As a lender, this can vary depending on multiple factors, including the size of the displaced patient population, the overall mix of brand drugs being dispensed, and how quickly you expect to grow,” Glaze says. “The last thing a new pharmacy wants is to see rapid growth and not have enough working capital to sustain rapid expansion. I believe a good starting point in terms of working capital would be somewhere between $400,000 and $600,000, depending on these factors.” This is consistent with the industry standard for setting up an independent pharmacy.
Evaluating Loan Applications in This Environment
First Financial Bank takes a multi-pronged approach when screening loan applications. “As a lender, we have to evaluate multiple factors when it comes to making a loan,” Glaze explains. “The first is making sure a borrower has a solid business plan as their foundation. Understanding the market opportunity and how to capitalize on it is key. Understanding both patient care and the business side of pharmacy is key and plays a crucial role in creating success long term.”
“I look at the passing of key legislation as a huge upside for pharmacy owners in Arkansas to ensure that they are paid fairly and sustainably,” Glaze says. “No law is perfect, and owners must take an active role in managing day-to-day operations to ensure profitability.”
Beyond Arkansas: National Implications
Other states – including Indiana, New York, New Jersey, and Vermont – are taking similar action. If Arkansas’s model goes nationwide, independent pharmacy owners should consider financial planning.
“First Financial Bank will continue to foster strategic partnerships nationwide,” Glaze says. “As a pharmacy-centric leader, we have the unique ability to understand these opportunities that arise when changes like this happen in the market. Understanding how changes like these affect pharmacies helps us as lenders and partners to position our customers for success.”
He emphasizes the importance of preparation: “Understanding that these legislative changes can lead to the opportunity for growth of the Independent Pharmacy. The key to growth is making sure stores have a financial plan to have enough working capital either on-hand or accessible to be able to take on new customers and seize this opportunity.”
Practical Advice for Independent Pharmacy Owners
What should independent pharmacy owners be doing now? Both specialists have clear guidance. “Join your state pharmacy association and invest financially to strengthen it,” Vinson advises. “These investments are investments in yourself, your profession, and your patients. We have made great progress, but there is still important work to do in court, enforcement, and future legislative reform.”
He continues: “Join and support your preferred national associations, including the National Community Pharmacy Association. Relationships matter. Get to know trusted colleagues in the profession, including banking industry partners. Learn the laws and the opportunities that help you protect and serve your patients.”
Vinson also suggests that educational offerings such as the NCPA Ownership Workshop are great jumping-off points: “It is also a good idea to consider partnerships with pharmacy owner groups and to recognize the power of relationships in helping you grow as both a clinician and a business professional. Talk with people in the industry who have experience and earn their trust. The NCPA Ownership Workshop is also an excellent place to start from an educational standpoint.”
Moving Forward with Confidence
Changes in Arkansas signal more than one state’s approach to PBMs. This fundamentally changes the way the pharmacy industry could operate. Although legal challenges have created short-term uncertainty, momentum for pharmacy reform continues to accumulate at the state and federal levels. As independent pharmacy owners, this moment of great need requires thoughtful planning, powerful networks, and relationships with financial institutions that know pharmacy.
If you are thinking about opening your first pharmacy, expanding operations or keeping up with industry trends, please consult an advisor or other professionals in that field. At First Financial Bank, we’ve provided independent pharmacy owners with financial resources to navigate regulatory changes, market shifts, and growth opportunities. Say hello, we’d love to hear from you.
