For the past 30 years, DataScan Pharmacy's founder and president, Alex Minassian, has watched the technology that pharmacists use change along with the business model. Today, the self-taught programmer is scaling back his involvement and handing off the day-to-day operations to his son Kevin, now VP of the Holbrook, N.Y., company. Alex and Kevin agree: The pressures on pharmacists has changed so much that a pharmacist today has to be as much an innovative business thinker as a clinician. The Minassians recently spent time talking with ComputerTalk's Maggie Lockwood about technology's impact on the business of independent pharmacy.

ComputerTalk: Alex, let's start with how you got into the business.

Alex Minassian: In 1977 I helped build a computer with a friend while working at Xerox, after reading the magazines that listed a computer system, a microcomputer, that was capable of running pharmacy software. The software, sold by a company in St. Louis, was transferred from a DEC computer, which was expensive then. I got in touch with them, and they offered to sell their software through me in New York state. We brought the software here originally, but we weren't happy with it because it required a lot of changes for New York state, and we couldn't do it because the company that owned the source code was hindering our ability to make modifications. In 1984 we were able to purchase pharmacy software code to modify to work specifically in New York state. We've changed the software four times. The newest version is on Windows, which everyone prefers.

I'm a self-taught programmer and built the software we have today from the ground up. Now we have three programmers, plus myself.  All of our employees, including our software engineers, can fully support our products.  We consider ourselves very flexible. Everyone's got to know everyone else's job in order to better assist our clients' needs. When a customer calls with a problem, our staff has the programming skills to go in and help.

CT: As you introduced your system to pharmacists, did you find them to be technologically savvy?

Alex: Negative. It was the worst thing you've ever seen. The first system we installed - the pharmacy was down the block from here - the pharmacy used it for three months. One of the employees figured out how to use it pretty quickly, but the owner could not figure out how to use it at all. We spent days over there trying to train him how to use the system, and the system was quite simple back then. Finally, he returned the system to us. It was running on a CPM box - this was before Microsoft. When the IBM PC became more popular, we were able to install our second system, and we still have that second customer. The PC system was much simpler from a hardware standpoint. Back then five days of training day and night was not enough. The most difficult part was getting pharmacists to drop typewriters and start using computers. Now we have the customers trained in a couple of hours.

CT: What was the tipping point?

Alex: The tipping point came when schools started educating pharmacists on computers. Also, in the late '80s, maybe 1987, HIP, a huge insurance plan in New York City that took care of the police departments and the large groups of unions, required everybody to submit claims on diskette rather than on paper. We sold 35 systems in one month. We were running ragged from place to place. If I'd had the manpower it would have been no problem to catch 50% of the pharmacies in New York City. We were not ready for it. It was a difficult year for us, but we gained a number of accounts. Most of our systems are now sold word of mouth. Customers know our service is impeccable, and we stand behind our system. Even if we have to work seven days a week to fix a problem, we're there.

CT: As you've gotten to know the business, what have you seen change?

Alex: The biggest change I've seen over the years is that a lot of the older pharmacists got out the business, saying the payouts from the insurance companies were minimal. The younger generation seems to be more business savvy, and they look at pharmacy as an entire business; they don't look at it as just selling prescriptions. Younger pharmacists see that prescriptions bring the business in, and then they can sell whatever they have in their front end. Years ago all they cared about was the number of prescriptions they could fill. They didn't care about the front end, they didn't care about point-of-sale software. Years ago they would fill 30 or 40 prescriptions daily and they were able to collect in excess of $200,000. Today they have to do 250+ scripts a day to make that. But the younger generation seems to be more business savvy. They are able to cash in on the volume of prescriptions by making more money per client coming through the door with other products and services.

If a customer calls us and says "We want to pick up a nursing home, but don't know how to go about it," we'll go in and explain how to run the business and show what the computer will do for them. We help a lot of the newcomers. I had a pharmacy call me and ask if it was good to open a pharmacy in a certain town. I looked at the pharmacy that had been there, and they had sold out - they had been doing a great business, but they sold out because the previous owner was getting old. I told the caller, "You are young. I am sure you'll do well." That was seven years ago. The guy is doing well over 200 prescriptions a day, he's got an assisted-living facility, he's doing great. This customer integrates all new technology. Whatever he can improve, to automate, he buys. That's what makes him a really good businessman - constant innovation. 

CT: So you see that the younger generation wants technology that helps them run their business.

Alex: The biggest thing now is to be automated. For example, there is a lot of money to be made on OTC items. The younger generation understands that they have to automate and be more savvy in purchasing.

CT: You see a lot of benefit in a point-of-sale (POS) system, then?

Alex: POS is an important part of the system. But there are other ways to think about it. If it's a heavy-volume store, they should get a robot to fill prescriptions, or maybe look at electronic counting. All these interfaces are what we've been working on for the past 10 years as new equipment comes up. It can make the pharmacists' life easier because they can handle the heavier volume without hiring more staff.

CT: That means they have to be out getting a feel for the pharmacy. They have to run reports and see what's selling, what's not selling.

Kevin Minassian: A lot of guys will buy a point-of-sale system and only use it to generate reports and as a cash register that can assist with processing FSA transactions. We say you should use the point of sale for all it's worth. It lets you shop for the lowest possible pricing from all your vendors. It's going to help you monitor your shelf space. I tell people: Think about what you are paying in rent for the store. This is your real estate. You're investing in your real estate every month. If you have merchandise that's collecting dust on the shelf, then that's a waste of space. If you review your reports from the point of sale and you have an open line of communication with your customers, you put what's not selling on sale and talk to your customers and ask them "Is there something you're getting from a local store that I'm not providing you?" If you have this conversation with your customers - and you should if you're an independent - then your customers can show you what's better placed on that shelf to get the most out of the space.

CT: How does technology allow pharmacists to be business focused, not just prescription focused?

Kevin: If you are an owner and you are trying to make your business successful, you cannot only look at how to shave costs. If you shave costs in one area, you might want to look around and say, where can I reinvest this money? What technology, what programs, can I put in my stores that will give me a return on my investment?

I can tell you that in our most successful stores, the owners don't fill prescriptions. The owners rely on pharmacists who look over the filling side and work with patients and have a personal relationship with them. There are two kinds of owners. First is the kind of owner who wants to streamline and to cut costs; it seems to be all they focus on. The other type of owner says "If I am going to invest my money in technology, where am I going to get the most bang for my buck?" I can tell you that the majority of pharmacists still have not jumped on board with an IVR. It's a two-part problem: They don't want to invest the money because they don't think they will get their money back, and it's hard to convince them of that because an IVR is not cheap. The second part of that is that they don't want to jump into an IVR because it takes away from personal service. I've got one owner who calls the IVR his little piggy bank because he comes in each morning and he has 80 prescriptions from customers who called in overnight. The pharmacist walks in the door and there is money right on the screen.  Allowing customers the ability to still dial "0" at the automated prompt still puts them in touch with a staff member quickly for assistance. 

CT: It's interesting that the emphasis is on reinvesting - that rather than constantly cutting costs, you think pharmacists should say to themselves "I'm going to reinvest and build my business." And technology is an area where you can really see the results of that reinvestment.

Kevin: You know, it's easy to say vendors are going to push these technologies because they make money on them. But take point of sale. As a business owner for many years, and one who's run successful businesses in different industries, there is no way if I opened a pharmacy today that I would not start off with point of sale - and from the very beginning do a true inventory load and watch my inventory like a hawk. I still argue with pharmacists who have point of sale that doing a full inventory load and watching over it is huge. It's huge not just for reporting but for a number of reasons, including what your cashiers are doing, what's moving out the door, what needs to be reordered without wasting an employee's time running around and checking all the shelves. We have guys who still aren't willing to do it, and I feel it's those guys who, in the long run, may end up selling off their stores because they are getting so frustrated with the idea that "Oh my goodness, reimbursements are down."

One client wanted to get a local assisted-living facility's business.  He offered the facility free eligibility checks for new DME products for the patients as well as a small seminar to get his foot in the door. He tells the ALF [assisted-living facility] owners he's around the block and he already services a lot of their clients and can help out with daily deliveries. This is a guy who is very big in technology. He'll log into our system using his laptop, and he'll be able to access the patient's data and be able to check eligibility as if he's standing in his office.

CT: The customer service aspect is easy when everything is automated.

Kevin: I'm a firm believer that if you are filling 150 prescriptions or more a day, you're doing a disservice to yourself and your customers not to have an IVR system. If you are opening a pharmacy and you have at least 900 square feet or more, you need to have a point-of-sale system to help manage the front end.

Alex: IVR frees up labor. The pharmacist doesn't have to pick up every call. A lot of time it's someone just calling in a refill. If I'm a customer, I don't want to have to wait on the phone to give a refill when I can just type it into the IVR.

Kevin: Our point-of-sale software has a fully customizable rewards program. I have guys who use the rewards system, and it's great. If you are a patient who constantly goes to the pharmacy for prescriptions and picks up a couple of OTC items on your way out the door, you're more likely to say "You know, I'm building up points here, and I need this item, and I might as well pick it up because I'll get rewards back." If you have a pharmacy and deal with a company like DataScan that builds software like this into your point-of-sale software, and it's free, why not implement it?

CT: It seems like the culture at your company is a very personalized experience with your customers. Can you tell me more about that?

Kevin: Well, I got our philosophy from my dad. My dad came from Europe without even a high school diploma, and he built up a successful business. Our product is as good as virtually anything else on the market, and better than a lot of what I've seen, and I'd say we're priced right in the middle. We don't want to give it away to get 900 customers in the door because the reality is I'd have to add more staff and would have less of a personal relationship with my clients. Our customers know my dad and me - you can't insult us, so tell us how it is. When I first came on and started managing, to eventually taking over the company a few years ago, we had some changes that were frustrating some customers. Their attitude changed very quickly when we took care of the issues.

Right now we service a couple hundred clients, and I would be shocked if one is disappointed or upset with us. They know my email address, my phone extension. They know that if my employees aren't taking care of something, they can reach me.

Alex: You can't think the same way as 20 years ago. A pharmacist should be a businessman, not a pharmacist. Yeah, he can fill prescriptions, but at the same time he needs to manage his front end to make money. The ones who close up [their stores] aren't able to do this. I think pharmacy schools should teach as much about running a business as about being a pharmacist. With point-of-sale systems, we tell owners which wholesaler has the best price. You might save 20 cents here or there, but it adds up. At the big chains there are people whose whole job is to manage this. The small pharmacy doesn't have the time to do this. The best bet is to open multiple accounts with multiple suppliers and be able to see who can give them the best price - and allow the POS to shop for you! Having a POS versus a standard cash register also allows you to keep track of your employees and curb theft, among a number of other functions. 

Kevin: We always tell the pharmacists: Your success is our success. If they aren't doing well, and selling off, we're losing clients. When I'm out on the road, more and more I find myself in a consulting role by helping pharmacists bring more business in their door based on what I've seen at other stores.

CT: In your opinion, what is going to take pharmacy forward? How can a pharmacist's partnership with his pharmacy management company make a difference?

Kevin: If you own an independent pharmacy, the two most important relationships you have are with a) your software vendor and b) your wholesaler vendors. If your wholesaler isn't giving you the right pricing, you can't stay competitive. If your pharmacy vendor isn't helping to get you the best technology, the best service, and the most reliable system out there, or when you've got a patient standing there and your system isn't working right or you can't do something for your patients and they walk out the door, you are burying yourself. One of the things we do to set the bar higher for our customer service is to offer full claim adjudication assistance to our clients.  We spend the time with them to get claims paid, and avoid passing the buck to the third party, which seems all too common these days. I was talking to a customer recently who used his volume to negotiate an even better deal with his vendors - even though he was aware that the pricing structure they had was aggressive to begin with. If you want to have a good pharmacy going forward, you need to look at every aspect of the business. It's not the old days.

CT: Alex, now that you're stepping back from the day-to-day, what do you do to keep busy?

AM: I'm becoming a bit of a snowbird because my son is doing a great job with the business, although I still manage to assist in making changes on the software no matter where I am!  Airplanes are my hobby. I was always a tinkerer, as I explained to you. When a programmer didn't work out, out of necessity I became a programmer. I am building an experimental plane right now. I'll fly my plane to Florida and visit clients in North Carolina along the way. We have a customer in New York state with three systems, and he didn't want to change his software, but wanted to install point of sale. It's on the west side of the Catskills. I flew up with a tech and we went to each installation. We can be in Boston in an hour. You can't beat that. CT