John Pangrac and Joe O’Leary — James Pharmacy, Toledo, OH
John Pangrac and Joe O’Leary attended the Pharmacy School at the University of Toledo, where they both earned bachelor’s degrees at the same time. They interned with major chains and were on the same track for a couple of years in the retail pharmacy workplace, then they both moved on to work at a local hospital, John for 5 years and Joe for 12.
John later moved to James Pharmacy and worked as a staff pharmacist where he began learning management skills. Six years later, the owners expressed an interest in discussing options with John related to their exit strategy. While Joe was happy working as an in-patient pharmacist at the hospital, he decided it was the time to make a move toward pharmacy ownership. He initially agreed to “try out” working at James Pharmacy for a six-month period, but he soon left the hospital and joined John.
The previous owners gradually cut back their workload, and John and Joe assumed more responsibilities at the pharmacy. In early 2014, they began the process of acquiring the pharmacy by contacting the local bank, which had been handling the current pharmacy owner’s loan and day-to-day business of the store. When the bank’s proposal arrived, the package offered wasn’t adequate for their needs. Commercial lending rules had changed in the wake of the economic downturn of 2007–8.
As James Pharmacy was already part of the Health Mart® franchise and a McKesson customer, the local sales representative suggested that they consider First Financial Bank and Live Oak Bank as potential lenders to secure loans for purchasing the business. Joe found that these institutions were a good fit as they specialized in the pharmacy sector and offered lower fees. They were able to tap into the resources they needed to transfer contracts and sign a new Health Mart franchise agreement, establish a credit account and audit manager, and participate in AccessHealth®. As the transaction was a stock sale, the transition was relatively simple, but there were obstacles to navigate. John and Joe needed to update the payment terms to manage cash flow at the start and gain an understanding of the ordering process. “We were able to lean on the expertise of our McKesson sales manager to help us through the details and give us a bigger picture of what was required and what our opportunities were,” said John.
The best and worst of times
“The best thing about being your own boss is setting policies your way. You can take pride in the business and serve patients all while helping pharmacy employees feel appreciated,” said Joe. “But multiply those extra responsibilities by 10!” He noted that part of his new challenges included always being accessible while still maintaining his personal routine for running the business.
Joe and John are in the process of helping to free up more of their time through consolidating tasks, workflow changes, empowering employees and altering the physical setup of the store. After 43 years, the pharmacy did not have advanced technology so many processes were done the “old school” way — from sending checks in the mail to having employees using a punch time clock. The employees have all embraced the newer technology, including online payments and web-based payroll systems to automate routine tasks such as insurance and incoming payments.
Advice for prospective owners
“We were fortunate that our purchase was friendly in nature, but there were disagreements. We were able to work out the issues in-person that would have required costly attorney fees and time,” said John. “It’s important to focus on the solid assets rather than the moving targets such as accounts receivable that could slow down the process.” John and Joe found that locking down the value of the business assets first was critical before adding on other variables. In their case, historical documents from 35 years ago indicated that the property had once been a gas station and would require an EPA study to complete the sale. That underlined the importance of learning about the physical aspects of a property.
For students, the partners’ advice is simple. “Take time to learn the business. You may find yourself working for a large retail or hospital organization at first, but that is an opportunity to learn about the industry, whether in an in-patient or acute care facility or a large chain pharmacy,” said John. “Find out where you are most comfortable, and then look at opportunities by checking with local independents and find out what their exit strategy is. Most want someone who can help preserve their legacy in the community.” The RxOwnership® team can also help buyers find current owners who are looking to sell.
In retrospect, John and Joe recommend exploring the ownership option when it is right for a prospective owner. “While there are challenges to ownership, the opportunities for a much richer experience come with owning your own pharmacy as opposed to working in a large chain or hospital setting. It is very satisfying to set your own rules, have a direct impact on your patients’ care and help your employees grow,” said Joe.
The Health Mart advantage
Joe noted that the Health Mart brand is growing in local market recognition through radio advertising, OTC products, vitamins, and the physical presence of more and newer stores in the region. James Pharmacy also offers medication synchronization, delivery services and drug packaging that help differentiate the store from other large retailers.