Independent Pharmacy isn't declining

Most coverage of last year's JAMA Health Forum study on community pharmacy turnover landed on the same headline: independent pharmacies are opening and closing more than chains. Read the headline and you assume it's bad news for independent pharmacy. Read the data underneath it and a different picture shows up.

What the Data Actually Says

In 2010 there were 21,896 independent pharmacies in the United States and 39,158 chain locations. By 2023 there were 23,732 independents and 36,622 chains. Over thirteen years the independent sector added nearly 2,000 net locations while chain pharmacy lost more than 2,500. Independent pharmacy grew. Chain pharmacy declined.

That's a resilience story, and most of the industry read it as a decline story.

The Churn Underneath

The churn behind those numbers is still worth understanding carefully, because independent pharmacies did open and close more than chains over the same period. The independent churn rate was 152.7%, meaning the total number of openings and closings across thirteen years came to more than one and a half times the number of independent pharmacies that existed in 2010. Chain churn was 49.9%. More independents opened, and more independents also closed.

The researchers explained it plainly. The lower barrier to market entry for an independent pharmacy means more people start them, and more of the ones that start eventually close or get absorbed.

That's the part of the data that matters most for the growth conversation. The market isn't declining. It's separating.

The independent pharmacies building lasting patient bases are in a different position than the ones that opened on local need and clinical capability alone. And the ones in the best position have one thing in common. They stopped relying on passive patient acquisition before they ran out of room to grow.

The Accidental Channel

Most independent pharmacies acquire patients through what I'd call the accidental channel. The patient lives nearby, or their insurance plan steers them there, or a chain closed down the street and they came looking for somewhere else to go.

Those are real patient acquisitions and they fill a pharmacy to a certain level. They also have a ceiling. A pharmacy that grows exclusively through the accidental channel fills to whatever its local traffic supports and then stalls. The patients it has stay loyal until something more convenient comes along, and the new patients it attracts are the ones who happen to find it. That's a fragile model, and it's fragile even when the pharmacy is excellent and the patients are satisfied, because satisfaction without a system doesn't compound.

The Patient Who Chose You on Purpose

There's a meaningful difference between a patient who found your pharmacy because it was closest and a patient who found your pharmacy because they were looking for what you specifically offer. The first stays until something easier appears. The second stays because they chose you on purpose.

Deliberate patients are more loyal, they refer more, and they're harder to move with a convenience campaign or a mail-order incentive. They also don't arrive on their own. The patient who walks in because a neighbor described a clinical service, or because a caregiver mentioned your follow-up process, or because they saw your pharmacy's name in a community context months before they needed a pharmacy, came through a channel the pharmacy built.

That channel is the patient attraction system.

What the System Actually Is

A patient attraction system is a deliberate, repeatable process that puts the pharmacy's specific value in front of specific patients before those patients are actively looking. In practice, that's a community presence that keeps the pharmacy's name alive between transactions, a referral prompt that gives existing patients the words to describe what makes their pharmacy different, and a follow-up process after new medications that surfaces the clinical care patients didn't know was happening.

Each of those is a simple system. None of them requires significant capital. All of them require time to build.

And that's the issue for the independent pharmacies that open and then close. They open on the basis of clinical capability and local need, and both of those are real. Both of them are also the floor.

Competing Through Relationships

The pharmacy that builds a patient attraction system on top of that floor stops competing for patients through convenience and starts competing through relationships. A chain can outspend an independent pharmacy on advertising, and it still can't build the local relationship. A mail-order platform can deliver cheaper, and it still can't counsel the patient who calls at ten in the morning with a question about a drug interaction.

The clinical capability that drives that relationship already exists in most independent pharmacies. The system that puts patients in front of it is the investment the data is pointing toward. The independent pharmacies that closed over those thirteen years were the ones that filled to their accidental ceiling and couldn't build a deliberate patient base to carry them further.

The ceiling on accidental patient acquisition is real. The ceiling on deliberate patient attraction isn't.

Build the system.

If you can't name the last few patients who came to you on purpose, and you can't name the process that brought them, the accidental ceiling is closer than it looks. The Independent Pharmacy Growth Index shows you where your growth system is holding and where it's leaking, across attraction, referrals, retention, and the places where new patients arrive by accident instead of by design. It takes a few minutes, and it tells you the truth.

Mike Hodges

Founder, Pharmacy Breakthroughs Mastermind

Former independent pharmacy owner