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How Local Ownership Gave Rise to Guardian Pharmacy

At the beginning, there was just a business model in search of an industry niche. Or at least that’s how Fred Burke likes to begin telling the story of Guardian Pharmacy, LLC — the third largest long-term-care pharmacy company in the U.S., with revenues of more than $210 million.

As founder, CEO, and president of the fast-growing firm, Burke says that other than narrowing its lens to stay focused on the healthcare sector, Guardian’s area of specialization remained a matter of debate.

Fred Burke 4jv“We looked at a whole lot of segments and studied hospice, urgent care, and fusion therapy, but we settled on long-term-care pharmacy because we saw it as the perfect segment for our business model,” explains Burke, who says that the business model is based on the simple premise that local management teams empowered to make decisions at the local level — particularly those decisions related to customer service — could be far more impactful than a centralized management function.

However, Guardian’s model goes a step beyond the dictums of decentralized management. To maximize the benefits of “local autonomy,” Guardian shares ownership in its “business units” with local management teams — an approach involving two evenly divided points of origins. The first of these occurs when Guardian acquires an ownership stake in an already established pharmacy, while the second would involve a startup, in which Guardian and a number of local entrepreneurial partners would join up to fund a pharmacy.

“Each pharmacy is an LLC, so each is a business in and of itself. It has its own bank account, board, P&L, and balance sheet,” explains Burke, who says that Guardian, first established in 2004, has ownership stakes (between 70 and 90 percent) in 22 pharmacies across the U.S.

“By and large, pharmacy owners are outstanding clinicians, and they do an outstanding job of tending to the needs of the patient and the doctors and nurses, but where they might not do as well is on the business side of the things,” says Burke, who notes that the firm offers its local management teams a robust back office consisting of a 30-member Atlanta-based support team made of subject matter experts specializing in everything from drug reimbursement to leadership development to real estate leases.

In the past, Guardian has not necessarily targeted specific states or geographies for growth, but instead has qualified opportunities as they came forward.

Still, as the number of Guardian pharmacies grows in certain regions, the firm has begun to tailor specific programs for different local ownership clusters.

“One of our recent initiatives is to launch a regional sales effort and go forward inside our southeastern market with a pharmacy footprint that can serve regional chains,” adds Burke, who believes a national footprint for Guardian may be only a few years away.

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05e6de4Average total director compensation in healthcare companies ($148,272) continues to fall just behind the energy and technology sectors, according to a new BDO Study. Board member compensation in the healthcare sector is likely driven by the highly complex regulatory environment around bringing a product to market, where development is often slowed by lengthy clinical trials and an increasingly arduous and uncertain review process with the U.S. Food and Drug Administration.

“Among healthcare providers and payers, we expect board member compensation will hold steady as the industry comes to grips with the changing realities created by the Affordable Care Act,” says Steven Shill, partner and national healthcare practice leader at BDO USA, LLP. “While much more demand may be placed on board members, compensation will likely not see a major shift until there is more clarity around the long-term stability of the industry.” MORE



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