Service Innovation in German Community Pharmacies. The Consumer Perspective

Table of Content

Table of Figures

List of Tables

1 Introduction

2 Theoretical Background
2.1 Position of Community Pharmacies in the German Healthcare System
2.1.1 Definition and Types of Community Pharmacies in Germany
2.1.2 Legal Framework of German Pharmacies
2.1.3 Quality Criteria of Community Pharmacies
2.2 Challenges in Patient-Centered Healthcare Service
2.2.1 State of Healthcare in Germany
2.2.2 The Role of Digitalization in Value Creation in Healthcare
2.2.3 The Role of Socio-Economic Status of Patients in Value-Centered Healthcare
2.2.4 Medication Management and Medication Adherence
2.2.5 Value Creation in Patient-Healthcare-Provider Interactions
2.3 Goods-Dominant Logic, Service-Dominant Logic and Service Innovation

3 Methodology
3.1 Partly Systemized Literature Analysis
3.2 Interviews
3.2.1 Interview Method
3.2.2 Interview Participants
3.2.3 Interview Execution
3.2.4 Interview Content
3.2.5 Interview Content Coding

4 Results
4.1 Partly Systemized Literature Analysis
4.2 Interview Results
4.2.1 The Role of Community Pharmacies in Germany
4.2.2 Service Innovation Potential in Community Pharmacies in Germany

5 Discussion
5.1 Implications
5.1.1 Competence and Consultation
5.1.2 Trust and Safety
5.1.3 Medication Management
5.1.4 Value Co-Creation and New Service Technologies
5.2 Limitations and Suggestions for Further Research

6 Conclusion

References

Abbreviations

Appendix

Abstract

In recent years, the shift from a goods-centered perspective to service oriented economic concepts is dominating marketing research. This service dominated approach is lately also applied to healthcare. Issues such as consumer experience and perspectives, customer journeys and value co-creation are entering the healthcare context. Community pharmacies are essential service providers in German healthcare and thus an important touchpoint for patients within their medication and disease management. New digital technologies and networks further facilitate the opportunities for an active cooperation between patients and healthcare providers such as community pharmacies. This thesis reviews the currently available literature on the role of community pharmacies and their services from the consumer perspective. As literature is very scarce qualitative, consumer interviews have been conducted to answer the research question “how do consumers perceive the pharmacists’ role and their responsibility towards providing / innovating patient care services”. One key finding is the perceived crucial importance of German community pharmacists for the individual medication management. The interviewed participants value primarily the excellent pharmacists’ competence resulting in a personal relationship of trust and confidence. An additional key finding of the thesis is the consumer acceptance of innovative healthcare services. Combined with the latest German legal regulation on digitalization in healthcare the identified positive consumer attitude towards service innovation in community pharmacies constitutes the base for advanced development and implementation of integrated innovative healthcare concepts.

Table of Figures

Figure 1. Literature Search Process (Source: own illustration)

Figure 2. Content Coding Scheme – Role of Community Pharmacies (Source: own illustration adapted from Gioia, Corley and Hamilton (2013))

Figure 3. Content Coding Scheme – Innovation in Community Pharmacies (Source: own illustration)

List of Tables

Table 1. Goods-Dominant Logic and Service-Dominant Logic (Source: own illustration adapted from Vargo & Lusch, 2004, 2008)

Table 2. Content Coding Scheme (Source: own illustration)

Table 3. Profiles of Interview Participants (Source: own illustration)

1 Introduction

In contrary to modern service dominant marketing and business strategies the Federal Union of German Associations of Pharmacists (“Bundesvereinigung Deutscher Apothekerverbände” - ABDA) has published a policy paper “Pharmacy 2030 – Perspectives on provision of pharmacy services in Germany” that does not allocate a central role to the consumer (ABDA, 2020). The paradigm change from firm-centric view to customer centric business models in economics and company service approaches is not at all reflected in this official German pharmacy policy paper (ABDA, 2020). This gap shows the potential and opportunities for future community pharmacy service concepts integrating customer needs, perceptions and experience into their focus. The discrepancy between modern economical service approaches and the official 2030 pharmacy policy paper is highlighting the relevance of the subject of this thesis to explore service innovation in community pharmacies in Germany from the consumer perspective.

Lusch and Nambisan (2015) are describing a broadened view on service innovation connecting different economic actors in jointly creating value. The main aspect in value co-creation is the resource integration involving different interacting entities to generate a supportive environment within the service ecosystem for joint value creation and service innovation (Lusch & Nambisan, 2015). This approach has already been partly adapted and combined with insights in the current healthcare research which is focusing for example on value co-creation and co-destruction in health services interaction, value co-creation through patient engagement, consumer journey in chronic illness and value-centered marketing in healthcare (Agarwal et al., 2020; Hardyman et al., 2015; Keeling et al., 2021; Nakata et al., 2019)

In the community pharmacy context these concepts of service innovation and value co-creation have only been scarcely studied and discussed. Thus, semi-structured interviews are an appropriate method to further examine the question addressed in this thesis: how do consumers perceive the pharmacists’ role and their responsibility towards providing / innovating patient care services in Germany. The objective to further investigate the consumer needs and perceptions in community pharmacies is contributing to the shortcomings that the consumer role is still underestimated in the pharmacy context.

The remainder of the thesis is the following: First, the role of community pharmacies within the German healthcare system and the related consumer perspective is described. Second, common theoretical concepts of service-dominant logic and service innovation are summarized. Third, the methodological approach consists of a partly systematized literature analysis as well as an exploratory, inductive approach through qualitative semi-structured interviews. Fourth, the results of the interviews are presented with respect to the two parts of the research question and interview categories. Fifth, the results and findings are discussed in relation to the theoretical background and areas for further research are suggested. Finally, the main findings are summarized with respect to the research question.

2 Theoretical Background

2.1 Position of Community Pharmacies in the German Healthcare System

2.1.1 Definition and Types of Community Pharmacies in Germany

In Germany there are two basic types of pharmacies defined in the Ordinance on the Operation of Pharmacies (“Apothekenbetriebsordnung” – ApBetrO): hospital pharmacies operated by hospitals and owner-operated public pharmacies, also called community pharmacies, which may also apply for a special license to supply hospitals (ApBetrO, 1995, sections 1, 1a). The German Pharmacies Act (“Apothekengesetz” – ApoG) defines the allowed types of public pharmacies: they may be owned either by a single owner or may also be operated by a partnership of pharmacists, a so-called “offene Handelsgesellschaft”, additionally they may be temporarily leased pharmacies, branch pharmacies or emergency pharmacies (ApoG, 1980, sect. 8, 9, 16, 17).

Pharmacy chains are not allowed in Germany (ABDA, 2020, p. 3). The ownership of pharmacies is restricted by official license application to a number of three additional subsidiary pharmacies in the same rural district, each of which must be managed by an approbated pharmacist (ApoG, 1980, sect. 1, 2).

A total number of 19.075 community pharmacies are providing the German residents with pharmaceutical services and medication which are mainly financed by statuary health insurance and private health insurance (ABDA, 2020, p. 9; Federal-Ministry-of-Health, 2020, p. 8). The ABDA quotes a rate of 23 pharmacies per 100.000 inhabitants in Germany thus ranging in the last third of the European pharmacy density ranking (ABDA, 2020, p. 83).

2.1.2 Legal Framework of German Pharmacies

The legal framework for operating regulations of German pharmacies is defined in the ApoG and by the ApBetrO. In Germany, pharmacies have the legal mandate to ensure the provision and distribution of pharmaceuticals, including night-time and emergency services (ApoG, 1980, sect. 1; ApBetrO, 1995, sect. 23). Mail order trade is allowed in Germany under the precondition that the owner applies for a special license (ApoG, 1980, sect. 11a).

Pharmacies charge the cost of reimbursed medication directly to the health insurance of the insured patients, while patients with the exception of children up to 18 years pay a supplementary charge between 5 and 10 € (Federal-Ministry-of-Health, 2020, pp. 10, 32). According to ABDA, 83.8% of the total pharmacies sales revenue in Germany in 2019 consisted of pharmaceuticals covered by health insurances (ABDA, 2020, p. 78).

The guidelines for the reimbursement of medication and therapies are defined by the Federal Joint Committee (“Gemeinsamer Bundesauschuss”) which consists of all representatives of the German healthcare system, including patient organizations (Federal-Ministry-of-Health, 2020, p. 19). Electronic drug prescription and medication plans will be implemented together with an electronic patient record system through a new telematics infrastructure by 2022 (ABDA, 2020, p. 16). The development and implementation is regulated by the Social Code Book V Amendment Act 2019 (“Digitale-Versorgung-Gesetz” - DVG) and Amendment Act 2020 (“Patientendaten-Schutz-Gesetz” – PDSG). The private data of patients is also protected through a duty of professional secrecy for all healthcare professionals according to the German penal code book (“Strafgesetzbuch” - StGB) (StGB, 1998, sect. 203).

2.1.3 Quality Criteria of Community Pharmacies

The two basic legal acts ApoG and ApBetrO are defining the minimum quality requirements for pharmacy operation in Germany.

Any public pharmacy in Germany must have an entitled and responsible head of the pharmacy with five years of university education, authorized by an official license to practice (ABDA, 2020, p. 3; ApBetrO, 1995, sect. 2). An assigned deputy must also have a pharmaceutical university approbation (ApBetrO, 1995, sect. 2).

The head of the pharmacy is responsible for setting up and implementing a quality management system (QMS) for all processes in the pharmacy including hygiene management (ApBetrO, 1995, sect. 2a). All processes must be reviewed according to the QMS both by internal inspections and by external auditing on a regular basis (ApBetrO, 1995, sect. 2a). The minimum size of the pharmacy, necessary rooms, structure and furnishing of the operational spaces are defined in ApBetrO (1995) sect. 4.

The number of employees of the pharmacy must be sufficient to cover all regular operations and all employees must have an appropriate pharmaceutical education, including the theory and application of the QMS (ApBetrO, 1995, sect. 3). Patient consulting related to medication may only be provided by a pharmacist with university approbation (ApBetrO, 1995, sect. 20). Scientific and legal literature for medication consulting and drug preparation must be available in the pharmacy (ApBetrO, 1995, sect. 5). Another important source for ensuring service quality are the Federal Chamber of Pharmacists’ guidelines covering many pharmaceutical topics and containing working aids and recommendations on operating procedures and disease management (ABDA, 2020, p. 43).

Medication counterfeiting is a drug safety issue which is addressed by the European Anti-Counterfeiting Directive 2019. A protection database “securPharm” is created by German pharmaceutical organizations as quality gate to minimize the risk of providing plagiarized pharmaceuticals to patients (ABDA, 2020, p. 55). Pharmacists are responsible for pharmacovigilance with respect to reporting counterfeiting of medicines and also to report undesired side effects of medicines; within the drug recall system they have the duty to collect, return or destroy the affected drugs (ApBetrO, 1995, sect. 21).

Pharmacy service quality is regulated under the premise of reliability of supply and of ensuring drug and patient safety. Opening hours and standby duty of pharmacists are legally defined (ApBetrO, 1995, sect. 23). The obligation of patient consulting with respect to medication management and provision of information about the prescribed or purchased medication is also explicitly defined (ApBetrO, 1995, sect. 1a, 20).

Guhl et al. (2019) have addressed customer perception of service quality and perceived customer value in community pharmacies. From 289 standardized interviews the authors have found that the most valued pharmacy service elements are personal interaction, physical aspect, store policy and availability (Guhl et al., 2019). They conceptualize a model which reveals customer satisfaction and loyalty as consequence of customer value perception, underlining the importance of the customer perspective with respect to service quality in pharmacies (Guhl et al., 2019).

2.2 Challenges in Patient-Centered Healthcare Service

2.2.1 State of Healthcare in Germany

In the analysis “State of Health in the EU” the Organization for Economic Cooperation and Development Organization (OECD) states that Germany has very low levels of unmet medical needs, in comparison to other EU countries they range close to zero (OECD, 2019). Main health risk factors in Germany are reported to be dietary risks, tobacco and alcohol consumption (OECD 2019). On the whole, it is stated that Germany provides almost universal health coverage with shortest waiting times for specialist appointments (OECD 2019). The country has the highest per capita health expenditure in the EU while only reaching average outcomes in relation to cost (OECD 2019). However, value in health care may not be viewed as patient outcomes relative to cost of care; instead, according to the literature about service-dominant logic value can be defined as a benefit to a party (patient) unique to a context (Hardyman et al., 2015). The German Federal Ministry of Health is putting a focus on cooperation and dialogue in healthcare and has established a national health portal intended to strengthen the role of the patients (Federal-Ministry-of-Health, 2020, pp. 45-47).

2.2.2 The Role of Digitalization in Value Creation in Healthcare

According to the OECD, the degree of digitalization in the German healthcare system is still relatively low but a timeline for the setting up of a digital network is set in the Digital Health Care Act in 2015 (“eHealth Act”) (OECD, 2019). The development of new digital offerings facilitated by the eHealth Act is strengthening the health-care competence of patients in Germany (Federal-Ministry-of-Health, 2020, pp. 45-46). The implementation of a digital health care infrastructure in Germany (“Telematikinfrastruktur”) is interlinking the players in healthcare and ensuring a compatible and safe system for electronic exchange of information (PDSG, 2020, sect. 306, 311).

A great variety of electronic health data and consumer information are now available through different data sources for improving predictive health analytics and transparent communication between healthcare stakeholders (Agarwal et al., 2020). The new generation of more digital patients can more easily take over an active role within shared decision-making models and value creation in healthcare leading to improved wellness and treatment programs (Agarwal et al., 2020). On the other hand, this new active role may also be perceived by patients as an additional burden when at the same time managing a serious health condition (Agarwal et al., 2020).

The protection of consumer privacy in digital data collection may cause patient concerns due to ongoing reporting of data breaches like hacking, data theft or the selling of private data to third parties (Agarwal et al., 2020). In Germany, patient data protection within the digital healthcare infrastructure is addressed in detail by the Patient Data Protection Act (PDSG, 2020). From a marketing perspective, consumer privacy protection may also be considered as a way for building trust to differentiate from competition (Agarwal et al., 2020).

As digitalization is progressing, e-commerce and digital services are gaining market shares in pharmaceutical services. Consumers and patients are using digital tools to search for products, to compare prices or to order medication via e-prescription (Federal-Ministry-of-Health, 2020, p. 46). As a consequence, pharmacies have established websites, platforms and e-services for provision of medication (ABDA, 2020, p. 15; Federal-Ministry-of-Health, 2020, p. 42). The COVID-19 pandemic has increased the need of digitalization in healthcare systems significantly to improve information exchange and speed up the implementation of digital services to organize sufficient supply with medical devices, medicines and medical care (Federal-Ministry-of-Health, 2020, p. 42).

2.2.3 The Role of Socio-Economic Status of Patients in Value-Centered Healthcare

Technology advance in health care may represent barriers especially for vulnerable populations with both limited access to traditional health care as well as to innovative tech-based healthcare (Agarwal et al., 2020). Missing skills and resources, including the challenges of personal data protection, need to be taken into consideration when developing and implementing new tailored technological tools for value-centered healthcare (Agarwal et al., 2020). As an example, underserved populations may less likely receive needed material in patient platforms and they may have problems to navigate and understand the provided medical information (Agarwal et al., 2020).

Spanjol et al. (2015) examine medication adherence in a sample of chronically ill patients with limited economic resources and stated that marginalized individuals who already have a higher risk for chronic diseases in addition may be further disadvantaged in their capacity to self-regulate their complex situation (Spanjol et al., 2015). With respect to the management of chronic illness and life-long medication, Nakata et al. (2019) identify in a study with hypertension patients from a minority-serving medical center three life sphere conditions which negatively influence patient compliance behaviors: economic privation leading to medication under-consumption, living in disadvantaged neighborhoods hindering medication compliance and systemic exclusion from quality medical services manifesting in inadequate medical consultation (Nakata et al., 2019). The authors deduce several touchpoints from their study offering opportunities for improving medical compliance during the consumer journey of chronically ill underserved patients. With relation to community pharmacists they propose as one example the option to distribute drug pamphlets especially created by firms for low literate consumers. Another example they recommend for pharmacists is sending reminders to their consumers for medication refills and for following instructions (Nakata et al., 2019).

Old age combined with socio-economic variables and limited access to community pharmacies due to undersupply in rural districts are described to negatively influence medication adherence and to result in frequent re-hospitalization in Liguria, a region with the highest rate of elderly individuals in Europe (Di Novi et al., 2020).

2.2.4 Medication Management and Medication Adherence

The ApBetrO is listing medication management as a distinguished responsibility of pharmacists, defined as ongoing analysis of the patient’s medication including self-medication with the objective to improve medication safety and therapy adherence by identifying and resolving medication-related problems (ApBetrO, 1995, sect. 1a). Special challenges arise in the case of polymedication, a situation which affects 23% of adult German citizens (ABDA, 2020, p. 52).

Medication risks may also be due to pharmaceutical misuse or drug dependency mainly in self-medication, 1.4-1.5 million German citizens are estimated to be concerned (ABDA, 2020, p. 53). Murphy et al. (2016) discuss special challenges in community pharmacies when dealing with patients with mental illness and drug addiction where patients not only expect the absence of stigma and judgement but also sufficient time and adequate privacy. The authors also describe a strong desire of these patients to capitalize on the pharmacist’s knowledge because their need of information may not be sufficiently addressed by other health care professionals (Murphy et al., 2016).

Medication compliance or adherence as a crucial element in medication management of chronically ill patients is described as a decisive factor in value co-production or value co-creation in health care (Spanjol et al., 2015; Nakata et al., 2019). Medication compliance is defined as the extent to which customers follow the directions of service providers as a more passive recipient (Spanjol et al., 2015), whereas the widely used term adherence is referring to the World Health Organization (WHO, 2003) definition: “[…] the extent to which a person’s behavior – taking medication, following a diet, and/or executing life-style changes, corresponds with agreed recommendations from a health care provider” (WHO, 2003, p. 3). Spanjol et al. (2015) find in a study with chronically ill patients that healthcare providers only play a limited role in the coproduction efforts of the patients and those chronically ill patients develop their own system to manage their complex and challenging situation (Spanjol et al., 2015).

Nakata et al. (2019) highlight in their study that the in the life-long customer journey of chronic illness medication compliance is not an anchored state but patients are moving towards and also away from compliance. This finding is according to the authors underlining the importance of long-term post purchase experience of customers which is scarcely considered in previous research (Nakata et al., 2019).

2.2.5 Value Creation in Patient-Healthcare-Provider Interactions

According to Keeling et al. (2021) value co-creation and also value co-destruction in healthcare depend on the dialogic engagement during service interactions between patients and health care providers. Equality in relation, room for doubt and open self-expression within a dialogue are conceptualized to promote value co-creation, whereas a superficial dialogue dominated by one participant, the imposition of generic expert advice and superficial recognition rather than affirmation are considered to be co-destruction mechanisms (Keeling et al., 2021). The authors link these mechanisms to specific types of values and conceptualize two pathways either for evolving value based on critical exchange, shared appraisal and mutual respect or for deteriorating value due to withdrawal, exclusion and alienation (Keeling et al., 2021). These dialogic mechanisms are related to face-to-face interactions but are also considered to be applicable to other dialogue forms and digital dialogue platforms (Keeling et al., 2021). Consumer decisions and consumer experiences in response to health expert instructions are described to be strongly influenced by emotional and non-rational factors which may change during a life-long illness and medication (Nakata et al., 2019).

Agarwal et al. (2020) highlight the importance of communication for a positive patient experience and resulting patient satisfaction. The authors point out that obstacles such as time-consuming documentation may prevent effective interactions between health care providers and patients (Agarwal et al., 2020). Digital solutions may provide helpful tools for a more consumer-oriented interaction between patients and health care service providers (Agarwal et al., 2020).

2.3 Goods-Dominant Logic, Service-Dominant Logic and Service Innovation

An evolution in the concept of value creation has taken place in the last decades. The traditional approach is product-centered characterized by formal procedures of manufacturing, distribution and exchanging of goods (Vargo & Lusch, 2004). The concept of value creation has shifted from the manufacturing view towards a service paradigm connected to the product (Vargo & Lusch, 2004, 2008). Vargo et al. (2008) define service as the “[…] application of competences (knowledge and skills) by one entity for the benefit of another” (Vargo et al., 2008, p. 145). Value emerges according to service-dominant logic always in a kind of co-created process between producer and consumer of products (Vargo & Lusch, 2008). This implies that value is created collaboratively in interactive configurations of mutual exchange (Vargo & Lusch, 2008).

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