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RX Survival at the
Seattle Times
January 16,
2000
1,221
words
Rx Survival:
The prescription for what's ailing Washington's
independent drugstores: Take on the big guns by
competing where they don't
Dori Stubbs
Seattle Times business reporter
When she was
10, Janet Kusler delivered prescription drugs on
her bicycle for her father's Snohomish pharmacy.
Today, she owns the drugstore and delivers
custom medicines, flu shots and medical advice
on demand.
Kusler and
other independent pharmacy owners in Washington
say they are back in business as they focus on
providing patient-care services rather than just
prescription drugs.
In the past 10
years, 75 percent to 90 percent of independently
owned pharmacies nationwide closed, victims of
market changes wrought by managed care,
mail-order drug sales and competition from
chains and online retailers, said Don Downing of
the Washington State Pharmacists Association.
In Washington,
independents outnumbered chains until three
years ago, when chain pharmacies grabbed a 53
percent majority, increasing it to 55 percent in
1997, according to the Washington State Board of
Pharmacy.
But the number
of independently owned pharmacies held steady in
1998, and that's a promising sign, said Holly
Whitcomb of the National Community Pharmacists
Association.
"At least in
Washington, we are at an even point and might
start to see a gain, maybe not in 1999, but I
think the trend will start to turn the other
direction," said Whitcomb, owner of Seattle's
View Ridge Pharmacy.
Those who
survived say they successfully avoid
head-to-head competition with chain drugstores
by concentrating on services such as custom
medicines, immunizations, emergency
contraception, asthma and diabetes counseling,
and monitoring of blood pressure and
cholesterol.
"We in fact now
are seeing a whole new emergence of
entrepreneurship, and they're opening up
pharmacies your parents may not recognize,"
Downing said. Some have even forsaken
prescription drugs altogether, focusing entirely
on services, he noted.
The buzzword
pharmacists use to describe their shift in focus
is "niche."
"The
independent pharmacies that are left are
surviving because they are giving better service
or are creating niche markets that aren't being
served by chains or mail order or Internet
pharmacies," Whitcomb said.
Many community
pharmacies, such as Fairwood Pharmacy in Renton,
carved out a niche by installing "compounding"
labs. If a patient needs liquid medicine not
available on the commercial market, pharmacists
can make it, said Elwin Blair, owner of the
drugstore. If a woman wants to switch from a
prescribed synthetic hormone replacement to a
natural one, pharmacists can create it.
Need a dosage
adjustment?
"We can fine
tune the dosage to match the needs of the
consumer," said Blair, who added his compounding
center three years ago.
At 64, Blair
has no plans to retire. When he opened Fairwood
30 years ago, he mostly doled out prescriptions.
But to stay competitive, he's had to do some
re-inventing.
"Now, we're
getting into broader pharmaceutical care," he
said. "Another big part of our business is
immunizations."
His employees
travel to businesses and school districts, and
this year will immunize more than 3,000 people
hoping to avoid the flu and pneumonia.
He also advises
women who believe their contraceptives may have
failed.
For these
women, pharmacists in Washington are the only
ones in the United States who can consult and
hand out emergency-contraception pills,
sometimes viewed as a woman's last chance to
prevent a pregnancy.
By law,
Washington doctors, nurse practitioners and
pharmacists may sign agreements that allow
pharmacists to prescribe certain drugs. Several
pharmacies supply "day-after" pills, which do
not cause an abortion. Similar agreement laws in
all 49 of the other states are much more
restrictive.
"Pharmacists in
Washington state are seeing between 1,500 and
2,000 women for this service every month,"
Downing said.
"It's a
specialty kind of thing," added Whitcomb. "It's
what I mean by niche marketing, and that's
critical. You can't get good health care in an
impersonal setting, such as mail order or
Internet."
Managed care
can be credited for the surge of growth in these
areas, Downing said.
Health-maintenance organizations often require
their clients to order prescription drugs from
inexpensive mail-order outlets, and some do not
cover medicines. Though this has driven many
independent pharmacies to shut their doors,
others have taken advantage of a side effect of
managed care: fewer doctor visits.
"Prevention
became a key aspect of health care, and people
started taking charge of their health," Downing
said.
Profits for
specialty services are beginning to take off,
report Downing and Whitcomb.
In Washington,
profits for pharmacies from immunization shots
and emergency contraception rose from nothing
three years ago to $4 million this year, Downing
said.
But just as
HMOs emptied the pockets of small pharmacies,
they may soon fill them back up. The expectation
is that as insurance companies recognize the
value pharmacists provide in patient care, they
will pay to keep their clients healthy.
"The hope is
that the near future brings them profit,"
Downing said. "The hope is that insurance
companies, DSHS, and Medicaid and Medicare will
someday help cover the costs of these services."
Many
independent pharmacies offer blood-pressure,
cholesterol and glucose monitoring; advise
patients on changes in their conditions; and
provide medication education and counseling.
Brock Nyberg,
owner of Falls Pharmacy in Snoqualmie,
specializes in diabetes care.
Besides
checking glucose levels and insulin doses, his
counseling involves helping customers get their
insurance companies to pay for expensive
medicines and supplies.
Washington has
a law requiring insurers to pay for such
medications, but many diabetics are unaware of
this, Nyberg said.
"They just
didn't know or didn't take the time to call
their insurance companies and inquire," Nyberg
said. "What they do is don't give themselves the
benefits of taking better care of themselves
because of cost disincentives."
Nyberg and his
wife, Shanna, both pharmacists, opened their
drugstore in March in what had been the town
pharmacy for 40 years.
Though
colleagues advised him against opening his own
store, Nyberg has an independent streak.
"I worked for
the same independent store for nine years, and
saw how happy customers were at getting special
services only an independent pharmacy could
offer. It's what made me believe it's a viable
option," Nyberg said.
The
husband-and-wife team adheres to small-town
ideals, such as staying open late, coming in
after hours and making deliveries. Like Blair,
they operate a compounding lab, satisfying
demands for topical anti-wrinkle cream and
fertility-drug preparations.
"I think most
independents will thrive by providing service
mail-order and chain drugstores don't offer,
things they're not interested in because they're
not run of the mill," Nyberg said.
That also
describes Janet Kusler, the comeback kid of
independent-pharmacy owners.
After becoming
a pharmacist, Kusler helped her father, then ran
her own home health-care agency.
When her father
retired in 1993 after after 26 years in the
business, he sold his prescription list to a
grocery store, and Kusler's Pharmacy closed.
Kusler brought
it back to life in September. Aware of the gains
made by independents in the last two years and
the ability to provide new services, she seized
her opportunity.
She hired her
father, bored with his life of leisure, to work
as her compounding pharmacist and reopened
Kusler's Pharmacy in the same location.
"We feel like
we've been here forever, and at the same time,
we feel brand new," Kusler said.
To complete her
store, she added a selection of novelty gifts.
"It allows us
to be competitive pricewise in the pharmacy,"
she said. "It's like back to the future of
pharmacy, old-fashioned service and
old-fashioned recognition of customers, yet with
the latest in computer technology."
|
Chains have
different strategies at the Seattle Times
January 16,
2000
674
words
Chains have
different strategies as they battle for
dominance
Dori Stubbs
Seattle Times business reporter
The battle of
the drugstore chains comes down to different
competitive tactics. Rite Aid, with a 37 percent
share of the Seattle drugstore market, explains
its strategy in one word: convenience.
Bartell Drugs,
Seattle's second-largest chain with 19 percent
of the market, uses three words: service,
neighborhood and family.
In the past
five years, other chains such as Longs and
Walgreens have entered the Northwest. Longs has
managed to acquire a 13 percent market share,
but Walgreens has yet to make significant
inroads.
As independents
gear up for the future by concentrating on
health care services, Rite Aid's plan is to stay
focused on prescription drugs.
This means
targeting an aging population and making readily
available new drugs such as Viagra and Propecia
(a hair-loss prevention medication), said Alison
Costello, a Rite Aid spokeswoman.
Its strategy
calls for stores at prominent intersections.
"Customers want quick and convenient, in-and-out
quickly," Costello said.
Rite Aid offers
drive-through pharmacies, an 800 number to
access a pharmacist 24 hours a day, phone-in
refills, mail-order prices for maintenance drugs
and a computer system that tracks a customer's
prescriptions for potentially harmful
combinations.
To keep up to
speed with online pharmacies, Rite Aid invested
$7.6 million this year for about a 22 percent
stake in Bellevue-based drugstore.com.
Though the
chain's pharmacists do private consultations,
they do not give flu shots or prescribe
emergency contraception (though they do dispense
it with a doctor's prescription).
Rite Aid, with
3,800 stores nationwide and 145 in Washington,
suffered financial woes after it bought Thrifty
PayLess in 1996 for $1.4 billion plus $890
million in debt assumption. A year later, it
bought PCS Health Systems for $1.5 billion.
These debts, combined with a federal
investigation into Rite Aid's accounting
practices, caused the stock price to plummet
from $51 a year ago to single digits today.
New chief
executive Robert Miller, formerly CEO of
Portland-based Fred Meyer, quashed rumors that
Rite Aid would sell some of its West Coast
stores.
Rite Aid
reported 1998 annual sales of $12.7 billion and
profit of $143.7 million.
The
109-year-old Bartell's chain approaches the
drugstore market much the same as an independent
pharmacy owner. Its strategy calls for putting
stores in neighborhoods instead of at busy
intersections.
"We have a lot
of respect for the independent pharmacists in
the community, and many of the things we do in
our stores mirror the independent neighborhood
pharmacies," said Mike McMurray, vice president
of marketing.
The
family-owned company operates 45 stores in
Snohomish, King and Pierce counties and will
continue to expand, McMurray said. It will open
stores in Everett and Maple Valley next year.
Bartell's is
about customer service and building
relationships, said John Ahrenius, manager of
Bartell's Magnolia store. It's important for his
40 employees to feel like they're part of the
Bartell family, he said, so worker retention is
important.
"We have
several employees who have been here 10 or 12
years or more," Ahrenius said.
Marla
Christianson, a pharmacist at the Magnolia store
for 18 years, said it's not just the benefits
and pay that keep her there. It's things like
getting a birthday card from the company and
having the president stop by to shake her hand.
"We are proud
of the people we have within our stores,"
McMurray said. "We think they offer excellent
service."
The company had
estimated sales of $150 million in 1998. It
intends to stay focused on the Puget Sound
market, McMurray said.
Though he
agrees with Costello that the demand for
prescription drugs is increasing and convenience
is important, McMurray said Bartell's also
emphasizes services such as bone-marrow testing
and blood-pressure monitoring. Its pharmacists
perform compounding, give flu shots and
prescribe emergency contraception.
As for online
drugstores, the company doesn't see them as a
threat.
"It's in its
infant stages," McMurray said. "Some aspect of
the Internet related to pharmacy is a reality.
We don't know what it will be, but we're
studying it. We have an Internet site and think
the Internet will be a great communication tool
for our customers."
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