Back in small business
GLOVERSVILLE – For the second time in his life, Tom Wojciechowski is the owner of a small, independent pharmacy.
A few weeks ago, Wojciechowski opened Tom’s Family Pharmacy at 47 S. Main St. For those who remember, that’s the site of the former Del Negro Pharmacy, which Tom was the owner of for 20 years. Tom can’t call his new business Del Negro’s because he sold that name to Rite Aid Corp. in 2008, along with his customer list and a guarantee that he not reopen a pharmacy at his former location for at least five years.
Now that the five years are up, Tom Wojciechowski is back.
“Full retirement really isn’t for me,” he said. “I missed pharmacy. I missed the people. I missed the customers. I missed my co-workers, the comraderie we had.”
Wojciechowski’s new business bucks the trend of independent pharmacies selling out to corporate giants. He bought Del Negro’s pharmacy from its original owners in 1988, after having worked at the store as an employee since 1974. He didn’t own the business for long before the chain pharmacies were at his door looking to buy him out.
“Frequently, offers would come in, from six months after I owned the business and right on through for 20 years. We were always getting offers or chains would say if we were ever interested they wanted to sit down and offer us a price. And over the years, the offers would go up and up and up, along with my age,” he said.
In 2008, at age 60, with the economy still reeling from the economic crisis, Wojciechowski decided he’d better take one of the corporate deals.
“I started thinking, ‘what happens, if when I do want to retire, there’s no buyer’,” he said.
Pressure to sell
John Norton, a spokesman for the National Community Pharmacists Association, said there are 2,207 independent pharmacies in New York state compared to 1,617 chain pharmacies. He said well-run independent pharmacies are usually profitable and are more likely to be sold to a corporate chain than go out of business. He said, although in recent decades there has been a trend of corporate buy-outs by chain pharmacies, for the last five years the percentage of pharmacies in New York state owned by independents has remained steady at about 57.7 percent.
“There’s a lot of states that have parity between corporate and independent pharmacies, but New York state has a lot of independents in the upstate area, and New York City is so diverse that there’s a lot of space for independents,” he said.
Wojciechowski said corporate buy-outs of small independent pharmacies are predicated on the large chain’s calculation that they can retain a certain percentage of the independent pharmacy’s customer list, which is what is really being sold to them, along with agreements that shut down the former business. Part of the deal usually includes a clause whereby the independent pharmacist goes to work for the corporate chain for a period of time, in the hope that the pharmacist’s presence in the store will help maintain the illusion that the customers are continuing the same relationship they had with the independent store.
Wojciecowski said he worked for Rite Aid in Gloversville for about eight months, but he didn’t like the experience. He said most of the “niceities” of the kind of service an independent store can offer are lost at a corporate chain with its emphasis on profits and the volume of work demanded of its employees.
“It’s not that the service is always bad in a chain setting, but we can be so much more flexible,” Wojciecowski said, “whether it’s delivering a medication or if a customer has a need after hours for an emergency prescription to be filled. You can’t get that at a chain. If they close the door at 9 p.m., they’re gone.”
Norton said, although pharmacies tend to be a profitable business, independent pharmacies still face financial pressures in the form of new regulations and long wait times for reimbursement from Medicare Part D and slim profit margins from those reimbursements.
“It’s not that those things drive the small pharmacies out of business. Pharmacies continue to do well, but a lot of independent pharmacists decide they don’t want to deal with the struggle anymore and they have these chains knocking on their door,” he said. “These chains are very aggressive.”
Tina Mylott, one of the owners of Palmer Pharmacy at 2 E. Main St. in Johnstown, wrote a letter to the Leader-Herald’s editorial page March 31 to address rumors that her family’s business had been sold to a corporate chain. Mylott said she believes some of her customers may have confused her pharmacy with Tower Pharmacy in Perth, which was recently purchased by Rite Aid. She said the owners of Palmer Pharmacy have no intention of selling their business any time soon, but they’ve had plenty of offers.
“My work station is full of business cards,” she said.
Mylott said the pharmacy business has become more difficult in recent years because of tighter reimbursement rates from Medicare and longer wait times for reimbursements from government programs and private health insurance.
“It’s a frustrating business to be in right now, because the cost of prescriptions is sky-high and reimbursements are not good,” she said.
Mylott said her father first purchased Palmer Pharmacy in 1964 from the Palmer family, which had operated it since 1904. She and her brother worked at the store when they were teenagers and now they own it. She said the reason to stay in business is simple.
“Pride. My father is still alive and we pride ourselves on what we do. I feel our service is very individualized. In other words, if you walk in the door, we take the time to talk to you,” she said.
Competing with the chains
A look at the drug price search engine on the the website rxpricequotes.com – which claims to provide drug prices at pharmacies within a 5-to-100-mile radius of any U.S. ZIP code – reveals there is little difference in the price of most popular drugs at most pharmacies. For some drugs, some independents seem to have slightly better prices than chain pharmacies and for other drugs, the chains might have slightly better prices. New York state law requires pharmacies to provide customers with a price-poster of their top-selling drugs, which are usually the basis for the online price search engines. Independent pharmacies obtain their drugs through whole sale corsortiums that typically offer drugs within the same price range that chains obtain them.
Norton said drug prices usually only affect customers who are paying cash for drugs, which would be the case if the customer didn’t have insurance or the drug wasn’t covered by their insurance or he had to go out of pocket to supplement costs not covered by a government program. Health insurance drug co-pays tend to be the same at all pharmacies. Norton said companies like Walmart can offer cheap prices for generic drugs.
“But they only offer the low prices for drugs on a list. If your drug isn’t on the list, they’ll charge more for it,” he said.
Hash Patel, the owner of Gloversville Pharmacy at 42 N. Main St., said price flexibility is the area where he feels he has an advantage over the chain pharmacies. He said he worked for a large pharmacy chain for more than 10 years before saving up enough money to start his pharmacy. He set up shop in Gloversville in 2012. He said he’s tried to fill the independent niche that Del Negro’s Pharmacy used to fill in downtown Gloversville.
“When you work for a chain, there are many limitations to helping patients. You can’t use your own judgment and help,” he said. “If I want to recommend something to a patient when the patient can’t afford a prescription they need, I can do that with my own store because I know my costs. And, as long as I can make a few bucks on it, I’m happy, and I can help the patient.”
Norton said another area where independent pharmacies can compete with chain stores is the sale of durable medical supplies typically not offered at chain stores. He said most chain pharmacies make almost all of their profits on other items in the store, which allows independent pharmacies to be more focused on drugs and the medical needs of customers.
“We have to do things that distinguish ourselves from the chains, and one of the big ways is offering more home delivery,” he said.
Wojciechowski said the sale of Del Negro’s Pharmacy netted him enough money to retire, and he tried retirement for about a year and a half, but he was so bored he returned to work at Rite Aid part-time as a “floater” pharmacist. Working at different locations throughout the chain, Wojciechowski said he determined he could restart his business at the age of 65 and fill the needs and the prescriptions of his customers better than the corporate giants.