CA AG looking at pharmacy aspect of Kroger Albertsons merger

[BillyGr]

Has Kroger's publicly announced that any pharmacy locations will be closing? I don't know about ABS, but KR's current nationwide pharmacy marketshare is less than 3%. Combined with ABS, it's still less than Walmart. Is KR's current pharmacy operation impactive? Yes and no - depends on location and whether or not you as the customer will be affected if C&S elects to exit the pharmacy business.

Not to go off subject - the public announcement by KR as to the number of locations they themselves have chosen to divest may not equate to what the F.T.C. actually approves IF the acquisition is approved.

So, let's say the deal is approved by the F.T.C., with conditions. It very well may be that the F.T.C. places a "fence" around the pharmacy locations, and requires C&S to operate certain pharmacy locations for a number of years - let alone to any agreements with various state Attorney General's that may require additional conditions.

Without conditions, I could see C&S shuttering the acquired pharmacies, and selling the patient scrip files to Wag's and/or CVS, similar to what Southeastern Grocers is doing - shuttering their RX business before Aldi takes over.

No clue what they may do today, but going back to history again, there were at least a couple of the Grand Union stores that C&S ran that came with pharmacies, and those remained open as long as the stores did - they didn't close or sell them off when taking over.

[HCal]

No clue what they may do today, but going back to history again, there were at least a couple of the Grand Union stores that C&S ran that came with pharmacies, and those remained open as long as the stores did - they didn't close or sell them off when taking over.

Sure, but that was in an era when smaller pharmacy chains were still viable. As recent events have shown, it is becoming increasingly difficult for supermarket pharmacies to compete. If Save Mart, Schnucks, Stater Bros. and even Target decided to get out of the pharmacy business, it's going to be much harder for C&S.

[BillyGr]

No clue what they may do today, but going back to history again, there were at least a couple of the Grand Union stores that C&S ran that came with pharmacies, and those remained open as long as the stores did - they didn't close or sell them off when taking over.

Sure, but that was in an era when smaller pharmacy chains were still viable. As recent events have shown, it is becoming increasingly difficult for supermarket pharmacies to compete. If Save Mart, Schnucks, Stater Bros. and even Target decided to get out of the pharmacy business, it's going to be much harder for C&S.

No one said they couldn't compete, they just chose not to do so.

Other supermarkets still have pharmacies (including a small chain that has just two featured on a supermarket site just today), and it would also depend on how they are run (totally separate, maybe under some type of cooperative setup, and also if C&S actually runs the stores vs. selling them to someone else who already has stores with pharmacies).

[Alpha8472]

Pharmacies can be profitable today. It depends on the workers in the pharmacy actively monitoring drug reimbursements. If a drug is not paid for by the insurance, then the pharmacy should not give it away for free or at a $300 loss. The pharmacy is not a charity organization. The issue is that pharmacies are indeed giving drugs away at a loss. You can check the reimbursement. It just takes a little time.

The insurance doesn't warn you when a drug is a loss. You have to research it.

You can't help every customer and just give drugs away. The insurance companies indeed want pharmacies to lose money. Why won't insurance companies pay a fair reimbursement? The insurance companies are just hoping pharmacies won't check and give the drugs away at a loss.

[storewanderer]

No clue what they may do today, but going back to history again, there were at least a couple of the Grand Union stores that C&S ran that came with pharmacies, and those remained open as long as the stores did - they didn't close or sell them off when taking over.

Sure, but that was in an era when smaller pharmacy chains were still viable. As recent events have shown, it is becoming increasingly difficult for supermarket pharmacies to compete. If Save Mart, Schnucks, Stater Bros. and even Target decided to get out of the pharmacy business, it's going to be much harder for C&S.

No one said they couldn't compete, they just chose not to do so.

Other supermarkets still have pharmacies (including a small chain that has just two featured on a supermarket site just today), and it would also depend on how they are run (totally separate, maybe under some type of cooperative setup, and also if C&S actually runs the stores vs. selling them to someone else who already has stores with pharmacies).

There are a lot of variables that go into if a pharmacy can operate profitably. The mix of customers, mix of drugs sold, specific insurances that are dominant in the area surrounding the store/the reimbursement rates, among other factors.

I was pretty hard on some of these chains like Target, Raleys closing half of their pharmacies, Save Mart closing pharmacies, Schnucks, etc., but given how things have gone down with pharmacies it is starting to look like this is not a problem isolated to specific states but there are issues with in-store pharmacies throughout the US. Yet some groups as you point out continue to operate pharmacies in supermarkets, even some independent grocers supported by wholesalers, so what gives? How do they do it? And these chains can't? It is quite a mystery.

[Alpha8472]

The profitability is tied to understaffing. Most supermarket chains understaff their pharmacies. For a while Save Mart and Lucky pharmacies had just one employee. The pharmacist would work alone. You fill prescriptions, answer phone calls, ring up customers, and give medical advice. There was literally no time to try to keep the pharmacy profitable.

You have to return expensive drugs such as insulin that is ordered and never picked up by customers or else it will be thousands of dollars in losses if it expires. You need to do profitable vaccinations, which takes time away from filling prescriptions. One vaccination could take anywhere from 30 to 45 minutes if a pharmacist is working alone. For example defrost vaccine, dilute, mix, prepare, have patient fill out paperwork...

A major source of profit is vaccinations. So if a pharmacist is working alone, it is more likely that the pharmacist would be too busy to offer vaccinations. The pharmacist would not have time to get any prescriptions filled or help other customers.

So clearly understaffing at Save Mart pharmacies killed off most of the profit. There was no time to research the reimbursement of each drug to see if it was one of those $300 in loss medications.

I have a very good pharmacy manager at work, but keeping the pharmacy in profit is a busy job. He constantly has to encourage vaccinations, return unwanted insulin for refunds to the distributor, check for drug reimbursement costs, manage unwanted drug inventory, etc. These steps to keep a pharmacy profitable is a full time job. A single pharmacist working alone would never have time for all of this.

My friend worked for a Safeway Pharmacy. She loved it. They had proper pharmacy staffing back then. The manager could keep the pharmacy profitable, do vaccinations, etc. It was totally different than a Save Mart pharmacy or even a Walgreens pharmacy. Walgreens really understaffs. I don't think a Walgreens pharmacist would have time to care about profit and loss. They barely get anything done and no overtime is allowed.

There are pharmacy software programs that keep track of pharmacy profit and loss. You have to constantly monitor profit and loss and keep the pharmacy in profit. It can be done, the pharmacy manager just has to manage his or her time. If the supermarket chain staffs the pharmacy properly there should be enough time. Save Mart clearly did not have proper staffing.