Bartell discussion (specific) from Seattle Times

[SamSpade]

As I know they do have a soft paywall and we've been posting a lot of coverage, I took the liberty of running this through archive.today before posting.
With a quarter of its locations gone, Bartell's Future Uncertain
Retail consultants think at least 1/4 of Bartell's remaining store fleet could go, partially due to lack of drive up pharmacy capabilities.

I do feel for the customers that have lived in those tall apartment buildings on First (aka "Pill") Hill and then transferred prescriptions to the pleasant Bartell on Broadway only to see that now also close down. First Hill is pretty steep on foot and does have OK bus service but that's another trip out for someone that may be elderly or have mobility issues.

The nearest pharmacy is a Walgreens one block up Broadway. It may be quite busy at this point with the dense Capitol Hill neighborhood plus those taking the streetcar up from the International District after losing that Bartell Drug location.

[storewanderer]

I'm afraid quite a few more of these will close.

As I recall Rite Aid paid something like $95 million for Bartell. I don't think Bartell was very profitable (I doubt it was profiting more than a few million per year as a chain) on its own but that was probably plenty for the Bartell family to be satisfied with.

A local family chain without much debt may have been happy having stores that only made a profit of $50,000 a year or maybe even less than that since they had 60 or whatever stores that is still a lot of money. But these big corporations with big big debts to pay down plus big hungry shareholders need more profit.

And this is why we are better off with a larger number of smaller chains. They're willing to operate more (lower volume) stores which create more convenient options for customers. Do a drive around Phoenix where I just was and look around all of the commercial centers. You see dead grocery spaces all over. Now you have to drive a few miles to get to a grocery store in a lot of cases, past multiple shopping centers that obviously once had grocers. What happened? Before in the 80's you had Lucky, Alpha Beta, Bashas, Frys, Southwest, Mega, some IGA operators, Safeway, various other players there in the market to open stores. Then in the early 90's you lost some of the others but gained Albertsons and Smiths who built a good lot of stores.

[retailfanmitchell019]

I'm afraid quite a few more of these will close.

As I recall Rite Aid paid something like $95 million for Bartell. I don't think Bartell was very profitable (I doubt it was profiting more than a few million per year as a chain) on its own but that was probably plenty for the Bartell family to be satisfied with.

A local family chain without much debt may have been happy having stores that only made a profit of $50,000 a year or maybe even less than that since they had 60 or whatever stores that is still a lot of money. But these big corporations with big big debts to pay down plus big hungry shareholders need more profit.

And this is why we are better off with a larger number of smaller chains. They're willing to operate more (lower volume) stores which create more convenient options for customers. Do a drive around Phoenix where I just was and look around all of the commercial centers. You see dead grocery spaces all over. Now you have to drive a few miles to get to a grocery store in a lot of cases, past multiple shopping centers that obviously once had grocers. What happened? Before in the 80's you had Lucky, Alpha Beta, Bashas, Frys, Southwest, Mega, some IGA operators, Safeway, various other players there in the market to open stores. Then in the early 90's you lost some of the others but gained Albertsons and Smiths who built a good lot of stores.

I wonder what would be happening had Albertsons never broken up and kept Sav-on/Osco? I suspect Sav-on would be a firewall against CVS in SoCal like the way Meijer is a firewall against Walmart in Michigan, or Fred Meyer being a firewall against Walmart in the PNW. It would be one of the last regional drug store chains standing against this CVS/Walgreens duopoly.

[storewanderer]

I wonder what would be happening had Albertsons never broken up and kept Sav-on/Osco? I suspect Sav-on would be a firewall against CVS in SoCal like the way Meijer is a firewall against Walmart in Michigan, or Fred Meyer being a firewall against Walmart in the PNW. It would be one of the last regional drug store chains standing against this CVS/Walgreens duopoly.

Things would be very different. Sav-On/Osco was a strong performing asset for Albertsons. I think it would have still been opening new stores. Osco actually had quite good geographic reach; it was in a lot of the midwest/upper midwest.

CVS should not have been allowed to acquire both Sav-On and Longs in CA/NV. But they were. Oh and the Target pharmacies too. CVS gets whatever it wants because it is like a de facto government entity with how tangled up into everything it is between Caremark, the deep amount of Federal benefits programs it is involved in, etc.

[ClownLoach]

I wonder what would be happening had Albertsons never broken up and kept Sav-on/Osco? I suspect Sav-on would be a firewall against CVS in SoCal like the way Meijer is a firewall against Walmart in Michigan, or Fred Meyer being a firewall against Walmart in the PNW. It would be one of the last regional drug store chains standing against this CVS/Walgreens duopoly.

Things would be very different. Sav-On/Osco was a strong performing asset for Albertsons. I think it would have still been opening new stores. Osco actually had quite good geographic reach; it was in a lot of the midwest/upper midwest.

CVS should not have been allowed to acquire both Sav-On and Longs in CA/NV. But they were. Oh and the Target pharmacies too. CVS gets whatever it wants because it is like a de facto government entity with how tangled up into everything it is between Caremark, the deep amount of Federal benefits programs it is involved in, etc.

I wonder if we are going to see pushback on the growing monopoly of CVS. I wouldn't be the least bit surprised if they were willing to put out a bid for all of Rite Aid knowing that they wouldn't face antitrust scrutiny due to bankruptcy exceptions, but they also were aware of the inconsistency of their stores and operations which they would have had to "swallow whole." They probably had a hotline setup as we discussed pre-bankruptcy where they were offering store file buyouts just like CarMax offers on used cars.

They have made it very difficult for the Caremark customer to get a prescription filled outside of CVS. This is where I think they have become anticompetitive in their behavior, and I think it warrants Federal government intervention in the form of a breakup.

The Caremark and Aetna companies should be separated from CVS. They may wish to make preferred pharmacy policies still, but it should be reasonable for other Non-CVS pharmacies to be able to be in network without restrictions on fills and such. CVS shouldn't be allowed to care if the prescription is filled at CVS or at Rite Aid or Kroger. They have intentionally removed customer choice in ways other insurers have not. I think there is an inherent conflict of interest here that needs to be addressed, otherwise we are going to run out of pharmacies and then the few CVS that remain will have lines like the DMV while patients die because it took too long to fill their prescription.

Worse, I worry that a recapitalized Walgreens could emerge soon since they have appointed the chainsaw wielding CEO who apparently has decided there are no sacred cows in the organization. We all know they need to separate the European business from the US and I'm sure he is the one who will do it. Then they will be running lean and mean and start to be aggressive. As mentioned elsewhere they could decide to make a offer to the banks to acquire Rite Aid; they'll have to overpay but it's hard for the FTC to claim a recently bankrupted entity is a fierce competitor in any market. They could go after other remaining regionals the likes of Bartell in other parts of the country. I think when they emerge from the cost cutting their mission is suddenly going to be all about growing the company again, yet I don't think they are going to present any real threat to CVS but rather just cause trouble by consolidating the rest of the industry.

[HCal]

There has certainly been far too much consolidation in the pharmacy business, but I think it really comes down to the state of the prescription drug industry in the US. Insurers (both private and governmental) don't pay well for a lot of drugs, meaning it's hard to make a profit. PBM's like Caremark are obviously pushing their own pharmacies. Some megaplayers like Walmart and Costco might run the entire pharmacy as a loss leader or break-even. Throw in some online pharmacies to siphon off customers, and you have a very difficult environment for all but the very largest players.

The only way out of this might be for the government to start regulating reimbursement rates paid by insurance companies to pharmacies. Without that, the smaller companies will continue to get squeezed until we have a duopoly.

[storewanderer]

I wonder if we are going to see pushback on the growing monopoly of CVS. I wouldn't be the least bit surprised if they were willing to put out a bid for all of Rite Aid knowing that they wouldn't face antitrust scrutiny due to bankruptcy exceptions, but they also were aware of the inconsistency of their stores and operations which they would have had to "swallow whole." They probably had a hotline setup as we discussed pre-bankruptcy where they were offering store file buyouts just like CarMax offers on used cars.

They have made it very difficult for the Caremark customer to get a prescription filled outside of CVS. This is where I think they have become anticompetitive in their behavior, and I think it warrants Federal government intervention in the form of a breakup.

The Caremark and Aetna companies should be separated from CVS. They may wish to make preferred pharmacy policies still, but it should be reasonable for other Non-CVS pharmacies to be able to be in network without restrictions on fills and such. CVS shouldn't be allowed to care if the prescription is filled at CVS or at Rite Aid or Kroger. They have intentionally removed customer choice in ways other insurers have not. I think there is an inherent conflict of interest here that needs to be addressed, otherwise we are going to run out of pharmacies and then the few CVS that remain will have lines like the DMV while patients die because it took too long to fill their prescription.

Worse, I worry that a recapitalized Walgreens could emerge soon since they have appointed the chainsaw wielding CEO who apparently has decided there are no sacred cows in the organization. We all know they need to separate the European business from the US and I'm sure he is the one who will do it. Then they will be running lean and mean and start to be aggressive. As mentioned elsewhere they could decide to make a offer to the banks to acquire Rite Aid; they'll have to overpay but it's hard for the FTC to claim a recently bankrupted entity is a fierce competitor in any market. They could go after other remaining regionals the likes of Bartell in other parts of the country. I think when they emerge from the cost cutting their mission is suddenly going to be all about growing the company again, yet I don't think they are going to present any real threat to CVS but rather just cause trouble by consolidating the rest of the industry.

The damage has already been done. CVS has been building its empire very quietly for decades. I feel their attitude has changed somewhat in the past 10 years, after they got Caremark is when I saw a real change in attitude in how they operated their stores and how they did things. They knew once they got Caremark they had the piece they needed to start behaving in a questionable manner from a competitive standpoint.

The US Government in conjunction with the insurance companies/drug companies have made the environment so bad for the pharmacies (unless they are called CVS) that at this point even if the government were to call out CVS there have been so many options taken away that I'm not sure how much difference it would make.

I don't want to sound like an alarmist but it is just another thing that seems to be really crumbling up. The thing is I thought this crumbling when it came to medical related things like insurance, etc. would hit a breaking point back in like 2015 or 2016 and here we are today paying more than ever with fewer choices than ever and no improvements in sight in the US.

Meanwhile Cigna and Humana announced a merger today. This makes CVS look like a peanut issue.

I do not see a bright future for Walgreens. I expect they to make a play for the rest of Rite Aid; frankly that play will just hasten their demise. But Walgreens has such unbelievably poor management at this point in time that they may just be stupid enough to do it.

[BillyGr]

The Caremark and Aetna companies should be separated from CVS. They may wish to make preferred pharmacy policies still, but it should be reasonable for other Non-CVS pharmacies to be able to be in network without restrictions on fills and such. CVS shouldn't be allowed to care if the prescription is filled at CVS or at Rite Aid or Kroger. They have intentionally removed customer choice in ways other insurers have not. I think there is an inherent conflict of interest here that needs to be addressed, otherwise we are going to run out of pharmacies and then the few CVS that remain will have lines like the DMV while patients die because it took too long to fill their prescription.

They may own Aetna, but there is no restriction on getting your prescriptions elsewhere, as I know someone who has that insurance and gets everything from the local supermarket chain pharmacy. Some things are 30 days at a time, others are 90 days, even one that is $180 for that 90 days (one of the brand names with no generic option, I have seen prices for it over $1,000 with those "coupon" offerings).

No clue what they do with the Caremark side, but it isn't an impact for someone with Aetna.

[storewanderer]

They may own Aetna, but there is no restriction on getting your prescriptions elsewhere, as I know someone who has that insurance and gets everything from the local supermarket chain pharmacy. Some things are 30 days at a time, others are 90 days, even one that is $180 for that 90 days (one of the brand names with no generic option, I have seen prices for it over $1,000 with those "coupon" offerings).

No clue what they do with the Caremark side, but it isn't an impact for someone with Aetna.

This depends on the Aetna plan. There are absolutely Aetna plans that are serviced under Caremark that basically twist the user's arm into using CVS.

These health plans are all different, function differently, depending on employer/group/region/state. With as many different rules and restrictions as these health insurers have and so many different plans I am sure the administrative side of all that is a big reason why the pricing is so out of control.

[BillyGr]

They may own Aetna, but there is no restriction on getting your prescriptions elsewhere, as I know someone who has that insurance and gets everything from the local supermarket chain pharmacy. Some things are 30 days at a time, others are 90 days, even one that is $180 for that 90 days (one of the brand names with no generic option, I have seen prices for it over $1,000 with those "coupon" offerings).

No clue what they do with the Caremark side, but it isn't an impact for someone with Aetna.

This depends on the Aetna plan. There are absolutely Aetna plans that are serviced under Caremark that basically twist the user's arm into using CVS.

These health plans are all different, function differently, depending on employer/group/region/state. With as many different rules and restrictions as these health insurers have and so many different plans I am sure the administrative side of all that is a big reason why the pricing is so out of control.

OK, so perhaps then it is just for Aetna only plans (since you note that the other ones are served by Caremark).

Only knowing the one I have dealt with, it has never been an issue, but it makes sense they offer other options as well .