Discount Drug Mart makes home health, clinics a priority

Drug Store News, April 23, 2007

It may have that general-store-on Main-Street look and feel, but Discount Drug Mart is a pure druggist at heart. With an average 24,500-square-feet per store, the chain can more readily afford to experiment with space intensive initiatives designed to drive more healthcare traffic through its doors.

And that's what the chain is doing this year--tinkering with a home health care allotment of 400 square feet to 500 square feet in every store and piloting convenience care clinics, dedicating between 200 square feet and 300 square feet, through six locations-the first of which is expected to open this summer.

"Our goal is once the [health care consumer] gets into the store is try to sell them some of that front-end [merchandise], to have our pharmacists recommending products that maybe complement the medication they're taking," commented Tom McConnell, Discount Drug Mart's chief financial officer and vice president. That has become especially important as pharmacy margins continue to shrink, he said.

Discount Drug Mart rolled home health care centers out to all of its 66 locations, each staffed by a dedicated home health care professional. Staff in these departments receive an exemplary provider certificate of accreditation from the Compliance Team Inc., an accrediting body for the Centers for Medicare & Medicaid Services.

This type of home health care certification marks a first for any large retail drug store chain, according to the Compliance Team, and signifies that Discount Drug has met Medicare's new requirement that all participating providers must be accredited in order to continue to bill Medicare for products covered under Part B, such as diabetic supplies and durable medical equipment. Hospital-style beds are on the horizon, McConnell said. "[Discount Drug Mart] is a tremendous example of a safe, honest and caring home medical equipment provider," stated Sandra Canally, founder and president of the Compliance Team.

All Drug Mart stores have met the Compliance Team's accreditation requirements during recent on-site evaluations. In addition to fraud and abuse awareness safeguards, Drug Mart has implemented patient care improvement plans as part of the continuously measured accreditation process. The program features annual validation visits and requires scoring of 90 percent or better to achieve accredited status.

Positioning itself as a durable medical equipment provider may not be a bad play--particularly, if the chain is able to leverage its relationships with local hospital networks as well as employers through its independent third-party pharmacy network IPS Network into a steady stream of referrals.

This summer, Discount Drug Mart plans to begin adding in-store clinics in its stores, and will partner with Quick-Clinic as well as another, yet-to-be-named, hospital network in six locations. The QuickClinic facilities themselves are ready to go, McConnell explained-the only thing that is left to do is assemble the provider teams to staff them. While McConnell noted that the local labor supply for NPs is relatively thin at the moment, new state legislation passed last year allows physician assistants in Ohio to write prescriptions under the supervision of a physician, so the in-store clinic labor shortage is expected to get better.

As for the rest of the store, Discount Drug has expanded its frozen food offerings and convenience food items, stopping just short of being a grocer without fresh meat and produce departments. "Our typical customer comes in about three times per week," McConnell said. "So our goal is to be one-stop, convenient shopping."

Discount Drug Mart

Headquarters: Medina, Ohio

2006 sales: $605 million

% change vs. 2005: 2%

No. of stores: 66

No. of stores with Rx: 66

Avg. store size: 24,500 sq. ft.

Rx sales: $290.4 million

% of sales from Rx: 48%

Sales per store: $9.2 million

Source: Drug Store News