FoxMeyer expands its reach in facilities and services

Drug Store News, Oct 9, 1995

This past year, Dallas-based FoxMeyer Health Corp. made great strides in crucial areas like information-based services, streamlined, high-tech distribution centers, greater geographic reach, and in programs for pharmaceutical care and disease state management.

FoxMeyer's new 339,000-square-foot National Distribution Center, which opened in mid-Ohio in late July, uses automated systems capable of picking 80 percent of the order lines each day. The center, one of eight opened this year, operates 24 hours per day and is expected to be the highest volume and most efficient distribution center in the pharmaceutical industry.

FoxMeyer recently consolidated its information service and managed care units under CareStream Corp., with the goal of providing electronic connectivity of all parties in the health care system including providers, payors and patients.

Building toward this consolidation was the 1994 acquisition of the Utah-based Scrip Card prescription benefits management company, which specializes in programs for small- to medium-size employer groups. This provided expansion of FoxMeyer's own PBM which enabled the wholesaler to focus on larger businesses and employer groups.

A major result was FoxMeyer's success in winning the primary supplier contract for University Hospital Consortium, valued at $750 million, which went into effect in February 1995 and marked the largest contract in the industry.

To service this customer, FoxMeyer opened seven distribution centers, (in addition to the Ohio DC), including FoxMeyer's first on the West Coast, which also provided additional facilities for servicing drug chains.

FoxMeyer also expanded by acquiring three other units: Synercom HealthCare Systems Inc., a pharmacy management system with strength in hardware and software; the pharmacy benefits management company, Arrow Prescription Plan; and Pharmaceutical Services Inc., which provides retail pharmacists with pharmaceutical care protocol, model and software support to help manage cognitive services.

In the area of disease-state management, FoxMeyer introduced its Diabetes Life Center last fall. The center provides retail pharmacies with information necessary to be more active caregivers for customers with diabetes. To date there are more than 1,500 participating pharmacies, mainly independents and regional chains.

Another component of FoxMeyer's growth is in the Canadian managed care arena. Last year FoxMeyer entered the Canadian market through an agreement with Toronto-based Evans Health Group, Ltd. More recently, FoxMeyer established FoxCare Managed Care network, which will connect over 3,000 Canadian pharmacies and Foxmeyer Canada's pharmacy benefit management company.

This launch was soon followed by a contract to provide pharmacy benefit management services for the Ontario Public School Boards' Association, which potentially includes 250,000 lives and reportedly is one of the largest such agreements to date in Canada.

As the nation's fourth largest drug wholesaler with sales of $5.2 billion in fiscal 1995, FoxMeyer reported a 33.3 percent increase in operating income to $68.4 million. FoxMeyer's Health Mart franchise retail chain currently includes over 800 members, while its overall business consists of 34 percent with independent pharmacies, 31 percent with drug chains, 30 percent with hospitals and managed care firms, and another 5 percent in other categories, including mail order, government, and grocery/food & drug retailers.

To serve these customers, FoxMeyer currently operates 23 distribution centers, including the eight new facilities opened this past year.