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Archive for Saturday, February 10, 1996

T HAVE REMEDY FOR DRUG STORE AFFLICTIONS

February 10, 1996

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Intense health care competition squeezes a Lawrence pharmacy out of business.

Raney Drug Stores, in business in Lawrence for 46 years, has been sold to the Dillons supermarket chain and will close its two stores at the end of business Feb. 18.

Dick Raney, whose father opened the family's first pharmacy in Lawrence in 1949, said intense competition within the industry because of the price demands of managed-care insurance companies prompted him to sell.

"The direction of health care in America has been very discouraging," said Raney, 67. "I would guess in a year and a half, America will be sick of what it's getting in health care."

The two Raney stores, at 921 Mass. and 925 Iowa in the Hillcrest Shopping Plaza, will reopen Feb. 19 under Dillons management for a brief merchandise sale. Prescriptions from the downtown store will be filled at the Massachusetts Street Dillons, 1740 Mass., and those from the Iowa Street store will be filled at the Dillons at 3000 W. Sixth.

"Our objective is to take care of the patients in the same manner that Raney has taken care of them for years," said Jane Siebert, director of pharmacy for Dillon Food Stores, headquartered in Hutchinson.

The company owns 66 supermarkets and 46 pharmacies in Kansas and is a subsidiary of The Kroger Co. of Cincinnati, which owns 1,300 supermarkets and 800 pharmacies nationwide.

Raney said competition from large national retailers, such as Wal-Mart and Target, was troublesome but tolerable compared to the "predatory capitalism" of mail-order prescription drug services and managed-care insurers.

He said small, independent pharmacies have been forced by the insurers to sell prescription drugs at a loss. Mail-order prescription services selling at the same low prices have negotiated better wholesale drug prices to remain profitable. They have done so without providing the advice and service offered by independent pharmacists.

"We've been approximately matching mail-order prices at substantial losses," Raney said. "We imagined ourselves always to be community pharmacists first and sellers of perfumes and cosmetics a far distant second. But the loss of pharmacy is the loss of our heart and soul."

At least two nationwide class action lawsuits have been filed by pharmacists who claim drug manufacturers and managed-care insurers have fixed prices to drive local pharmacies out of business.

The sale of the Raney stores leaves just one drug store in downtown Lawrence, Round Corner Drug Store, 801 Mass., which opened in 1855 and is believed to be the oldest pharmacy in Kansas.

The pressures that drove Raney out of the business likely will drive other local pharmacies out as well, said Tom Wilcox, Round Corner's owner.

"It's pretty scary right now," Wilcox said. "Like a lot of the independents in town, this is our life's savings, this is our work. This is what we like to do. What managed care has been able to do is squeeze the reimbursements out of health care professionals. But there's only so much they can squeeze."

Raney, a city commissioner and mayor in the 1960s, joined his father's business in 1952 after receiving his pharmacy degree from Kansas University. He opened the Hillcrest store in 1958 and a store in the shopping plaza at and Massachusetts in 1960. That store became a popular spot for coffee drinkers. It closed in 1983 when Dillons, the shopping plaza's owner, expanded into the pharmacy business and refused to renew Raney's lease.

Raney and his family own the Hillcrest Shopping Plaza at Ninth and Iowa, which has about two dozen commercial tenants.

The managers of the two Raney stores have been hired by Dillons and the chain is interviewing most of the other 38 employees, but they have not been guaranteed jobs.

"They're being given first priority, and we're trying to see how their skills mesh with our needs," Siebert said.

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