Small town pharmacies struggle
It's a bittersweet Saturday in the small southwest Minnesota community of Adrian with population just over 1,200. Residents are celebrating at the town's annual St. Patrick's Day parade. Mixed in though with the celebration is a sense of loss. It's the final day of business for a downtown store.
"Last day as a pharmacy," said Mel Kroon. "The store will still be open to sell the cards and the gifts."
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Mel Kroon leads the way into his drugstore through aisles filled with greeting cards, household items and knick-knacks. He's owned Kroon Community Drug in Adrian for about 27 years. He said he likes the job, he likes his customers, but he's tired of fighting what seems like a losing battle against high costs and low profits.
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"This is a matter of economics in many respects," said Kroon.
It's an economic scenario which Kroon feels is tilted against the small drug store.
He said state and federal government regulators decide what to pay him for the prescriptions he fills under programs like Medicare and Medicaid. Private insurance companies do the same for their policy holders.
"This is a matter of economics."
"As pharmacies we do not have much of a choice," said Kroon. "We either accept that contract or we reject it."
He said many of the reimbursement rates provide him too little profit. Some even guarantee a loss. He remembers a recent example involving residents of the nursing home in Adrian.
"There's a patch that some residents up there use for nausea and vomiting and dizziness," Kroon said. "And they were paying me two dollars below my cost for a month's supply. I mean how long can you operate at those levels and remain a viable business?"
The loss of the Kroon drugstore means Adrian is without a pharmacy for the first time in over 130 years.
The closure comes as the overall numbers of pharmacies in Minnesota are increasing. Chain stores though account for nearly all of that growth. Independents are declining in both the metro and rural areas of Minnesota.
By far the the fastest rate of decline is in rural Minnesota, a part of the state where the independent is most important, and where they still outnumber chain stores.
Minnesota Pharmacists Association President Tim Gallagher said the independent drugstore owner faces great stress.
"Many of them have not had a vacation in five or six years," said Gallagher. "They either can't find pharmacists to come work there, or they can't find relief pharmacists, or they just can't afford to pay them. They're just barely getting by. I visited with a pharmacy owner, in a rural pharmacy, last year who hadn't even paid himself a salary for over a year."
Chain drugstores have several advantages over independents. They can offset low profit margins through volume. A chain store typically sells two or even three times as many prescriptions per day as an independent store. Plus, the chains sell more non-pharmacy items like gift cards, household goods and food.
Back in Adrian it's time for the annual St. Patrick's Day parade. The Grand Marshall is departing pharmacist Mel Kroon. Residents like Kay Cox said putting him at the head of the parade is a small way to thank him for his years of service to the town.
"He was always there when you needed help. And you could even call him on a weekend, which I never did but once, and he was down there immediately," said Cox.
The Adrian drugstore is closing during a time when the pharmacy industry is prospering. Sales are up as more people than ever rely on drugs to treat various medical conditions.
As a result, pharmacists are in short supply and their pay is rising. The average starting salary for a pharmacist is about $100,000.
Mel Kroon plans to sample that economic reality by going to work for a chain pharmacy in the region.
"I have other friends that have done the same thing, pharmacists that have sold their pharmacies," said Kroon. "They'd say I go home and don't have to worry about anything anymore. Best move I ever made. Now I'm going to see if that's correct or not."
In his new job Kroon said he will work fewer hours and earn 30 percent more than he did as an independent drug store owner.
