Community-Focused Pharmacy: The HomeTown Pharmacy Approach

All 36 of HomeTown Pharmacy’s retail locations in Michigan are small to medium-sized and range in size from 2,000 to 7,000 square feet. About 93 percent of the company’s revenue is from prescription sales, though the company also maintains front-end gift departments in most of its locations. All locations include health and beauty aid and over-the-counter medication departments.

“We spend a lot of time getting the right things in the right places, and really try to recreate that old-time pharmacy feel,” Mathews says.

Roughly half of the company’s stores are the only pharmacies located in their communities. “Although we don’t have to compete for business in these locations, the other half of our locations do have competition from large chains, so we have to be cognizant that we’re providing the best service at a reasonable price,” he adds.

HomeTown strives to offer customers faster service with lower wait times than larger stores. The company does this in part by choosing locations that have space available for drive-thru windows.

“We have fair prices, and give our customers the ability to get in and out of our stores in a decent amount of time,” Mathews notes. “We’re big enough to compete yet small enough to give personal service and react quickly to the needs of our patients or changes in the market.”

HomeTown stores also make it easy for their customers to find non-prescription items such as seasonal and gift items by locating them close to the front of the stores. Gift items are displayed on chairs, hutches and other furniture. “We display gifts in a matter similar to the way they would look in people’s homes,” he adds.

Industry Advocates

Addressing market changes and overcoming industry challenges is one of Mathews’ highest priorities in his role. One of the company’s biggest challenges is the growth of the closed-network pharmacy model, particularly within Medicare Part D. Many of the regional prescription drug plans within Part D have a closed or preferred network, where consumers are given financial incentives to choose a particular pharmacy. HomeTown is working with Part D and other insurance providers to be included in as many of these networks as it can, Mathews notes.

Another challenge HomeTown faces is the consolidation of generic brands. “There used to be higher margins in generic medications, but as manufacturers are buying other companies and whittling down, there’s less competition,” he adds.

The company uses SureCost purchasing software, produced by Emerlyn Technology, to ensure that it hits its minimum spend on generic medications from wholesalers, Mathews says.

Mathews is actively involved in advocacy regarding another important industry issue: maximum allowable cost accountability. He supports state legislation that would compel insurance payers to divulge the reimbursement limit for prescription drugs to pharmacies. This would allow pharmacies to better plan their spending and control costs, he says.

Technological Enhancements

In addition to the SureCost software, HomeTown Pharmacy makes use of other technology to enhance its operations. The company uses the QS/1 pharmacy management software system to assign prescription numbers as well as for pricing and billing purposes.

The company also uses pill-counting machines to dispense medications in some of its locations. A compliance system that makes automated calls to customers when refills are ready is also in place, Mathews notes.

Customers also can make refill requests online. Enhancing its website is a high priority for HomeTown, as it intends to move to a full-service e-commerce platform before the end of next year, Mathews adds.

Growth Opportunities

Creating a community-driven pharmacy was a high priority for HomeTown Pharmacy founders and second-generation pharmacists Tim and Fred Grice, Jr., when they founded the company in 1996.

“The concept behind HomeTown Pharmacy developed from a simple desire – bring together the personalized service of independently owned community pharmacies with the bargaining power and efficiencies of a larger corporation,” the company says.

The Grice brothers had previously worked for a national drug store chain after graduating college. With the help of their father, the brothers purchased Gobles Pharmacy in Gobles, Mich., which they rebranded as HomeTown Pharmacy’s first location. Fred Grice Jr., today is the sole owner of the company.

The company grew after its founding mainly through acquisition. Expansion is still ongoing for the company, which added eight new stores in 2013 and expects to close on a new deal in summer 2014. “We’re always looking to grow and buy good stores,” Mathews notes.

Recent acquisitions include a five-store chain located in Traverse City, Mich. This is the second multi-store acquisition made by the company in the last four years. “We’re not afraid to take on a larger chain,” he adds, adding that most of the company’s acquisitions are single stores or two-store deals.

Family Oriented

Mathews attributes the company’s success and growth in part to its internal culture. “We have a very family oriented culture, and our management approach is to hire well, train well and equip people for success,” he says.

HomeTown locations operate during “family friendly” hours of 9 a.m. to 7 p.m. Monday through Friday and 9 a.m. to 3 p.m. Saturday, which allows employees ample time to spend with their families. Two of the company’s pharmacies have Sunday hours.

“The stores we acquired in those communities were open on Sunday and we wanted to meet the expectation of those customers,” Mathews says.

Most of HomeTown Pharmacy’s hiring is from within the community. “We’re looking for honest people with solid, Midwestern values,” he adds.