published Sunday, July 25th, 2010

County-owned competitor irks local pharmacists

by Dan Whisenhunt

First the city of Chattanooga opened its pharmacy. Now Hamilton County is following its lead, and that has some local pharmacists worried, saying it will draw customers away.

County Mayor Claude Ramsey said the county’s employees don’t have to use the pharmacy planned for the McDaniel Building on North Highland Park Avenue.

“(Employees) still have a choice to go where they want to go,” Mr. Ramsey said. “We think it will be more economical for employees to use the county pharmacy, but if they choose to go somewhere else, it’s up to them.”

The overall goal of the pharmacy plan is to save taxpayers money by lowering the county’s drug costs, officials said. The county anticipates it will save $2.3 million over the next three years.

The pharmacy would be available only to county employees and their families and county retirees under the plan, Mr. Ramsey said. Elected officials also could use it, he said.

Fred Ross thinks it’s a prescription for disaster for his fledgling drugstore. The owner of Ross Pharmacy on East Third Street is less than one mile away from the planned site of the county’s pharmacy.

He said he has several county employees who are regular customers, and he also lost city employee customers when the city’s pharmacy opened in 2009.

“My concern is not so much what I lost,” he said. “It’s what I would not be able to win.”

Mr. Ross also has another beef with the plan — he pays city and county taxes, yet the county is opening up another pharmacy not far from his business.

“I view them as a competitor,” he said.

Nancy Reed, owner of Medical Arts Pharmacy on McCallie Avenue, also feels like she’s financing one of her competitors.

“It seems to me like if you’re going to help anybody, you should help someone who’s paid taxes here for all these years,” she said.

Mr. Ross said the county could have easily contracted with local pharmacists and achieved the same savings by hiring one company to manage its pharmacy.

“I feel like they’re doing the business side of it for profit,” he said.

That’s not the case, according to County Director of Human Resources Rebecca Hunter.

She said the county will purchase the drugs at cost, with no markup. Under the plan, she said, the county will pay $8.76 for each one of the plan’s 1,900 subscribers to On-Site RX, the company hired to manage the pharmacy, the same company managing the city’s pharmacy.

The county also will pay an additional $175,000 annually for pharmacy employees, though they will not be considered county employees, she said.

The county is required to pay a $65,000 development fee to On-Site up front, according to the contract, Ms. Hunter said, which covers the licensing and other costs associated with starting up the pharmacy.

The county’s analysis shows the effect of drawing customers away from independent pharmacies would be minimal, she said, since most county employees shop at big-box pharmacies such as Walgreens and CVS.

Ms. Hunter said it would not be to the county’s advantage to contract with individual pharmacists because they run a for-profit business.

“It will not generate any profit,” Ms. Hunter said. “We’re buying the drugs at cost. We’re not marking them up. We’re not in this to make a profit. We’re in it to reduce costs.”

about Dan Whisenhunt...

Dan Whisenhunt covers Hamilton County government for the Times Free Press. A native of Mobile, Ala., Dan earned a degree in broadcast journalism from the University of Alabama. He won first place for best in-depth news coverage in the 2010 Alabama Press Association contest; the FOI-First Amendment Award in the 2007 Alabama Press Association contest; first place for best public service story in the Alabama AP Managing Editors contest in 2009 for economic coverage; and ...

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harrystatel said...

How wonderful! Taxpayers subsidize another government bureaucratic pork package. For who? The government of course.

Thanks Claude and the Commission! Make sure you get your Viagra, because with all the taxpayer screwing your doing, I'm sure you need help.

July 25, 2010 at 9:18 a.m.
fairmon said...

CVS and Walgreen management please do not consider the ludicrous statement by the County Director of HR that implies it is ok to incrementally affect private or publicly owned businesses as the view of most city and county stake holders. Most stakeholders appreciate your sharing the cost and burden of supporting the "wealthy county club style leadership" of our elected elite. Most think incrementally affecting a privately or publicly held business by government ownership of subsidized "not for profit" competing businesses is not appropriate. Keep in mind most HR people they think have a good business sense but are clueless about how business systems operate and how you daily seek the most minute incremental improvement to survive. Incrementally is how most bankruptcies or business failures occur. This action and the city's recent property tax increase is an excellent example. There is no immediate pain but incrementally becomes greater and will to some be debilitating. Like a cancer it will eventually be terminal without radical treatment. We can only hope enough stakeholders join the PAPO fraternity that effective preventative action occurs. The more gullible stakeholder believes the county and city subsidzing of pharmacies will not add to the tax payers burden. Some will never wonder if this move is so wonderful why the city and county cannot share the same pharmacy instead the county duplication of the city. Some will not question why the government employees co-pay and deductibles are not adjusted as for profit businesses are aggressively doing? Plese don't become another abandoned boarded up location in our county or city.

July 25, 2010 at 1:42 p.m.
fairmon said...

To join the PAPO fraternity go to the web site.

July 25, 2010 at 1:49 p.m.
catlady1 said...

And, if it is not for profit, where is the money coming from to pay this group to operate it? From the employees? From the taxpayers? Or is the company also "not for profit?" WHO will profit? Follow the money! Is Chattanooga so rich that it can afford to get in the prescription business? Time for the TimesFreePress to do some REAL investigative reporting!

July 25, 2010 at 5:34 p.m.
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