Drugstore beats odds, celebrates 100 years

Managed care cuts profit margin

GALLATIN -- Sam Rickman turned the yellowed pages of a 1918 Perkins' Drug Store prescription ledger, calling out familiar names as he came to them.

"Dr. John R. Parker. Dr. R.N. Buchanan ...

"Some of their descendants are still in this area," said Rickman, 59, co-owner of the town's only surviving locally owned, independent drugstore. There were once a dozen here.

Perkins, under a series of owners, has made it through the Depression, the World Wars and -- so far -- managed care, allowing it to reach its 100th birthday this year.

That's no easy trick. Nationwide, the number of independent drugstores has been dropping, with 1,300 shutting down annually over a five-year stretch in the 1990s, according to the National Community Pharmacists Association in Alexandria, Va. That slowed last year with only 100 lost.

"It was a signal that the worst may be behind us," said Todd Dankmyer, a spokesman for the association. Last year, officials counted 25,000 independents and 52,600 chain stores nationally.

One trend has been for the Eckerds, Walgreens and CVSs of the world to swallow the smaller stores.

In Nashville, for instance, chains in the last two years took over Moon Drugs, Jones Pharmacy and Blankenship Drugs. Chain names continue to mushroom on corners and in shopping centers, offering drugstores with a glitzy, mini-Wal-Mart approach to the field. Garden chairs and hoses can be bought along with cosmetics and magazines.

Rickman said chains have "made passes" at Perkins, but he isn't eager to sell for the money offered. And, he doesn't want to lose the freedom of having his own store.

At Perkins, a display of brown bottles labeled as Black Willow Bark, Euphorbia Pilulivera and Goat's Rue speak of the bygone era when, in 1899, Claude Perkins opened his drugstore on the town square.

"You'll do no better than to take this prescription to Perkins Drug Store," blank pads once given to doctors read. They wrote out their orders in a script so elaborate that it's difficult to decipher.

A.B. Perkins, no relation, took over the business in 1926 and his son, Tom Perkins, joined him in 1955, 10 years before his father retired. Rickman bought part ownership in 1967 and Ferrell Haile bought out Tom Perkins in 1988.

The original store on the square has been closed, and a gift shop and a drive-in window, which drew customer after customer last Wednesday afternoon, have been added to its sole location -- called Perkins Drugs & Gift Shoppe -- at 532 Hartsville Pike.

"You have to find a lot of little niches," Rickman said. The pharmacist has learned, for one, to be a buyer of gifts at Atlanta markets.

Rickman and his pharmacist partner, Haile, 52, don't regard the chains as their competition. They believe they can hold their own against them with hard work and personal service, evident in the down-to-earth store. They deliver to nearby elderly, mix compounds, have a homemade lollipop tree for the kids and coffee and tables for anyone who wants to sit a spell.

"We feel that the managed-care insurance companies are the competition," Rickman explained.

The worst squeeze for independent drugstores here has come with TennCare, which replaced the state's Medicaid program in 1994, he said.

The managed health-care program for low-income, disabled and previously uninsured Tennesseans pays about $2 to $2.25 less per prescription than do Medicaid programs in surrounding states, said Jeff Joyce, a spokesman for the Tennessee Pharmacy Coalition.

"Managed care has substantially decreased the ability of pharmacies in general -- chains and independents -- to make a decent profit," he said.

The independents, however, have less staying power than the large diversified chains with mass purchasing power, he said.

The insurance companies, which handle policies for large blocks of people, offer drugstores a contract -- setting certain prices they'll pay for drugs. The stores can take it or leave it.

In some cases, if the pharmacy accepts, the store might not make enough money to stay in business. If the store doesn't take it, it might not have enough business.

Blue Cross-Blue Shield recently sent out proposals for new contracts that Joyce says "will substantially reduce the pharmacies' income even more.

"Unfortunately, there does not seem to be a whole lot the pharmacies can do."

A Blue Cross official said insurers don't have carte blanche when it comes to prices they will pay for drugs.

"I've got to have it high enough to attract enough pharmacies but not so high that it won't be a good business decision for Blue Cross," said Gary Simmons, in Chattanooga.

While 25% of Perkins' medicine sales fell under managed-care arrangements five years ago, today it's 75%, Haile said.

"The profit margin is down and continues to drop," he said.

On the other hand, prescription drug use has risen because the patient pays nothing or only a co-payment, he said.

"If you don't adapt then you don't survive," Haile said.

Survival at Perkins includes buying through a coalition of independent pharmacies and hiring technicians to do the "count and pour." Haile and Rickman verify prescriptions and act as counselors for customers.

"How you getting along?" Haile calls out to a customer.

Old Gallatin High School cronies, they're soon enmeshed in talk of ballgames and the whereabouts of other friends.

"It's a personal service," said Donnie Thompson, the former schoolmate who said he likes the laid-back shop.

Thompson, unfortunately, had changed insurance carriers recently and Haile had to track down a representative of the company to find out about coverage.

After holding through 10 minutes of music and recorded messages, another message informs him the insurance company is too busy to take the call that day.

"Some days are hard," Haile said.

Perkins' Drugs is holding a 100th birthday party from 3-6 p.m. Saturday next to the store, with music and drawings for $100 savings bonds.

This article appeared in the Nashville Tennessean Monday, July 12, 1999
By ANNE PAINE, Staff Writer with photo's by BILL STEBER