Q&A: McKesson's Bob Graul on RxOwnership

At the latest McKesson ideaShare, Drug Store News had an opportunity to sit down with Bob Graul, national VP of RxOwnership, and have an in-depth discussion on what RxOwnership is all about.

DSN: With RxOwnership now in its seventh year, how has business been in the past year?

Bob Graul: As we saw with record attendance at the Ownership Transfer workshop at McKesson ideaShare, we’ve had a very strong year, supporting more than 380 start-ups and nearly 200 ownership transfers. McKesson made a decision in 2007 to fund this program and put resources behind maintaining the independent segment. Independents tend to be very community oriented, and we’ve invested quite a bit to help preserve that segment and bring a certain support to the communities.  McKesson was founded in the retail segment more than 180 years ago, our roots are there. We firmly believe that chains and independents employ different business models to deliver similar services to patients, and today, as the role of pharmacists continues to evolve and grow, we need both models.

One of the key points is that we don’t charge anything. Our service is free. We work on relationship building. We have three major buckets that we work in: buyers, sellers and start-ups, and we try to match potential candidates. For example, one of our current customers in one part of the country told me, “I want to see what’s available in San Diego.” So we hooked him up with our San Diego representative and reviewed our pipeline to see what was available from a seller’s standpoint.

DSN: You said during the Ownership Transfer Lunch that there are more pharmacies opening today than closing.

Graul: You know, it’s almost a push, but it’s a little bit of a plus. I go by National Community Pharmacists Association data, and what they have been saying is it looks like about 2,200 stores are in play every year. About 1,000 actually exit the market, but about 1,200 open up every year. We did nearly 400 start-ups last year. Our goal this year is more than 400.  When we launched the RxOwnership program, it was really aimed at ownership transfers. We’d get start-ups occasionally, but it wasn’t really a focus. But about three years ago, it just exploded to where the vast majority of people contacting us wanted to open a new pharmacy as opposed to buying one.

I think there are a couple reasons why that happened. The shortage of pharmacists is gone. Now there is a surplus of pharmacists, so not every graduating pharmacist has a job guaranteed, and not all of the jobs that are available are the plush jobs that they used to get. They might be working the 24-hour stores, the midnight shift, weekends, floaters working multiple stores. And because of the increasing volume that a lot of the chains are seeing, their clinical exposure is sometimes limited. From a production standpoint, the pharmacist may not get as much clinical exposure as they might if they owned their own business and designed their own workflow. So we’re seeing the younger folks really interested in that.

The other thing that happened was between 1985 and 1995, we went from some 30,000-plus outlets to about 20,000-plus outlets in that 10-year span. When I was first in business, owning stores back in the early ‘80s, in a five-mile radius there were probably 15 stores. So if one closed, the scripts just drifted to another one. We’ve finally hit that critical mass now, such that when a large independent closes, they may be the only independent in that market area. Usually the towns like the independents, so you see start-ups going in to start over again.

DSN: Let’s talk about what RxOwnership does, the service that you provide to the independent pharmacy community. What is it you do from start to finish?

Graul: A lot of what we do is marketing. And it’s not marketing us, so much as marketing to the owners that there’s an aftermarket for their store. A lot of the owners will think, ‘Nobody will buy this; there’s no market for it.’ We want to make sure they know to contact us, even if they have a chain offer, contact us, because we might be able to bring someone in who is interested in maintaining the pharmacy as an independent. 

DSN: So not only do you market to owners, making sure that they’re aware that there is an aftermarket, but also vet the acquisition community, so that when you do the matches, the sellers don’t have to worry about who they are selling to.

Graul: We can never guarantee what we do, of course, but we have a very low failure rate in the start-up world; it’s less than 5% of the stores actually. If we go from marketing to actually working with buyers and sellers and start-ups, there’s some due diligence up front to make sure they’re going to be able to do the deal. There’s some work with the owners to make sure they are really ready to sell. A lot of people will say they want to sell, but we want to make sure that they’re actually ready to sell. Obviously, we can help them look at the numbers before we get to the bank to make sure that it’s going to work, the price is right. And then there’s a lot of advice as to what you do next, especially for the buyer, what’s next, all the permits, all the licensing, are you going to be Health Mart? We help them with demographics, too, in the very beginning when they’re readying their business plans. We can provide them with the standard demographics, and then we have some other internal demographics that we use that identify how many prescribers there are in town, what the competition looks like and that kind of thing. So it gives them a better map of what their store might look like.

DSN: When you’re talking to the buyer, what kind of conversations are you having about the clinical opportunities that are out there, such as medication therapy management?

Graul: You don’t have to pry it out of them. The typical younger buyer that we work with, that’s what they’re sharing with you as soon as you start to talk to them. They are primed and ready to start doing MTM, adherence programs, detailing doctors and counseling patients.  They’re educated and trained to do it. That’s actually a plus at this point in time where you often see stores bringing in younger pharmacists as employees to help manage these clinical services. The challenge is, depending upon the size of the store, can you afford it? And, that sometimes is a tipping point.  



DSN: Talk about the work you’re doing at the college level

Graul:  The pharmacy schools made a strong shift to clinical services and clinical education many years ago when they switched over to the PharmD program. So I’m not really concerned with what clinical training they get or what clinical programs they’re familiar with. What concerns me with pharmacy students is they get very little or no business background. They’re not really set up to go out and run a business. They might get a marketing course, and they might get a macroeconomics course. And there is usually a pharmacy management course, but that’s typically a little more around diabetic clinics and the more clinical aspects of it.

We’ve done two grants now with the Un