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Scrappy regional operator Kerr Drug has retooled its retail focus with a deceptively simple mission statement: to provide the best pharmacy care in the Carolinas. But Kerr has an underlying mission, as well: to turn its industry-leading efforts in pharmacy care and clinical services into a long-term, profitable and growing business.

More than ever, Kerr Drug is aligning itself with the health and wellness needs of its patients and caregivers--and with the needs of the health plans and corporate plan sponsors it serves in its North and South Carolina strongholds. "We revamped our retail mission last year to sharpen our coverage of the health and pharmacy service niche," Kerr's director of marketing, Diane Eliezer, told Drug Store News. "[We're] taking the vision of community pharmacy farther than most drug chains ... [and] providing clinical services and health care products that go well beyond the traditional drug store mix."

Added Tony Civello, Kerr's chairman, president and chief executive officer: "We have molded and are continuing to sculpt the finest model we can. By combining pharmaceutical care, disease prevention and maintenance, expanded health-related products and services and home health and caregiver support, we are taking our vision of community farther than ever before."

Kerr's future depends on the success of that niche strategy. Fifty-three years after the first Kerr drug store opened, seven years after the company was reborn under new owner-managers and three years after beginning a top-to-bottom overhaul of its retail mission and focus, Kerr Drug is at something of a crossroads. The chain has proven itself a nimble retail health care innovator, pushing the boundaries of pharmacy practice and becoming a leading developer and proponent of the in-store health center concept. !t has also fielded one of the industry's most effective clinical service teams and contributed to well-known public-private health care partnerships like the Asheville Project. But as a regional player unable to match the marketing clout or operating efficiencies of powerhouse competitors like Walgreens, CVS or Wal-Mart, Kerr has de-emphasized the front end and shed some three dozen unprofitable or high-overhead stores in a gradual consolidation.

That shift has made comprehensive health services and a more clinical approach to community pharmacy Kerr's primary niche opportunity. To succeed, the chain must, in a very real sense, help lead the charge to a new and broader role for pharmacists as recognized pharmaceutical care practitioners, integrated with a community health system involving doctors, nurse practitioners, community health centers, public health plan sponsors and other resources.

Thus, Kerr has reassigned and promoted key executives to support its realignment from traditional drug store operator to pharmacy and health care specialist. Among those promoted were Ralph Petri, to executive vice president of pharmacy and logistics; Mark Gregory, to vice president of pharmacy and government relations; and Gray Steward, to director of pharmacy administration and compliance.

Banks Kerr founded Kerr Drug in 1951. But the chain's modern history dates to 1997, when former Thrift Drug president Civello and a team of investors and managers purchased more than 160 former Rite Aid and Kerr stores in the Carolinas from Rite Aid and Eckerd's corporate parent, J.C. Penney. Early on, Civello and other chain managers knew the company's niche was in health care and personalized pharmacy services.

To that end, Kerr continues to expand its Kerr Health Care Center concept and its relationships with pharmacy school faculty, local health providers and patients themselves.

Kerr opened five of the new centers in 2003, building on the knowledge gained from its earlier care center concept, called Enhanced Pharmacy Care Center.

The new care center prototype--which debuted early last year in a new Kerr drug store in Raleigh--combines clinical services and health screenings with a broad assortment of durable medical equipment and specialized home medical products in a store-within-a-store-format. The centers are located adjacent to a traditional dispensing pharmacy, set off by dramatic lighting and overhanging signage, and staffed by a home health technician.

Kerr developed the centers "to reflect our primary role as a community health care resource," according to Eliezer. She said the chain will open at least seven more centers this year.

Behind the commitment to the concept are "Kerr's years long experience as developer of EPCC," said Eliezer, "utilizing shared pharmacy school faculty, clinical staff specialists and pharmacy residents to provide patient education and disease management services to the community."

Eliezer cited a slew of other factors behind Kerr's pursuit of a clinical health care focus. "Impetus is coming from several areas," she noted, including "demographic shifts dictating that the prescription business will continue to grow exponentially," and "growing opportunities ... for detection, prevention, and disease management, which can be handled in partnership with a physician but in a more convenient environment." Indeed, she said, patients who visit a Kerr Care Center "visit 5 times more frequently than they visit any other healthcare provider" because of their convenience.

Also driving Kerr's quest for a new health care business model are growing calls among employer groups for cost-efficient pharmaceutical and clinical care; increased attention to personal health through exercise, diet, smoking cessation and quality of life; and the "emergence of groups such as Adult Children of Aging Parents with caregiver needs, said Eliezer. She also cited "Kerr's huge successes as an original member of the nationally acclaimed Asheville Project ... considered a benchmark for civic and private partnership in the battle to provide communitywide comprehensive health care at lower costs."

The next step is to make that concept a profit-making business model. There are hopeful signs, said Kerr's marketing chief. We have expanded our work in this area to include 10 employer groups and other patient populations for whom we provide drug therapy management, as well as a variety of other preventive services in communities throughout the Carolinas," she said.

12 KERR DRUG BY THE NUMBERS

Headquarters: Durham, N.C.

2003 sales: $476 million *

Percent change vs. 2002 sales: 3.9 percent

No. of units: 122 *

Average store size: 8,400 square feet

Pharmacy sales: $356 million

Percent of sales from pharmacy: 67 percent

Sales from square feet: $476

* Includes 112 Kerr drug stores and 10 Smart Dollar closeout stores

Source: Drug Store News

Care centers focus of efforts

As Kerr Drug moves ahead with plans to operate as many as a dozen patient care centers in its stores by year's end, the chain also is adding to the services and home care products those centers provide.

The centers, set off in the stores with distinct signage and decor, have become walk-in centers for a variety of large-scale durable medical equipment. Full-time DME specialists at each center are trained to help patients with diabetic shoe fittings, compression hosiery, home oxygen therapy and in filling out Medicare and Medicaid claim forms.

Kerr also fields a team of clinical pharmacists, who operate within the stores and the community, providing screenings for a variety of conditions, including cholesterol, diabetes, asthma, osteoporosis and skin cancer. Kerr clinical pharmacists also conduct classes in weight and smoking management and work with patients and their physicians to manage chronic disease therapy.

What's more, said director of marketing Diane Eliezer, "By contracting with self-insured employers in disease management programs that actively involve our team of clinical pharmacists as drug therapy managers, we have demonstrated significant reduction in overall health plan costs for our employer-partners and expanded availability of lower-cost options."

For instance, she said, "Our clinical services team has been able to demonstrate tremendous improvement in quality of care, as well [as] 50 percent decrease in absenteeism in an Asheville-based self-insured employer population of patients with diabetes and other chronic conditions."

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