HEALTH MART GIVES INDEPENDENTS CLOUT

REGISTERED PHARMACIST ANDYPalans, owner ofWharf Health Mart inO'Fallon, Mo, has seen many benefitsfrom becoming a Health Mart pharmacist.He made the change when hispharmacy moved in March 2006."Ourstore has gone up in business about20% since we moved, and I attribute amajority of that to switching to HealthMart, mainly because customers wantto see the new and exciting look."

McKesson's Health Mart pharmacyfranchise model is different fromother franchises. It levels the playingfield for independent pharmacy byproviding its members with theresources and national strength theyneed to compete in today's growingcompetitive marketplace. McKessonrecognizes that independent pharmaciesare at a disadvantage when itcomes to managed care.

"Independents are very successfulwhen they compete at the local level.They can't control the pressures onthe national level. This is wherethey're feeling pinched," said StefanLinn,McKesson senior vice presidentof marketing. The franchise "givesthem recognition within the industry.Independents are always strugglingto be known. It [Health Mart]gives them a uniformed way to connectwith the industry. It also carriesmore weight with public policy," added Linn.

Unlike a typical franchise, theHealth Mart model does not requirea sign-up fee, no long-term commitment,and has a 90-day opt-out clause,which can be used at any time withoutpenalty. Franchisees pay a low monthlyfee, which is not tied to revenue.Health Mart helps independents in 4key ways: managed care and contracting,branding, in-store execution, andcommunity.

MANAGED CARE ANDCONTRACTING

Health Mart franchises benefit fromautomatic enrollment in Access Health,McKesson's managed care contractingentity, which conducts third-partycontracting with pharmacy benefitmanagers on behalf of pharmacymembers. As part of the Health Martmanaged care network, franchises arepart of a >3000-pharmacy network,have representation in >9000 planswith >60 pharmacy benefit managers,and can take advantage of contractreview and advice.

"One of the main benefits I will seein the future is having Health Marton third-party cards, therefore, lettingpeople know that we do indeedaccept their insurance," said Palans.

BRANDING

The franchisees benefit from increasedcustomer recognition and storetraffic through the branding component.The franchisees have access to anational branding and advertisingcampaign, a consumer Web site, advertisingtemplates and resources for localmarketing, and contemporary storesignage and décor.

Wharf Health Mart underwent afacelift when it became part of the franchisenetwork. "When we moved, webought the whole trade show store ofthe future.The main thing I see with ourimprovements is the ease at which customershave in finding what they need," commented Palans. "When we moved,McKesson came in and did a whole redoin our store merchandise based on ourstore demographics. They sent backwhat was not selling and put on ourshelves everything they thought wewould need based on our demographics.Now, in most instances, we havewhat customers look for."

IN-STORE EXECUTION

The in-store execution programsdrive manufacturer recognition. AllHealth Mart pharmacies are automaticallyenrolled in McKesson's FrontEdgeMerchandiser program. The programhelps franchisees reinforce relationshipswith manufacturers through dedicatedresources for front-end store execution,guaranteeing consistent merchandisingfor product introductions and specialpromotions.Trained merchandisers visitthe pharmacy monthly to update thepharmacy's products and promotions,so store shelves are easier to shop andstaff can focus more time on patients.

COMMUNITY

The community aspect provides anopportunity for franchisees tocome together and share best practices,to partner more effectivelywith industry associations and policymakers, and to gain from continuededucation opportunitiesaround timely business and clinicaltopics. Furthermore, the HealthMart community allows leadingindependents to speak with a collectivevoice, which leads tostronger partnerships with policymakers and industry associations.

As for Health Mart's futuregrowth, Linn said, "I think it's goingto grow in pockets and then expandthroughout the United States." Currently,the total number of HealthMart pharmacies hovers near 500,with about 300 franchisees inprogress to becoming Health Marts.McKesson anticipates 3000 HealthMart stores by the end of 2007.