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Dreiling resigns as Duane Reade CEO, heads to Dollar General

BY Antoinette Alexander

NEW YORK Pharmacy retailer Duane Reade announced on Monday that chairman, president and chief executive officer Rick Dreiling has resigned to become chief executive officer of the 8,000-plus store discount chain Dollar General.

Serving as interim chief executive officer is David D’Arezzo, the company’s current chief marketing officer. In addition, Alan Lacy, senior adviser to Oak Hill Capital Partners and former chairman and chief executive officer of Sears Holdings, will work closely with D’Arezzo. Lacy also will be advising the 241-store chain on its permanent chief executive officer search.

The moves are effective Jan. 18, 2008.

“Duane Reade’s senior management team has led a successful turnaround over the last two years, significantly improving operations, increasing market share and enhancing the customer experience,” stated Tyler Wolfram, a director of Duane Reade and partner of Oak Hill Capital Partners. “This has resulted in record growth in same-store sales and a substantial increase in adjusted FIFO EBITDA. Rick leaves Duane Reade in an excellent position, and we thank him for his contributions to the company.”

In July 2004, the acquisition of Duane Reade was completed by a group of investors, including Oak Hill Capital Partners and members of its management team.

Added Dreiling, “I would like to express my gratitude to a talented team of senior managers and to all of the employees at Duane Reade who have worked so hard to help implement the company’s successful transformation. The recently reported third quarter marked the fourth consecutive quarter of industry leading same-store sales growth, and I continue to be very optimistic about the future for the company. I would also like to thank Oak Hill for being a terrific partner over the past two years.”

Dreiling, a former Longs Drug Stores executive, assumed the role of president and chief executive officer of Duane Reade in November 2005 and in March 2006 established a six-point turnaround plan dubbed Duane Reade Full Potential. The initiative centered on returning to the fundamentals of the business, and stabilizing and improving its current assets.

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S&P revises outlook on Rite Aid

BY Michael Johnsen

NEW YORK Standard & Poor’s Ratings Services revised its outlook on chain drug retailer Rite Aid to negative from stable, the firm reported Friday. At the same time, S&P affirmed the ‘B’ corporate credit rating on Rite Aid.

“The outlook change reflects the company’s weak same-store sales and our expectation that this trend will continue over the next few quarters,” stated Standard & Poor’s credit analyst Diane Shand. Rite Aid faces a more cautious consumer, strong growth of lower-priced generics and intense competition, she said. In addition, the current environment could make it more challenging for the company to integrate its recently-acquired Brooks/Eckerd stores.

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Boston Mayor decries in-store health clinics

BY Antoinette Alexander

BOSTON On the heels of the Massachusetts Public Health Council approving regulations allowing for in-store health clinics in the state, Boston Mayor Thomas Menino is reportedly looking to ban the clinics from opening in the city.

The decision by the health council “jeopardizes patient safety,” Menino said in a written statement, according to a Boston Globe report. “Limited service medical clinics run by merchants in for-profit corporations will seriously compromise quality of care and hygiene. Allowing retailers to make money off of sick people is wrong.”

The newspaper also reported that, in a separate letter, the mayor urged members of the city’s Public Health Commission to consider banning the clinics from opening within Boston. CVS has plans to open 20 to 30 MinuteClinics in the Greater Boston area but it is unclear how many of those would be within the city’s limits.

Defending its decision to allow clinics to operate, the state Public Health Council issued a statement that read: “The members of the Public Health Council were deliberative and thoughtful in their review of the limited service clinic regulation. We believe these types of clinics, operated either as part of a retail operation or in a nonprofit setting, can provide the public access to safe, convenient, and quality care for minor health issues.”

Officials at MinuteClinic were not immediately available for comment.

On Jan. 9, the state Public Health Council approved rules for limited service medical clinics. The new regulations took effect immediately.

“This is a new model for health care delivery that can benefit many people in the Commonwealth. These regulations will improve consumer convenience and make it easier for non-profit organizations to establish satellite clinics in a variety of settings to serve vulnerable populations,” stated secretary of Health and Human Services JudyAnn Bigby in a statement issued after the approval.

Added John Auerbach, commissioner of the Department of Public Health and chair of the PHC, “Properly regulated, these types of clinics will serve an important function, making care for minor medical care more convenient. The council was mindful of not wanting to create a stand-alone system of health care, so these regulations require coordination and linkages to primary care providers.”

The approval came at the end of a long review process that included two public hearings and the submission of hundreds of pages of testimony regarding the regulations, including testimony in favor of the clinics from the Convenient Care Association.

“We appreciate the Public Health Council’s careful deliberation regarding the adopted regulations that will now guide the operation of limited services clinics in Massachusetts. These retail-based clinics are providing consumers in 35 other states with easy access to high-quality, affordable health care in the face of a nationwide primary care physician shortage. Since this growing shortage is well documented in Massachusetts, and its related health care access issues have been exacerbated by the state’s near-universal healthcare coverage, we appreciate the Council embracing limited services clinics as a partial solution to these serious problems,” said Web Golinkin, president of the CCA and chief executive officer of in-store clinic operator RediClinic, in a statement issued after the council’s decision.

Sparking the move to create specialized regulations for these clinics was CVS’ application to open a MinuteClinic in one of its stores in Weymouth. According to the council, early in the application review process it became clear that DPH regulations governing medical clinics did not address the operation of medical clinics with limited scope of services. Rather than consider applications requiring numerous waivers from full-service clinic regulations, the department decided to create a specialized set of rules.

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