Rx roots and the Revco years
When he came to Rite Aid in 2004, Thompson brought his own flair for reinvention and entrepreneurialism, shaped by a multifaceted career in both small- and large-chain retail pharmacy and in start-up companies dealing in other sectors of health and wellness.
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Thompson began his career while still in high school, working for Dunaway Drugs, a family-owned chain of more than a dozen stores in suburban Atlanta, “from the age of 16 and throughout my college career in the summers and during holidays” while attending the University of Georgia. After graduation, he worked for an independent pharmacy before joining Revco D.S. in 1978, first as a store pharmacist in Atlanta, and later as a store, district and regional manager. He moved to Revco’s headquarters in Twinsburg, Ohio, in 1988, taking on management roles including director of store operations. From 1995 until the company’s sale to CVS in 1997, he served as VP of pharmacy operations.
“It was a great foundation,” said Thompson. “Revco was an excellent company.”
“Not unlike Rite Aid, Revco went through some very difficult times,” he told DSN. “We fought our way through and out of Chapter 11 bankruptcy reorganization, which was a tremendous learning experience. Looking back on that, it prepared me well for many of the challenges we experienced at Rite Aid.”
In praise of a pharmacy champion, trailblazer
Usually it takes some time for any individual’s full impact on their company, their profession and their industry to come into focus after that person has moved on.
Such may be the case with Robert I. Thompson, who stepped down Sept. 18 from his position as EVP of pharmacy at Rite Aid. But this much is clear: Thompson played a key role in the reinvention and revitalization of Rite Aid’s healthcare business and mission in recent years, which was clearly a major factor in the company’s remarkable turnaround and return to retail viability.
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For his leadership in the renewal of Rite Aid’s retail pharmacy business and his many efforts on behalf of pharmacy practice, patient health and a higher level of patient care by pharmacists throughout his career, Thompson has been named the DSN Pharmacy Innovator of the Year. And in another fitting cap to his career, Thompson was recently named the Harold W. Pratt Award winner for 2015 at the National Association of Chain Drug Stores Total Store Expo in August.
Thompson, a 1976 graduate of the University of Georgia School of Pharmacy, is a chain pharmacy veteran and healthcare industry entrepreneur who forged a long and successful career at Revco D.S. and Rite Aid. He joined Rite Aid in July 2004 as the company was still struggling to emerge, following the conviction of former senior executives in the wake of a massive accounting fraud that forced the company to erase some $1.6 billion profits and sent its stock price and debt rating reeling.
Amid those setbacks, and still carrying a heavy debt load from earlier acquisitions — along with mounting credit pressure, competition and declining same-store sales in many markets — Rite Aid’s future was in serious jeopardy.
“Between 1999 and 2002, the company had gone through a terrible situation with the [financial] restatement and all the other issues,” Thompson remembered. “So the company was coming out of those very difficult years and trying to reposition itself, and there were lots of challenges across the board.”
In retrospect, Thompson’s entry into Rite Aid — after a 20-year career with Revco and a seven-year stint in leadership positions with two venture capital-backed firms in the fields of dentistry services and health and safety services — couldn’t have come at a better time. Under the steady guidance of new leaders Bob Miller, Mary Sammons and John Standley, the company was working to shed its past legal troubles and regain its financial footing and growth momentum. And Thompson, who had witnessed both the downside of Chapter 11 bankruptcy and the upside of recovery as a member of Revco’s management team in the 1990s, brought both his broad perspective and his vision for a higher level of pharmacy practice when he joined the beleaguered drug chain.
“The great thing about Rite Aid is its people,” he asserted. “They are very hard-working and very resilient, and they’d gone through a very tough time. So it was good to come to Rite Aid in 2004, because people were very optimistic and very encouraged that they’d been able to put all this bad stuff behind them and start rebuilding the company’s reputation and its business.
“Everyone knew we had a lot of work ahead to get the stores right, to have the right kind of stores with the right kind of services and offerings, to continue to see our company grow and be a significant player in the industry,” Thompson added.
Building a new pharmacy model
On entering Rite Aid, Thompson was immediately tasked with creating and executing a new vision for the embattled company’s pharmacy and health strategy. “I came in as VP of pharmacy business development,” he explained. “My role was to help find new opportunities that would be applicable to our strategy as a chain pharmacy.”
“There was a lot going on in the marketplace, where chain drug retailers were trying to figure out new models and new opportunities, so I was given a broad charter and was encouraged to bring in and help develop new ideas for the company. We were trying to build a model for the future,” he said.
To that end, Thompson led a push by Rite Aid into the retail clinic business early on in his tenure. “One of the first things I worked on was nurse practitioner clinics,” he explained. “We opened the first Take Care clinics in our Portland, Ore., stores.”
That first venture into clinics was short-lived; the Take Care clinics and brand were quickly acquired by Walgreens. But the experiment helped Rite Aid pioneer the concept with other health systems and providers, and the company worked to develop this key health service under Thompson.
Thompson retained the title of VP of pharmacy business development through June of 2007. When Rite Aid purchased the former Brooks-Eckerd drug store chains, consisting of more than 1,800 stores, he was tapped to lead the integration of the two companies until February 2008, after which he became SVP of the Northeast division.
When John Standley, who had left the company to serve as the CEO of Path-mark Stores in 2005, returned as the company’s new chairman and CEO in 2008, he brought in a new management slate that included Ken Martindale, who currently serves as CEO of Rite Aid Stores and president of Rite Aid Corp., and Frank Vitrano who was recently named chief strategic business development officer. Standley also recognized the value Thompson would bring to the enterprise going forward, and knew Thompson’s expertise in pharmacy and health care — and the continuity and vision he could provide as the company transitioned into a new and expanded healthcare mission — was key to that transition.
To that end, Thompson was quickly shifted from field management and put in overall charge of Rite Aid’s pharmacy operations.
“A true health-and-wellness destination”
“If you go back to the situation we were in 2008, coming into 2009 we were struggling with our pharmacy business,” Thompson recalled. “We knew the marketplace was about to change because of the Affordable Care Act. We weren’t certain at that time exactly how the ACA was going to impact retail pharmacy, but we knew it would have an impact because anything that happens in health care today seems to impact pharmacy.”
“So as a team — including John, Ken and others — we began to educate ourselves on the pending changes in the healthcare marketplace to make sure we understood it so we could respond appropriately to continue to meet the needs of our customers,” Thompson continued. “And at the same time, we had the pharmacy industry and pharmacy academia telling us about the expanding role of the pharmacist and the role of the future.”
In the midst of these changes, Walmart unveiled its hugely influential $4 generic drug discount program in fall 2006. “That kind of changed the game for everyone in trying to understand how we were going to compete in this marketplace,” Thompson said.
In the wake of that huge market disruption, he told Drug Store News, “we were also evaluating what we really want this company to be longer term. Are we going to be remembered simply as a low-cost pharmaceutical [dispensing] alternative or something more?”
“In 2008 and 2009, the $4 generic had only been around a couple of years. And we asked ourselves, ‘Is our business model of the future going to be one of just trying to be the low-cost provider and sell every product at $4? Are we going to be that type of retailer, or are we going to be a different type of retailer that truly offers differentiation?’ And if you look at the core of our business, which is pharmacy, we made the decision — and it was the right one — to be a company that was going to use our core pharmacy business, and our pharmacists, who are central to everything we do, to be a true health-and-wellness destination, and to make that a reality,” Thompson added.
“Once we made that decision, we determined how to invest our resources. One of the investments was [to launch] the immunization program. And one was making sure we had the tools and technology in place to do additional compliance and adherence activities,” he said.
Investing in wellness and clinical care
Since then, Thompson has led a slew of groundbreaking health-and-wellness initiatives within Rite Aid’s vast, 4,600-store pharmacy network, along with pioneering collaborative care models in partnership with hospitals and health systems to drive long-term medication adherence, improve patient outcomes and reduce hospital readmissions for chronic care patients under the Rite Aid Health Alliance program.
Among the many new patient-care and preventive-health initiatives he has helped drive were a continuing series of programs that have established Rite Aid as a major source of retail pharmacy and health services across the United States, including:
- A massive effort to train all 11,000-plus Rite Aid pharmacists to become certified immunizers, which Thompson said was “not only key to providing a fundamental, important preventive-care service, they’re also an essential clinical pharmacy service as we define it. … We have a great team of pharmacists who have done just a fantastic job of stepping up to the plate to become more clinically oriented,” he added. “We grew our immunization program from nothing to … about 3.7 million immunizations last year. That’s a huge accomplishment.”
- The development and expansion of Rite Aid’s highly popular Wellness store format, dubbed the Genuine Wellbeing concept. “We’ve got almost 1,900 of our stores that have been remodeled to our Genuine Wellbeing format,” Thompson said. “Those stores are doing well. They’re beautiful; they’re state of the art.”
- The 2010 rollout of the wellness+ loyalty program, “which is really driving consumers to utilize Rite Aid pharmacies,” according to Thompson. “Our wellness remodel program … was focused on trying to create that wellness environment and to bring that message to consumers that, yes, we are going to be this destination for health and wellness,” he added. The program, now known as wellness+ with Plenti, rewards healthy behavior and medication adherence.
- Massive investments in pharmacy technology to boost dispensing process efficiency “so we can free up the appropriate amount of time for the pharmacists to engage in these clinical activities,” Thompson noted.
- The creation of the Wellness Ambassador — easily one of Rite Aid’s most farsighted innovations — whose primary focus is serving customers to help deliver a better in-store shopping experience. “Probably the most distinguishable characteristic” of Rite Aid’s Wellness store retail layout, Thompson told DSN earlier this year. Rite Aid currently has more than 2,000 Wellness Ambassadors in stores across the country, helping consumers navigate the healthcare aisles and connect the front of the store back to the pharmacist.
- The introduction of the Rite Aid Care Coach, another new wellness-related associate in the store, who works in tandem with Rite Aid pharmacists and a patient’s personal physician to meet predetermined health goals — for instance, to lose weight or quit smoking. Currently, Rite Aid has Care Coaches in about 60 of its stores, which have been selected as part of its Health Alliance partnerships with local hospital and physicians groups.
- The acquisition of Health Dialog, a company that specializes in health outcomes tracking and analytics, and health education training, to support both patient adherence efforts and its collaborative care activities through the Rite Aid Health Alliance program.
- The acquisition of RediClinic in April 2014. The company unveiled its first 24 RediClinics in Rite Aid stores in the Philadelphia and Baltimore/Washington, D.C., markets, and announced plans in May for 11 more in the greater Seattle area and 100 locations by the end of fiscal 2016.
- Expansion of other adherence and patient care programs. “Our pharmacists are working hard every day to deliver clinical interventions like medication therapy management. We developed our own clinical intervention technology, which we call Point of Care Compliance,” Thompson said. “We’re focused on compliance and adherence and MTM interventions,” he continued. “And our pharmacists have done a fantastic job delivering great customer service, in addition to doing all this additional work to grow our business and expand their capabilities.”
- The acquisition this year of EnvisionRx, a pharmacy benefit manager. Thompson said the combination of Rite Aid’s pharmacy capabilities and its new PBM unit will boost its ability to participate in integrated delivery models and team care. “It’s the wave of the future, and the way to ultimately control healthcare costs and deliver better care,” he added.
Sorting out the speculation and saying good-bye to a friend
A lot was happening in the world of community pharmacy, as we raced to close this issue of Drug Store News — no news bigger than the late October bombshell that Walgreens Boots Alliance would swallow up Rite Aid, in a deal valued at more than $17 billion all in.
Certainly, DSN expects more twists and turns in the story between now and the close of the deal expected sometime in the second quarter of 2016. As we were still releasing pages to our printer, speculation on the number of store divestitures and/or closings the deal would entail varied considerably. In its filing, Walgreens said it was prepared to sell up to 1,000 stores to satisfy the FTC. About a week later, a report from real estate firm Cushing & Wakefield estimated that between FTC-required divestitures and other closings, the total number of stores lost could be as high as 3,000. The next day, a Credit Suisse analyst report put the number needed to appease federal trade regulators as low as 175 stores and as high as 950 stores, well within Walgreens’ limits.
DSN believes that if Walgreens has to part with 3,000 stores, it’s a deal-breaker. That would seem at odds with Walgreens Boots Alliance executive vice chairman and CEO Stefano Pessina’s desired interest in “creating a more comprehensive and stronger platform for the development of our brand presence and the future growth of our business,” as he told analysts during the company’s Oct. 28 earnings call. Given the company’s broader strategy to drive future profitability at the front-end of the store and leveraging exclusive brands like Boots No7 to get there, it doesn’t seem logical that it would spend $17 billion to buy 4,600 stores and close 3,000, just to keep only 1,600 or so. Walgreens could just go back to playing the “hedgehog” and grind out 1,600 more stores for a lot less money.
Lastly, a word about the passing of FMI’s Cathy Polley, and no one could have said it better than Cathy herself: “I live my life to the fullest. We only get so much time on this earth, so wasting it is not an option. I try to surround myself with those who want to join me in making a difference every single day.” That’s what Polley told the organization Disruptive Women in Healthcare, which named Polley a “Woman to Watch” in 2014.
For our money Cathy Polley was a “Woman to Watch” from the day she entered our industry as a Kmart pharmacist in 1982 until the sad day this November that she was called from this world to the next. She was a friend and a partner, and Drug Store News will miss her terribly.