Small pharmacies focus on niche services, personal attention

Veteran pharmacist Yee-Lai Chiu jokes that he might fill prescriptions for fun after he retires.

He enjoys helping patients, he said, but dealing with prescription benefit managers and insurance companies can be frustrating. With third parties largely controlling reimbursement rates, there’s not much profit potential in dispensing medications, especially for small, independent drugstores, he said.

Chiu has managed to survive, though. He and his son, Thomas, who is also a pharmacist, own and operate two of the five independent drugstores in Sioux Falls: CareTrends Pharmacy on South Minnesota Avenue and Complete Home Care on West Russell Street.

Chiu, a 1975 graduate of South Dakota State University, has thrived partly by carving out specialties in areas such as home infusion therapy, which involves helping patients take intravenous medications. Other independents have found specialties in areas such as compounding.

“If you don’t have the passion, the heart to help patients, you won’t succeed,” Chiu said.

The other three drugstores in Sioux Falls that are considered small independents are Van Hove Prescription Shop on South Seventh Avenue, Pharmacy Specialties & Clinic Inc. on West 57th Street, and Dan’s Drugstore on South Cliff Avenue.

Sioux Falls is the hub of the pharmacy business in South Dakota: 529 of the 1,156 registered pharmacists practicing in the state work at businesses in the city. Many independent drugstores remain in business in smaller cities across the state, but the single-outlet drugstores that were common in Sioux Falls generations ago gradually have given way to bigger chains and pharmacies affiliated with hospitals and clinics.

There are 66 licensed pharmacies in Sioux Falls, according to the South Dakota Board of Pharmacy, which is part of the Department of Health. About half of them are in stores with multiple outlets. That includes Hy-Vee, Kmart, Lewis, Shopko, Target, Walgreens and Walmart. Lewis, a regional chain based in Sioux Falls, has the most local outlets, with nine.

Most of the other pharmacies in Sioux Falls are affiliated with Sanford Health, Avera Health or other medical businesses.

During the past five years, three pharmacies in Sioux Falls closed or became part of other companies. In addition, two outlets merged to create one local independent. The three that closed weren’t general purpose pharmacies. They were Nelson Laboratories, Animal Rx and the McHale Institute. Pharmacy Specialties and Clinic Pharmacy consolidated.

“Independent pharmacies talk all the time about how tough it is to make it,” said Kari Shanard-Koenders, executive director of the Board of Pharmacy.

Economies of scale have helped bigger stores proliferate, she said, and creating specialties has become important for small stores.

Dan’s Drugstore is the only new independent to have started in the past five years. Dan Peterson opened the store in March.

“It’s going pretty well. I’m off to a good start,” Peterson said. “I’m progressing every month toward my goal. I’m seeing more customers and foot traffic.”

Although located in a strip center, Peterson’s store is traditional in character. It includes a few rows of general merchandise in the front and the pharmacy area in the back. Peterson stresses prompt, personalized service.

“I just believe that a pharmacist should know their patients by their first name. Pharmacy has gotten to where that’s not the case in the big-box stores,” said Peterson, who had 14 years of experience in pharmacy before opening his store.

For now, running the store is a one-man operation. He does it all, but he hopes to grow the business and add employees.

“I knew going in it would be sacrifice and long hours, but there’s no place I’d rather be,” he said.

Chiu is among those in the business who have wished Peterson well.

Chiu went into business in 1991 by opening a home infusion pharmacy. All he had at the beginning was a desk, chair and file cabinet, he said. Now, his business is housed at sites in the north and south parts of the city.

“I think it’s very hard to run a traditional pharmacy from scratch because of, No. 1, capital,” he said.

Generally, drugstores can make more money selling toys, hardware or groceries than they can selling prescriptions, Chui said. He stresses, however, the importance of pharmacists doing more for patients than dispensing medication.

Providing good oversight and guidance on medicine use is the key for the future, he said. Eventually, the value that an on-site pharmacist brings will be more widely recognized by third-party cost managers, he said.