AHOLD CENTRALIZES PHARMACY OPERATIONS

Stephanie Loughran

CHANTILLY, Va. -- Ahold USA here is putting the finishing touches on a pharmacy infrastructure facelift.

The company has made "very good inroads" in centralizing its pharmacy operations to improve profitability and streamline its pharmacy-buying, operational and marketing functions across the conglomerate's six supermarket banners and four operating companies, said John Fegan, corporate vice president of pharmacy.

Ahold USA operates 1,600 stores under Stop & Shop Supermarket Co., Quincy, Mass.; Giant Food, Landover, Md. and Giant Food Stores, Carlisle, Pa.; Tops Friendly Markets, Buffalo, N.Y.; Bi-Lo, Mauldin, S.C.; and Bruno's Supermarkets, Birmingham, Ala. Giant of Carlisle oversees responsibility for Tops, and Bi-Lo takes responsibility for Bruno's, said Fegan.

"The major focus was to improve profitability through leveraging our size to produce better contracts in third party, better purchasing power and more effective marketing programs," Fegan said. "We basically had six companies doing six different things."

Since the convergence process began in January, Ahold USA centralized various pharmacy components and created new staff positions to achieve this consolidation, Fegan told SN. The restructuring process is "almost complete," he said.

Among the changes reported by Fegan:

The company integrated the clinical segment, appointing a manager of clinical services to handle screenings and nutritional tours.

It centralized its third-party insurance program, managed care and financial analysis component, the segment responsible for negotiating and analyzing contracts across the entire chain.

The company condensed its professional services department, which handles recruitment and Health Insurance Portability and Accountability Act compliance.

It centralized its approach to pharmacy systems by designating a coordinator who handles requests from the operating companies to add programs to the pharmacy, interfacing with the pharmacy operations group and the Ahold information services group. It consolidated the pharmacy-buying program and the marketing initiatives.

The greatest challenge, Fegan explained, is to "try to get our arms around everything that was going on in each operating company's pharmacy area." While each banner was practicing pharmacy, all of the programs, purchasing contracts, market-share agreements, recruitment and the like were different for each company, he said. "We didn't have any control over that in the past," Fegan said.

The synergy throughout the operating companies has already been working, Fegan said. "We're starting to see improvement in our contracting rates as we obviously continue to see the positive effect of buying, and we're seeing a positive effect in what each operating company is looking at in terms of the compliance issue," he noted. "We're also seeing improved communications among operating companies."