Arcadia Resources and PrairieStone tie the knot

April 16, 2007

Can a marriage between a highly automated pharmacy chain that operates in grocery stores and a company that provides home care services and operates retail health clinics be successful?

Can a marriage between a highly automated pharmacy chain that operates in grocery stores and a company that provides home care services and operates retail health clinics be successful?

Alan Lotvin, M.D., CEO of Arcadia Resources' CareClinic division, thinks the company's recent acquisition of Minneapolis-based PrairieStone Pharmacy is a win-win for both groups.

"We felt the combination of the CareClinic strategy and PrairieStone's pharmacy services strategy was very complementary. We can go to a grocery/drug retailer and show them how they can provide numerous services. The clinic establishes the store as a health destination and helps bring patients into the store. Many of PrairieStone's services can bring more people into the store, help the store lower its drug acquisition costs, and make better use of its staff," said Lotvin. And PrairieStone's Licensed Pharmacy Services software product allows pharmacy access to restricted payer contracts and improved acquisition costs for pharmaceuticals.

Lotvin believes Arcadia's clinic solution is compatible with PrarieStone's automated pharmacy, which has a very small imprint. "They can come into a grocery retailer and shrink the size of the pharmacy space down to around 417 sq. ft. The retailers don't have to give up any selling space, and the pharmacy provides retailers with another draw into the store," said Lotvin.

Noting that home health care is one of the fastest-growing segments in health care, Lotvin said Arcadia's home care division wants to align a set of products and services that make taking care of parents in the home safe and easy. "With PrairieStone we have acquired the unique DailyMed Packet Program, which is a med error and compliance package. The product uses multi-dose packets sealed and arranged by the day and time to be taken. It's another service to provide to people in their home to help them age comfortably and safely. With this product, there is very little opportunity for medication error and it makes it much easier for patients to be compliant, DailyMed also creates a differentiation for the store. It creates a reason for the patient to use one retailer over the other since it is not going to be available at every retailer."

Lotvin went on to say that one of the challenges in the clinic business will be finding highly qualified nurse practitioners, especially as more clinics are rolled out. "The company has a 29-year history of nurse staffing in the face of a variety of shortages over the years. They really thought this acquisition was a natural extension of the core platform. The company is trying to create greater access to high quality but lower-cost care, whether in the home or the retail setting."

CareClinic operates 12 clinics, and 22 additional clinics are slated to open this month. The clinics currently operating are located in Meijer stores in Indiana and Michigan under the Affordable Basic Care name, and in Walgreens in Nevada under the Health Corners name.

Lunds is the supermarket where the original PrairieStone pharmacies were located. As part of the transaction, Lunds will acquire the PraireStone pharmacies and Arcadia will manage them through the Prairiestone subsidiary. The pharmacies will retain the PrairieStone name. "PrairieStone is either managing the pharmacy or providing a series of services to the pharmacy," said Lotvin.

What will the future hold for the newlyweds? "We'll continue to look for areas where we can help grocery retailers better realize the benefits of having a pharmacy in their store," said Lotvin. "PrairieStone has relationships with 200 stores now, and we're going to look to expand into those 200 stores. As we continue to go out and market both sets of services, we'll market them together. We have great opportunities to cross sell."