Health Mart: Not your father's franchise

July 24, 2006

McKesson has unveiled a radically different pharmacy franchise model designed to strengthen its independent customers by giving them the clout of a mega-chain in the dog-eat-dog world of managed care.

Recognizing that independent pharmacies are at a distinct disadvantage when it comes to playing the managed care game, McKesson has come up with the Health Mart franchise. By joining McKesson's Access Health Group, independents will have someone negotiating contracts for them with health plans and pharmacy benefit managers. They will also be listed in drug plan network books under the Health Mart brand so patients know their local independent pharmacy will honor their insurance.

"When you say 'franchise,' people get scared," said Canning. "You have to pay a sign-up fee, you've got a long-term agreement you can't get out of, and you pay a percentage of sales even though margins were a lot different 20 years ago. We've addressed all those downsides so independents can have all the benefits of a franchise without the scary things."

Although the managed care contracting angle may be Health Mart's biggest lure for independents, McKesson plans to build brand identity with consumers through a national advertising campaign that franchisees can customize for their own market. And there's a campaign to woo manufacturers into including independents in their product promotion plans.

"We have a merchandising force that goes into each Health Mart once a month every month," said Canning. "They execute getting items on the shelf, and they execute on promotions. They report back with the same technology we're used to seeing for the chains. If Schering launches a new item, in a 30-day cycle, we'll be in every Health Mart and can tell them how many store shelves the product got onto."