Hollister - When Stephen Rosati began working in his family's Penny Wise Drug store in high school, there were three other pharmacies within a block on San Benito Street.
Now, more than 30 years later, Penny Wise is the only independent pharmacy left in Hollister, and one of only a handful left in the central coast area. But with Med-icare Part D reforms forcing Rosati to turn away one-third of his customers, he's not sure how long he and his two sisters, Joan and Jeanne Rosati, can hold on.
"If we didn't own our building, we wouldn't be here," Rosati said.
Penny Wise is one of 24,000 independent pharmacies nationwide. However, 600 independent pharmacies closed last year, said Robert Appel, senior vice president of communications for the National Community Pharmacists Association.
"It's not so much competition," Appel said. "The independents can compete in the marketplace. It's the reimbursements that are being offered from the insurance companies."
Medicare Part D subsidizes the costs of medications for seniors, but allows insurance companies to reimburse pharmacies less than the drugs cost to dispense, Rosati said.
"You either go out of business, you take out loans that are going to be impossible to repay or you increase the price of your front-end merchandise or groceries," he said.
The Rosatis were unwilling to raise prices on other goods in their store to subsidize accepting lower reimbursements from insurance companies under Medicare Part D.
To reduce costs, Rosati and his sisters have cut business hours and terminated employees. Their last employee left in 2005, in anticipation of the start of Medicare Part D in 2006, Rosati said.
Rosati's parents, Joe and Marie Rosati, established Penny Wise in a 1,500-square-foot building in 1948. In 1979, the store moved to its present location at 549 San Benito Street, with 5,000 square feet to house its sundry goods. Along with the pharmacy, Penny Wise sells products ranging from greeting cards, picture frames and candy to Bibles and crucifixes.
About 15 years ago, Penny Wise stopped accepting third-party insurance companies and began to build a customer base of cash-paying seniors. As most of their customers would be switching to Medicare Part D, the Rosatis had to be careful in choosing which insurance companies to accept.
Rosati said their choice, which turned out to be the only insurance they accept through Medicare Part D, was based on how its reimbursements worked.
"It was very difficult to get quick answers from anybody," Rosati said of shopping for insurance companies.
Rosati has written to U.S. Rep. Sam Farr, the Democrat who represents San Benito County and the rest of California's 17th District in Congress, in hopes of affecting Medicare Part D reform.
Some of Rosati's loyal customers were forced to take their business to other pharmacies in order to have the insurance program pay for their medication.
But 73-year-old Hollister resident Ed Markham picked the one insurance company Penny Wise would accept under Medicare Part D.
Markham said Penny Wise was one of his first accounts when he began his career as a commercial banker.
"I like the personal attention," Markham said.
The Rosatis understand that as an independent pharmacy, customer service is what keeps them afloat. Rosati said he consults customers when they choose a medication.
"It helps people make the right decision on what to take the first time," he said.
Michael Van Cassell covers public safety for the Free Lance. He can be reached at 831-637-5566 ext. 335 or mvancassell@freelancenews.com.
Michael Van Cassell Michael Van Cassell covers public safety for the Free Lance. He can be reached at 831-637-5566 ext. 335.
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