DEERFIELD, Ill. -- In response to appeals from several Chicago community leaders, Walgreens here has delayed its decision to cut costs by reducing pharmacy hours in 30 out of its 409 Illinois units.
The drug chain had planned to reduce hours starting April 2 due to cutbacks in Medicaid reimbursement rates in Illinois, but postponed the change until May 1, according to corporate spokeswoman Carol Hively. Last week, Hively said the drug retailer was postponing the schedule change yet again.
"We are working with community leaders in the neighborhoods that would be most affected by a cutback, and enlisting their aid in trying to persuade the state to reinstate the previous Medicaid reimbursement rate," she said.
To meet an immediate shortfall in the state budget, the Illinois Department of Public Aid lowered the reimbursement rates last December. Since then, Walgreens has been losing money, Hively said.
"We're trying to do everything we can to not inconvenience the public, but we're put in a difficult position -- you can't operate stores at a loss," she said.
The 30 stores in question serve the bulk of Walgreens' Medicaid patients in Illinois, according to Hively.
Curtis Hartin, director of professional services for Schnuck Markets, St. Louis, which operates about 24 pharmacies in Illinois, concurred with Hively that the reimbursement cutbacks are detrimental to retail pharmacy. "We're in complete agreement that Illinois' decision is a poor one that needs to be revisited, and we're proactive in reversing it," he said. "It's given us cause for alarm, and has set a dangerous precedent."
The Illinois Pharmacists Association (IPhA), Springfield, Ill., is working with Walgreens and other chain pharmacies to address the issue.
Terri McEntaffer, executive director of the association, said the IPhA has been trying to educate state legislators in this matter. "Legislators are sympathetic, but it comes down to funding, and they're wary of making promises of how it's going to fall out," she said.
Analysts supported Walgreens' efforts. "Walgreens' best scenario is to get the rate that earns them profit on prescription fills," said Stephen Chick, food and drug retail analyst for JP Morgan Chase, New York. "If the reimbursement rate is not economically attractive to [Walgreens], they have the right to push back."
To drum up support, Hively said, Walgreens has talked to community leaders and local ministers, provided information on the situation in its Chicago-area stores and called upon its employees to give additional information to customers as needed.
Walgreens said its chief executive officer, L. Daniel Jorndt, met with Rev. James Meeks of Chicago's Salem Baptist Church, Rev. Jesse Jackson of the Chicago-based Rainbow Coalition/People United to Serve Humanity, state Rep. Mary Flowers and U.S. Rep. Jesse Jackson Jr., who all urged Walgreens to retain its hours.
"We agreed to honor their request for a delay of our plans, to give us all time to work together with Gov. Ryan and the legislature to find a way to resolve this situation and reinstate Medicaid funding," said Jorndt in a prepared release.
According to one report, Illinois reduced the rate paid to retail community pharmacies by an average of $2.50 per prescription, sinking many pharmacies into the red.
Following the cuts, Illinois now has the 39th lowest rate of Medicaid reimbursements of the 43 states in which Walgreens operates, according to the company.