Seizing on the opportunity to start a mail order pharmacy has spawned a decade of big growth for this Montana company. Seizing on the opportunity to start a mail order pharmacy has spawned a decade of big growth for this Montana company.
When Mr. Opportunity knocks, he doesn’t always have a smile on his face. For Ridgeway Pharmacy, the opportunity for unexpected and massive growth came when a customer told co-owner Jim Cloud he was leaving. That customer unintentionally set the stage for the explosion of a mail order pharmacy business.
Ridgeway got its start when Cloud and his future business partner were working together at an independent drugstore in Stevensville, Mont., a town of about 2,500. When it was announced that the Super One Foods regional chain would be moving into town, the chain approached Cloud’s partner about taking over the pharmacy in the new store. In 1998, the first Ridgeway Pharmacy opened inside the Stevensville Super One.
The operation was slowly humming along according to plan when a little bit of bad luck set the stage for an explosion of growth for Ridgeway. A customer came in and said that his insurance carrier was forcing him to buy prescription drugs through the insurer’s mail order service.
“We lost a customer through no fault of our own,” Cloud said. “We called their insurance, Blue Cross Blue Shield of Montana (BCBSMT), and asked if we could agree to match their mail order contract and charge customers the same amount.”
BCBSMT was interested in keeping the business in state, and since the mail order company they were using was based in Albuquerque, they worked on developing a program for more than a year, eventually offering Ridgeway a contract to run a mail order pharmacy. At the same time, the Ridgeway brick and mortar operations were also expanding, taking over a pharmacy in nearby Corvallis.
After spending about $70,000 to start its first pharmacy and $150,000 for its second, Ridgeway was now faced with the prospect of serving BCBSMT’s 100,000 members through
its new mail order business. For a cost of around $7,000, Ridgeway sent a mailer to BCBSMT members informing them that Ridgeway was now an additional option alongside the Albuquerque mail order. As if a Montana winter storm rolled through town, Ridgeway was snowed under with business.
The business grew so fast that the company had to invest in robotics to help fill prescriptions. Eventually the mail order operation became so big it couldn’t be contained in the original Stevensville store, so the company bought another building in nearby Victor to house mail order operations and add more insurance companies. Super One also came to Ridgeway and asked the company to take over pharmacy operations in its Hamilton store. Cloud said the company brought in a new person to run the Hamilton operations, bringing the company’s assets to three physical stores and a rapidly growing mail order business.
“Ridgeway is now the largest independent drug purchaser in the Northwest US,” said Cloud. “We are continually upgrading, investing in conveyor belts, new robotics, and a call center we just established, and we were recognized by Entrepreneur Magazine as one of the 500 fastest growing companies in the country.”
It is clear that without losing that one customer, Ridgeway wouldn’t have seen the growth that came about with the mail order pharmacy. After BCBSMT got on board with its 100,000 members, the Montana state government came in with 30,000 insured; a coalition of all the state universities brought in an additional 30,000 potential customers; retirees moving to different states have helped expand the company’s nationwide footprint to about 35 states; and Ridgeway also recently earned its first out-of-state contract with Clear Choice of Oregon. Customers can call, fax, or use Ridgeway’s Web site to place their orders.
“We also just put in a bid on a contract that covers a coalition that employs 25% of the workforce in Montana,” said Cloud. “We’ve had to become licensed in all the states we mail prescriptions to, so we are now pursuing business in other states.”
Since starting the mail order operation, Ridgeway has focused intently on supporting its development. The purchase and renovation of the Victor building was essential. It gave the mail order pharmacy a great location on a highway with easy access for UPS, FedEx, and the US Postal Service. The building itself was gutted and had all new phone lines and power systems installed. Ridgeway is currently having software custom designed to run the mail order pharmacy because traditional software designed for running retail pharmacies doesn’t work for mail order operations. To top that off, Ridgeway has tried to do all these things without taking on a mountain of debt.
So far, Ridgeway has been able to do that by taking its business in directions that allow for growth. The company is working through National Jewish Hospital out of Denver and the Montana state government on a project related to the monies paid to states as part of the tobacco settlement. The state is paying for smoking cessation drug Chantix and then has Ridgeway ship it all out, getting central billing from the pharmacy and avoiding the inefficiency that comes from dealing with hundreds of pharmacies across the state. The company is also planning to expand retail operations into other areas of the state and currently has three locations on the drawing board.
Throughout it all, Ridgeway has demonstrated a high level of integrity in all aspects of its business. That integrity was put to the test in the most severe way when the company was approached by what seemed to be a legitimate out-of-state Internet drugstore. When the first orders came in, the company noticed that all the prescriptions were written by the same Florida doctor, the orders spanned the country, and they were all for painkillers. Cloud immediately knew the prescriptions were illegal.
The company called the DEA, and Cloud cooperated with the federal government, working as a confidential informant. His testimony was a crucial piece of the government’s case against two Baltimore pharmacists who illegally sold nearly
10 million hydrocodone pills in two years.
With an impeccable reputation and a prescription for growth in hand, Ridgeway Pharmacy is poised to take a larger piece of the mail order prescription business in the Northwestern US while simultaneously expanding its physical footprint in Montana. Cloud is confident the business model and culture Ridgeway has created can stand toe to toe with the major players.
“Most of our competitors are massive Fortune 500 companies,” he said. “That makes it difficult for us to compete with them on bidding for jobs, but our personalized service is so good and we do our jobs so well that when people hear about how reliable we are, we can match up against anyone.”
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