Inside This Issue - News
Katz CEO Scorpiniti energized by intense competition
June 25th, 2012
by Alasdair McKichan
MISSISSAUGA, Ontario – Frank Scorpiniti is now just over a year into his Canadian experience: 11 months as chief operating officer of the Katz Group and just four months in the chief executive officer position to which he was appointed after the retirement of former president and CEO Andy Giancamilli in February. That time has been long enough for him to size up the competition.
Having spent his previous career first in California, where Longs Drugs had its headquarters, and then serving in a senior position with Duane Reade in New York City, Scorpiniti understands competition.
Frank Scorpiniti, CEO of Katz Group
“The competition in Canada, whether it comes from other pharmacy chains, supermarkets or mass merchants, is among the best in North America,” he says. “And that’s energizing: Strong competition drives us to be a better company. It keeps us continually focused on improving the customer experience and enhancing our offering.”
When he was growing up in the heart of Silicon Valley during the early high-tech boom, the parents of Scorpiniti’s school friends worked for such companies as Intel and Apple. Many of his peers were set on making their careers in one or another of the high-tech industries that the valley nurtured.
At age 16 Scorpiniti did not have a fixed view of where he should direct his energies, though he knew he wanted to go to college. His chief immediate ambition was to own a car. His father agreed that was a reasonable aspiration but suggested to Frank he might first think about how he planned to finance its purchase and upkeep.
That response prompted Frank to seek a job at his neighborhood Longs Drug Store — performing the everyday jobs associated with housekeeping for the front of the store: retrieving carts, receiving merchandise, stocking shelves and ringing out customers. These were the days before mass merchant and warehouse stores achieved the prominence they now have, and drug stores moved substantial tonnages of general merchandise.
One weekend, when Scorpiniti was about 18, the cashier operating the old-style register serving the dispensary called in sick and Scorpiniti was pressed into service to fill the position. In that role he was able to observe, close up, the type of interaction the duty pharmacist — he still remembers his name, Richard Loken — had with the patients he dealt with in a steady stream.
The young Scorpiniti was impressed at the almost magical interaction the pharmacist had with each of his patients. There was clearly mutual respect on both sides, and the patients expressed gratitude for the advice and, likely, the peace of mind they derived from the encounter.
Scorpiniti was hooked. He decided pharmacy would be his chosen profession. His application to the school of pharmacy at the University of the Pacific at Stockton was accepted, and Scorpiniti was able to take advantage of the fact that several Longs pharmacies were within easy reach of the campus. Every weekend saw him working in one or another of these stores, gaining the practical experience that nicely complemented the theory in which he was immersed during the week.
Scorpiniti went on to graduate magna cum laude with a doctorate in pharmacy. His part-time work with Longs was converted into a full-time professional position as, first, a relief pharmacist and, ultimately, a pharmacy manager. Scorpiniti notes that over a five-year period he must have worked in 75 or 80 stores all over northern California. These stores served a diverse population that included many patients of Chinese, Vietnamese, Hispanic and other foreign-born origins. He learned how to understand and react to the habits and lifestyles of all these different groups.
“Patients may not always be aware, but every day pharmacists are playing an important role in ensuring safe and cost-effective use of prescription drugs — a value community pharmacy is uniquely positioned to provide."
He was also able, he says, to cobble together in his own professional development the best practices of all the pharmacists with whom he came into contact in these many stores. At the same time, he was meeting a succession of store managers. With them, also, he forged relationships and received a grounding in the dynamics of front-store operational management.
In 1999 Longs’ then CEO, Stephen Roath, asked Scorpiniti to take on an assignment at the home office introducing category management, which at the time was primarily a front-shop discipline, to the pharmacy. It was quite a challenge. Scorpiniti likens it initially to adapting a square peg to fit a round hole. But soon, a pharmacy-based data warehouse was created, which gave insight into numerous improvement opportunities.
Difficult though the transition process was, it produced results. Profitability in the pharmacies improved significantly, and Scorpiniti was promoted from director of pharmacy category management to vice president of pharmacy marketing.
Scorpiniti was promoted to vice president of pharmacy operations in 2005, during Warren Bryant’s tenure as CEO. By that time, Scorpiniti reflects, he had been with the company almost 20 years, pretty well a generation, and was thoroughly steeped in its traditions and personally knew a great many of the personnel. It was at this stage, in the summer of 2008, that CVS Caremark Corp. made a successful bid for Longs Drugs, and that, of course, had a significant impact on all the senior managers in the company, including Scorpiniti.
After the Longs acquisition closed, Scorpiniti spent a few months with CVS as the integration of the two companies began. Then came a call from Duane Reade in New York City inviting Scorpiniti to take on the role of senior vice president of pharmacy operations. After meeting John Lederer, the former Loblaw Cos. CEO who was recruited to reinvigorate Duane Reade, Scorpiniti was sold on the opportunity and became part of the new management team Lederer was assembling.
Lederer’s vision was to establish Duane Reade as the best urban drug store in America. All the strategies Lederer and his team developed were designed, says Scorpiniti, “to relentlessly drive toward that vision.”
The challenges for the new management team were considerable. In addition to the challenges facing the brand and aging store base in the chain, the U.S. economy was facing its biggest economic downturn in 40 years and Lehman Bros. had just collapsed, together creating a burning platform for change that ultimately worked to Duane Reade’s advantage.
The team moved quickly to transform the brand and customer experience, improving patient and customer satisfaction in every area of the store.
Under Scorpiniti’s helm, pharmacy operations recruited the best and the brightest pharmacists in the marketplace to help invigorate the brand offering. Process efficiency improvements ironically saw the removal of central fill to decrease wait times for the customers who were habituated to the concept of “a New York minute,” and many more enhancements were made that helped to transform the customer and patient experience at Duane Reade.
Operating a successful front end in New York and environs was an unusual challenge, says Scorpiniti. For customers there are fewer retail options than in a typical suburban location, but space limitations imply that selection is critical. The Duane Reade team had to deal with that conundrum, constantly fine-tuning the offering by location.
After two years, history, in a sense, repeated itself when in 2010 Walgreen Co. made a successful bid for Duane Reade and Scorpiniti again found himself involved in helping manage the transition to the new ownership. He was working on that task when the call came from the Katz Group. Scorpiniti says he was very pleased with the new ownership of Duane Reade, but the opportunity to move into overall management of a successful and respected company was too tempting to turn down.
Scorpiniti says the Katz operation more closely resembles Longs than Duane Reade except in one particular: the diversity of the customer base. Operating in and catering to Katz’s multiethnic customers more closely resembles the New York experience. In New York a city ordinance requires that customers are able to consult a pharmacist in 16 specified languages.
Scorpiniti explains that this obligation was fulfilled at Katz through provision of a telephone connection to a central translation service. Via Katz’s proprietary pharmacy software system, Rexall is able to print prescription labels in 12 languages.
When Scorpiniti joined the Katz Group, it operated a chain of drug stores and provided various services for the 1,100 odd franchise and banner stores, and hundreds more independents affiliated with it.
Scorpiniti welcomed the decision, taken in February, that the company should concentrate on the growth of its corporate stores, currently numbering 420. The Drug Trading Co. and Medicine Shoppe Canada divisions were sold to McKesson Canada.
On the same day on which that disposition was announced, Katz disclosed the purchase of the 18-store Dell Pharmacies chain. “Since the divestiture of the banner and franchise divisions, the management team is laser-focused on enhancing our operating model and driving the customer experience at Rexall,” Scorpiniti says.
One of the Katz’s key attributes, says Scorpiniti, is that it has developed its own pharmacy software. This asset is key to its nimbleness in the marketplace and to achieving differentiation of offerings.
Scorpiniti is enthusiastic about the opportunity that the Canadian pharmacy scene currently offers the company. The health establishments in Canada and the United States, he observes, were designed to focus on treatment of illness, with much less thought toward prevention or to health maintenance.
The pharmacist is ideally situated to drive prevention, he says. “People are seeking more solutions — expanded offerings of traditional and nontraditional therapies. At the same time there are tremendous pressures on government to control health care costs, and that situation is obliging governments to focus on prevention. Pharmacists can play a crucial role in this environment. Community pharmacy offers convenient, low-cost access to the health care services that promote prevention and drive down costs. Government is paying attention, and we’re beginning to see pharmacists’ scope of practice expand.”
The pharmacist has a uniquely consolidated lens through which to view a patient’s drug therapy and potential therapy issues, notes Scorpiniti. “It is a big responsibility to oversee the use of multiple medications from multiple prescribers,” he says. “Patients may not always be aware, but every day pharmacists are playing an important role in ensuring safe and cost-effective use of prescription drugs — a value community pharmacy is uniquely positioned to provide."