Ramstad: Soda fountain out, vaccine hub in as St. Paul Corner Drug fights to survive

John Hoeschen would like to preserve St. Paul Corner Drug so another independent pharmacist can eventually buy it, continuing the neighborhood fixture he joined nearly 40 years ago.

But first, he had to let go of one vestige of the past: the store’s soda fountain.

On Saturday, Hoeschen invited neighbors for one last round of ice cream and a final farewell to the fountain. More than 100 people stopped in for a final scoop.

“All drug stores used to have fountains,” Hoeschen told me in between greeting customers and listening to reminiscences. “See where Dick is standing — that’s Dick Sundberg, who I bought [the store] from — was a walkway that was kind of the middle. This went all the way to the back register. Literally half the store was soda fountain."

The economics of the drugstore business began tilting against fountain service in the late 1960s. That’s when over-the-counter medications became more prevalent, and store owners created more space for them by cutting down the size of their fountains.

Today, the industry is even more different. Drugs hardly make any money for pharmacies. The big national chains CVS and Walgreens are closing less-profitable locations.

Independent owner-pharmacists like Hoeschen have lost pricing power because of regulations and pressures from wholesalers, insurers and pharmacy benefit managers.

In turn, the market value of pharmacies has eroded.

Just a few days before the party at St. Paul Corner Drug, the front page of the St. Paul Pioneer Press carried the news that West Seventh Pharmacy — another longtime, family-run drugstore in the city — was closing after its owner was unable to find a buyer. My colleague James Lileks soon added his own appreciation for family-owned drugstores.

“Nobody’s buying pharmacies,” Hoeschen said. “They’ll take them. They’ll take the business. But nobody’s buying them. It’s just disgusting that for a professional-service business like a pharmacy, after 100 years, the only option is liquidation. These aren’t furniture stores.”

Hoeschen, along with wife Tamra and daughter Hildie, have worked with other independent pharmacists and lobbyists in the past couple of years to increase the fee Minnesota pharmacists receive for dispensing prescriptions under Medicaid.

The family watched Monday’s special legislative session closely because a proposal to raise that fee is part of the health omnibus bill.

“That service in Minnesota, based on the last cost-of-dispensing study that was done, is worth $11.55,” Hoeschen said. “On most claims today, we’re getting zero to 25 cents. The bill that’s in the Legislature right now is just the start of what we need to get. Otherwise, this is unsustainable.”

When Hoeschen started as a pharmacist in the 1980s, the pharmacy received about $7 for every prescription it dispensed. Today, the pharmacy receives reimbursements that are below operational costs on two-thirds of the prescriptions it fills.

“So we’re paying to do eight months of work,” Hoeschen said.

How will the store stay open, I asked.

“The vaccines are going to save us,” he replied.

And that’s where the soda fountain comes in — by going out.

He stopped running the soda fountain during the pandemic in 2020, which forced the store to close. For weeks, Hoeschen and his colleagues filled prescriptions on behalf of their customers by directing them to other stores the government had allowed to open, often chains in the suburbs.

When federal and state administrators of the COVID-19 vaccine program decided drugstores could join the vast network of places to administer shots, Hoeschen took most of the remaining food-service equipment out of the fountain area.

The counter near the door became the check-in spot, while Hoeschen worked a few feet away dispensing doses for a team of mostly volunteer doctors, nurses and nurse practitioners giving the shots.

“I think the fountain did its finest work in the past four years,” Tamra Hoeschen said. “It was a desk for us to run a COVID-vaccine program that really allowed us to take care of a lot of people.”

Twenty-five thousand people in the first year, John said, and more than 90,000 so far.

These days, a couple dozen people come in daily for a vaccine of some kind — flu, COVID boosters, RSV, tetanus and, lately, measles. More visit in autumn and early winter.

An architect asked for the fountain fixtures in exchange for helping the Hoeschens redesign the space. They’ll make the front of the store more accommodating to provide vaccines and other health services. If all goes to plan, the work will finish this fall.

For drugstores all around the country, the move into health services is the latest ticket to profitability.

“It used to be every five years, you had to reinvent yourself, and then it became every three years,” Hoeschen said. “You had to tweak the way you were doing something or come up with a new revenue stream. Now, it’s, like, every quarter, you better have a new idea going through your brain.”