Regional pharmacy Med-Fast grows businesses from inside out

| Tuesday, Aug. 23, 2011

Doug Kaleugher opened his first pharmacy, a 250-square-foot operation in Moon, in 1990.

More than 20 years later, Kaleugher's Med-Fast Pharmacy has 20 stores, and his holdings include an array of other businesses, including a sign company, computer technology firm, car sales and rental and a limo service.

The Beaver County businessman may seem to have very scattered interests, but there is method to his madness, he said.

It all started in 1992 when he was about to open his second pharmacy, Kaleugher said. He wanted to order vinyl signs for the windows but found it would cost about $2,500 and be a months-long wait.

Upon researching what it would take to make his own signs, Kaleugher said he learned he could buy his own equipment for about the same price.

"So we bought our own and built a company around it," he said.

National Sign Co. was born, and Kaleugher has been building on this idea -- he calls it a "resource-share model" -- ever since.

His businesses are expected to generate $150 million in revenue this year. They employ 350 people.

Med-Fast Pharmacy offers free home delivery of prescriptions, so Kaleugher opened businesses for car rental and sales. After a vehicle is rented out for a year or two, it can go to the used car lot or into the Med-Fast fleet.

His businesses require computer systems and websites so he formed iServe Technologies, which does that work for Med-Fast but also hosts websites and creates systems for other companies.

Med-Fast fills mail order prescriptions and has a division that specializes in orders from across the country for diabetes equipment and medication. It has a home-care unit that can deliver oxygen tanks, wheelchairs and other medical equipment.

The key to running all these businesses is finding employees who can perform many tasks and are willing to be flexible, Kaleugher said.

"My job description is if it needs to be done, I do it," said Jimi Miller, Med-Fast's vice president of marketing who has worked for Kaleugher since 1992.

But it can be a challenge to find motivated workers who put the customer first, Kaleugher said.

"It's difficult to train people to give that personal experience," he said.

While Kaleugher said he's always searching for new ways to expand his businesses, the pharmacy operation remains at the core of what he does.

"The pharmacy drives everything," he said.

Med-Fast has four stand-alone pharmacies, a mail-order pharmacy and a pharmacy that supplies long-term care facilities. The rest are inside Kuhn's Market, Shop 'n Save and Foodland grocery stores.

Two of the eight Kuhn's Markets in the region have Med-Fast Pharmacy operations, Kuhn's owner Joe Dentici said.

"They run their pharmacies well, and they service their customers well," Dentici said.

After trying to run his own pharmacy at the Kuhn's on McKnight Road, Dentici said he prefers to have Med-Fast handle it.

"It works out better to have Med-Fast in there because that's their specialty," he said.

Independent pharmacies for years have faced stiff competition from national drug store chains, such as Walgreen's, CVS and Rite Aid, but the independents seem to be hanging on, according to industry data.

There were more than 22,200 national chain pharmacies in the United States in 2009, up 4.3 percent from 2005, according to the National Association of Drug Store Chains. That compares to the more than 20,700 independent pharmacies in 2009, up 1.1 percent from 2005. Supermarket pharmacies numbered 9,197 in 2009, down nearly 6 percent from 2005.

Kaleugher said his method for battling the large chains comes down to providing superior customer service, including free delivery and a more personalized experience between pharmacists and customers. Med-Fast tracks special offers by drugmakers and automatically applies discounts and free prescriptions for customers.

His stores are small -- an average of 1,500 square feet -- and, besides prescriptions, sell a limited selection of over-the-counter medications and vitamins.

The more intimate setting allows employees to get to know customers.

"I believe people buy from who they like," he said.

Additional Information:

Med-Fast Pharmacy

Headquarters: Aliquippa

Pharmacies: 20

Employees: 350

Revenue: $150 million this year, estimated

Other businesses: Med-Fast Diabetes Outlet, Med-Fast Home Care, Med-Fast Long Term Care, Shamrock Limousine Inc., iServe Technologies Inc., National Sign Inc., Thrifty Car Sales/Rental of Cranberry, Dollar Car Rental of Cranberry, Thrifty Car Sales/Rental of Aliquippa, Studio D.C.I.

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