Staff cuts on the cards for businesses

Pharmacies could consider making staff cutbacks in light of financial pressures, industry experts have warned.

Umesh Modi, a partner at accountancy firm Silver Levene, said the recent category M clawbacks had left many of his pharmacy clients in difficulties and struggling to pay their January tax bills.

Mr Modi warned this could lead to a repeat of the staff cutbacks seen as a result of January 2009's clawback. "They [pharmacists] will inevitably think about their cost structure and may well consider reducing staff numbers in light of reduced gross profit margins and increased costs, including the tax burden resulting from the austerity measures," he warned.

Others may have to use overdraft facilities or ask for tax payment term extensions, he said.

These concerns were reflected in a recent pharmacy survey by Avicenna, which found more than 20 per cent of respondents would consider reducing their staff numbers due to financial pressures.

Raj Nutan, director of commercial operations at Numark, said it was inevitable some pharmacies would look at staffing levels. "When there is a decrease in gross profit it is a natural reaction to look at cutting costs, staffing included," he said. 

"However, I would urge caution, as there are minimum requirements not just legally but also in order to maintain the security of staff in the pharmacy."

Meanwhile, The Co-operative Pharmacy called for a review of the pharmacy funding model.

"Pharmacy needs a fair and transparent funding model which encourages business investment and creates a long term stable platform," said John Nuttall, managing director of The Co-operative Pharmacy. "Whilst we continue to wait for the outcome of the cost of service inquiry, and [details of] how any future funding settlement will be distributed, there remains uncertainty within pharmacy industry."

Andy Harwood, director of business development at finance company Pharmacy Partners, echoed these concerns and said NHS reimbursement remained "inconsistent".

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