72% of English pharmacies will be in deficit by 2024, report predicts
Under current funding, nearly three quarters of community pharmacies in England will be in deficit by 2024, a report by accountancy firm Ernst & Young (EY) has forecast.
The EY report, published today (September 4) and commissioned by the National Pharmacy Association (NPA) found that the community pharmacy network in England is “unsustainable under the current financial framework”.
EY projected that by 2024, there will be a “network-wide £497 million deficit”, with the average pharmacy facing a shortfall of £43,000. “No industry is likely to be sustainable with so many operators in deficit,” the report said.
The predictions were made using data that predates the COVID-19 pandemic, with EY expecting that 72% of community pharmacies will be in deficit by 2024. This figure could, however, range from 64% to 85%, the report said.
“Although the long-term effects cannot be ascertained as yet,” the pandemic is “likely” to have “further weakened the network”, the report added.
“Such poor financial performance would place the financial sustainability of the network at risk, with significant implications for patients’ ability to access local healthcare services and NHS England’s ambition for community pharmacy,” the report explained.
Service provision unviable
Under the current funding model, which was agreed by the Department of Health and Social Care (DH) and the Pharmaceutical Services Negotiating Committee (PSNC) last year, the provision of services may also be financially unviable, the report said.
Pharmacies providing a “greater proportion” of services, to reduce pressure on other parts of the NHS, are “more likely to be in a financial deficit,” according to the report. “Benchmarking the fees paid for services carried out by pharmacies against analogous services in other settings reveals they are several times lower,” EY said.
The report advised NHS England to “consider the current funding quantum insufficient to sustain the network”. “Without intervention from NHS England, only the financially strongest pharmacies will survive”, it added.
“Policymakers [should] put in place public interest-focused safeguards against the English community pharmacy network collapsing as an unintended consequence of short-term cost saving”, the report said.
NPA: “Very real threat” threat of pharmacy closures
NPA chair Andrew Lane said the EY report “shows the precarious situation facing pharmacies up and down the country.”.
He warned that there is a “very real threat” that pharmacies could close, unless ministers “act now”.
Mr Lane called on health secretary Matt Hancock to “urgently” back the sector with further investment, to “underpin viability, change and improvement in our sector”.
The NPA will hold a meeting with its board members on September 7 and 8 to “give detailed consideration to EY’s findings”.
APPG: Pharmacies must be a “forefront” of NHS
Chair of the All-Party Pharmacy Group (APPG) Jackie Doyle-Price said the COVD-19 pandemic has “highlighted what a pivotal role” pharmacies “played and continue to play in delivering frontline care when many doctor surgeries were closed”.
“Going forward, if the NHS is to deliver a truly 24-hour seven day a week service, then pharmacies must be at the forefront of that,” she added.
EY health economics director George Agathangelou said the firm’s research “shows that many more pharmacies will become loss-making over the coming years if the current funding arrangements in England continue”.
“This is clearly unsustainable and requires urgent attention to help pharmacies maintain and develop vital services,” he added.