When Mark Bather took the job of Rowlands managing director last year, he could not have anticipated the challenges that 2020 would bring for community pharmacy, not to mention the rest of the world.
It was already a bewildering time for the sector, with Rowlands’ competitors reeling from the impact of funding cuts. When Mr Bather joined in June 2019, the multiple had put 70 of its branches up for sale. Later that month, Boots announced it was closing 200 loss-making branches. In August that year, Lloydspharmacy said there would “definitely” be more closures across the sector.
Then COVID-19 struck pharmacy with a tidal wave of demand. In July, Boots and Lloydspharmacy both announced potential COVID-19 related job losses – although Boots said pharmacy teams were “not expected” to be among its 4,000 staff affected.
On pharmacy closures and job cuts Rowlands has remained quiet, but changes to the company structure are oncoming. In a briefing sent to Rowlands staff this month, the company said it had undertaken a UK-wide review of its pharmacies that would entail “changes to our retail structure across the estate” so the chain could “remain relevant” – including a reduction in working hours. Mr Bather spoke exclusively to C+D in a Skype interview at the end of July about its plans for the future from a sparsely populated Rowlands head office in Runcorn, Cheshire.
The most extreme changes to the multiple would be pharmacy closures. When asked directly if there are any Rowlands closures planned in the near future, Mr Bather says “no”. However, he adds that he thinks “merge and close is a good option – where you have one or two underperforming pharmacies in a particular area, you can consolidate into one branch and utilise the teams you’ve got”, he says.
Mr Bather did not give figures for how many branches might be affected by the merging and closing, saying only that “we always have propositions or opportunities, nothing more than that”.
“Sometimes in this job, you have to make sure that you look at every branch – understanding how successful or otherwise they are – and then you make strategic choices.”
Although Rowlands has not announced any plans for widespread closures like Boots and Lloydspharmacy, some of its branches have shut down over the last few years. C+D investigations revealed Rowlands closed 13 pharmacies between November 2016 and October 2019. This was fewer closures than Boots and Lloydspharmacy saw over the same period, but more than Well Pharmacy and Day Lewis.
No “grand” redundancy plan
Rowlands is bucking the trend among multiples by not announcing any plans to make sweeping redundancies. “I don't have, as I sit here today, a grand plan of long-term redundancy,” Mr Bather says. Although this is more positive than mass redundancies, how employees will be affected by reduced working hours remains unclear.
Mr Bather stresses that the possible job losses at Boots and Lloydspharmacy are “incredibly sad…I do feel for the teams there, but we haven't got a moment to make that scale of change”.
However, as with his plans for closures, Mr Bather caveats this optimism by emphasising that part of his job is to ensure he makes “the right choices for the long-term sustainable future – it’s not easy”.
During our interview, Mr Bather cannot be drawn on details of how COVID-19 has affected the financial viability of the Rowlands business, saying only that the multiple reviews performance “every week” as “you’ve got to make sure you manage your cost base versus your…income”.
Fear during COVID-19
The early days of the COVID-19 pandemic, when the sector had to adapt at speed to a situation no-one had dealt with before, were, he admits, “incredibly challenging”.
“All businesses have had a really strange time. I think in the early days we were all scared,” Mr Bather says. “Nobody knew the scale of it”, he explains. “We had queues outside of stores…and it was really uncomfortable. Some of the behaviour of customers was really challenging.”
But since the early days of lockdown, Mr Bather says staff have settled into a routine accompanied by Perspex screens, social distancing and face masks. “Our teams are very good at adapting,” he says.
15% staff absences
Many pharmacy teams across the country were struck by staff absences at the height of the pandemic as individuals were forced to isolate. Rowlands teams were strained by almost one in seven staff being off work, “15% plus at peak”, Mr Bather says.
The hub-and-spoke facility MediPAC opened by Rowlands parent company Phoenix UK last summer was “a godsend” in helping the business manage the volume of demand for repeat prescriptions during the pandemic, Mr Bather says. Based near the head office in Runcorn, the facility can now send the 130,000 packs it dispenses on average a day to any Rowlands branch in England, Scotland and Wales.
“It’s absolutely galvanised our business – distribution, wholesale and retail are now absolutely in tune.”
The hub-and-spoke system is “more accurate than local dispensing”, and the automated process allows pharmacies to move more staff towards the front counter to improve service provision, he says.
“Our business has to be about service, that’s why we do this job. It can’t just be about dispensing. If you can [dispense] efficiently and accurately offsite, why wouldn't you?”
23 pharmacies sold
The plans to complete the sale of 58 of the branches the company put on the market in February 2019 remain in place despite the pandemic. Mr Bather says 23 of these have completed so far.
While lockdown initially slowed down the sales process, the pharmacy sales market has remained “relatively buoyant”, keeping prices “at a reasonable level”, Mr Bather says. However, he is uncertain how funding will affect long-term appetite for purchasing pharmacies.
Rowlands has had “good interest” in its pharmacies, Mr Bather says. He remains committed to selling the remaining 35 branches that are on the market.
COVID-19: Paused plans
However, the multiple’s plans to deliver more travel vaccination clinics were struck by COVID-19. The scheduled UK-wide rollout of the private clinics is, unsurprisingly, dormant.
The plan had been to grow from five pilot sites in the Liverpool area in partnership with Danish technology and healthcare company Practio. “When March hit, we focused solely on the rest of our business to make sure the core was solid,” Mr Bather says. He hopes to return to the clinics “when appropriate”.
The pandemic led Rowlands to temporarily halt a proposal to reduce opening hours across three quarters of its branches in England to save money. When COVID-19 hit, “I immediately took the decision not to do that”, he says.
“It would have been…the wrong message for us to say: ‘If you want us, we’re going to close our doors.’” However, this month Rowlands announced that it will steam ahead with the plans to reduce opening hours in the new year. The multiple said it needs to “align our opening hours to reflect what the NHS has asked contractually [for] us to provide and is prepared to fund”.
Advance funding challenge
A pressing challenge at the moment is not knowing whether community pharmacy will be required to repay the £370 million in “advance funding”, which was released this year to help the sector cope with the additional demands imposed by the pandemic, Mr Bather says. Industry bodies have argued that this amount should be converted into additional funding.
To date, the government has not indicated this could happen. “Ultimately, there is this assumption that we will have to pay it back, so it really is a long-term loan and that makes it really challenging for us,” Mr Bather says. The uncertainty surrounding the funding means the sector “can’t really invest it”, in case it does have to repay it, which “makes it really challenging for us”.
First point of contact
Like others, Mr Bather emphasises that one of the things the pandemic has demonstrated – particularly during lockdown – is the extent to which pharmacy is often the initial primary care contact for patients.
“With GPs closing their doors, for the right reasons, and with A&E being pretty much closed – again for the right reasons – we were the [first] point of contact,” he says.
However, trying to maintain this position under the current funding model would be “incredibly difficult for contractors because the model is not set up to do that, not at the moment”, he adds.
“If we are going to be the first point of contact…you have to make sure the funding model mirrors expectation.” He believes the government is “trying to do the right thing” but is “really struggling to get the model right for sustainable pharmacy growth”.
“Relevant to the high street”
Rowlands is attempting to kick-start its own growth by undergoing a brand refresh through updating the logo, staff uniforms and visuals of its branches. The company is on track to complete the redesign of 20 branches by the end of January next year, before rolling out to the other pharmacies.
“You want to make sure that you’re modern and relevant to the high street and we reviewed our look and feel and have gone back to a much cleaner and sharper colour scheme: white, light grey and blue,” Mr Bather says.
While admitting that it has, of course, been a challenging time for the entire sector, Mr Bather says he thinks Rowlands is “in a really strong place”, with “really clear” idea of where it’s going in the next 18 months.
Ultimately, he says, it’s about “looking after your team, looking after our people as a priority, making sure that patients come first” and “making sure that you are relevant, stay relevant and give customers what they want”.
Nevertheless, with last week’s announcement seemingly indicating that redundancies could be looming, with branch closures appearing to be a possibility down the line and a second COVID-19 peak rearing across England, Scotland and Wales there is a tang of uncertainty about the future.
The multiple is doing its best to keep up with the rapid shifts that are ripping across the country, but the impact of “strategic change” on its pharmacy employees remains to be seen.