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Average pharmacy will lose £19k over 10 months

Umesh Modi: The loss of income will lead to a tough time for small independents in particular

Pharmacy accountant Umesh Modi predicts the average business will see a "significant loss of income" between June 2016 and March 2017

EXCLUSIVE

The average pharmacy in England stands to lose £19,000 over 10 months as a result of funding cuts and a recently announced category M clawback, an accountant has warned.

Umesh Modi, a partner at Silver Levene, predicted that the average pharmacy will see a “significant loss of income” to the tune of around £1,900 per month between June 2016 and March 2017.

The £19,000 total loss will consist of more than £4,000 due to the Department of Health’s plans to reduce category M payments between June and September, and a further £15,000 between October 2016 and March 2017, when the government plans to implement a £170m cut to pharmacy funding in England, he told C+D yesterday (May 16).

"A tough time"

Small independent pharmacies in particular will have a "tough time" over the coming months and may struggle to stay afloat, Mr Modi warned.

However, contractors should avoid making redundancies because most pharmacies already run on “skeleton staff”. Staff losses could reduce their ability to provide a full range of services, he stressed.

Mr Modi advised pharmacists to focus on the “bigger picture” and try to increase their revenue to prepare themselves for the loss of income.

Pharmacists should ensure they reach quotas for medicines use reviews (MURs) and the new medicine service (NMS) payments as well as seasonal services such as travel vaccines, to mitigate the drop in funding, he suggested.

Read C+D's breakdown of the category M clawback here

 

How will your pharmacy survive a £19,000 loss of income?

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64 Comments

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P M, Community pharmacist

cut locum wages now!

Sue Per, Locum pharmacist

the usual alarmist crap from Mr Modi. He needs to rephrase his statement to read... The paymasters have just woken up, only to realise thay they had overpaid the contractors and they will now claw it back gently over the next ten months. Mr Modi further omitted to say, that this should not impact terribly on the balance sheet, as the contractors are still allowed to retain at least £500m of the purchase profits accrued from the simple art of haggling.The balance sheet will however be strengthened by imposing cuts on employee pharmacists & locums .

Sue Per, Locum pharmacist

the usual alarmist crap from Mr Modi. He needs to rephrase his statement to read... The paymasters have just woken up, only to realise thay they had overpaid the contractors and they will now claw it back gently over the next ten months. Mr Modi further omitted to say, that this should not impact terribly on the balance sheet, as the contractors are still allowed to retain at least £500m of the purchase profits accrued from the simple art of haggling.The balance sheet will however be strengthened by imposing cuts on employee pharmacists & locums .

Bal Singh, Locum pharmacist

You need to separate multiples from contractors. And vertical integration means massive profits the DoH can't investigate or claw back. So in the race to bottom they can happily survive.

Sue Per, Locum pharmacist

...... And the goodwills based on the pharmacy profits will continue to rise exponentially, with the blessing of the goverment's "control of entry" restrictions!!.

 

Hospital Pharmacist, Hospital pharmacist

I am not wishing to offend anyone however M Elnemy you are serious unprofessional. It's worrying that to some extent i would have to call you a peer...

Hospital Pharmacist, Hospital pharmacist

I am not wishing to offend anyone however M Elnemy you are serious unprofessional. It's worrying that to some extent i would have to call you a peer...

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Keith Mitchell, Community pharmacist

Has nobody noticed?

There used to be a wind-up merchant on this forum called Mesit (sic) Ozil, with a slight reference to the Arsenal midfielder. Guess what, he's re-surfaced as M Elmeny, who, surprise surprise, you will also find in Arsenal's midfield. Still gets you going though, doesn't he?

Chemical Mistry, Information Technology

and both crap players playing in a crap team with no bottle and manager past his best before date

Pill Counter, Pharmacy

another example of the lovely treatment of an experienced phamracist

https://www.pharmacyregulation.org/sites/default/files/determinations/murray_determinations.pdf

Yuna Mason, Sales

Dat last sentence tho... do your MURs, it pays for your job... the government is so mean... sound familiar? Multiple mindset? 

M Elnemy, Non healthcare professional

What do you expect from an accountant .... 

Pill Counter, Pharmacy

This is likely to become even more common - Another example of the lovely treatment of an experienced phamracist https://www.pharmacyregulation.org/sites/default/files/determinations/murray_determinations.pdf  “I am ashamed to admit that the two allegations (falsifying 17 MURs in August 2014 and the two mentioned in September 2014) are true. This came about by constant pressure that was present to perform MURs and reach the total of 400 per year. My actions were wrong to try to improve my monthly figures for a short while.”- Ms A Murray - See more at: http://www.chemistanddruggist.co.uk/news/breaking-guardian-claims-boots-staff-forced-abuse-murs?page=3#comment-30507

Chandra Nathwani, Community pharmacist

I wonder how a letter from all the pharmacy contractors sent to locums requiring a refund of £1 per hour for hours worked during 2015-2016 would go down?

Harry Tolly, Pharmacist

If they had been overpaid by such an amount then no problem. The cheque would be in the post straight away, after all it was an overpayment in error.  Can you think of any instance when a large vertically integrated multiple has overpaid anyone ? More like delayed or reduced payments to their locums of which there is plenty of evidence.

Chandra Nathwani, Community pharmacist

And who decides "I" have been "over-paid"? And this is NOT and error "over payment"! Can we have some evidence or am I paying 17p for Amlodipine when I should be paying 16p. This years profit could be next years clawback so even if I want to pay a good locum £35/ph I would not know if that is viable today. Margin surveys were meant to smooth out payments but the latest clawback shows the system is too complex and still an average.

Harry Tolly, Pharmacist

I understand that the multiples have advance knowledge of Cat M movements. Say no more.

Bal Singh, Locum pharmacist

Surely people need to realise the difference between turnover and net....mr. Pharmacist and Elnemly might what to consult Mr. Wenger for an explanation.

S Morein, Pharmacy Area manager/ Operations Manager

Everyone does. And that's why contractors are making fools of themselves as their net profits have risen every year for the last decade despite any supposed claw backs.

M Elnemy, Non healthcare professional

why is the NHS paying us £64 for pregabalin 300mg when i can buy it for £1.63 ?

Chandra Nathwani, Community pharmacist

So that it can be clawed back next year!

S Morein, Pharmacy Area manager/ Operations Manager

If these excess purchase profits are supposedly clawed back ,why does gross profit percentage for contractors continually rise? Especially as net ingredient cost slowly rises too. There are no real claw backs. Contractors have for a decade now pocketed vast unwarranted purchase profits far in excess of the Cat M agreements. Yet they whine and whinge.

Chandra Nathwani, Community pharmacist

Simple really. Gross percentage margin has risen because net ingredient cost has actually fallen (partly because of MDS and partly loss of patented drugs). You make the same dispensing fee whether you dispense 10p aspirin or £50 Xarelto. And while net margin has fallen year on year costs have risen and continue to do so. (Living wage, work place pension etc). Return on capital has fallen to zero (and will now go into negative). Selling up is the only option, but then what do you do with you time?  Becoming a locum/employee is not appealing by reading the post here.

S Morein, Pharmacy Area manager/ Operations Manager

Actually total payment per prescription has increased in the year to Feb 16. See the PSNC website. Last year it was 9.30/prescription this year 9.45/prescription. So your position on gross margin is completely erroneous.

Dave Downham, Manager

No, you're wrong. The fixed element of income is - obviously - fixed, and has been for some time. If the average item value has increased, then the variable element has increased and hence as the profit is a % of that, the overall gross margin % must have come down. Question should be why the average has increased for the first time in 8 years but the growth in prescriptions is the lowest in 10.  

Chandra Nathwani, Community pharmacist

Could it be because of cheaper older branded drugs going generic at exorbitant prices? Plenty of example as you probably know!

Kassim K, Community pharmacist

Not surprising that this particular area is being ignored despite it costing the NHS millions.  It is extremely hypocritical of the government to target specials whilst ignoring such price hikes but no one likes investigating the corporate hands that feed them. 

Bal Singh, Locum pharmacist

That price will come down on the next update.

Don't worry, these margins are what pay for Locum rates, so when they go and the locum pay suffers, cutting noses to spite faces springs to mind.

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