Speaking in his capacity as a pharmacy owner, Ian Strachan said his fellow contractors would struggle to make further efficiencies in the wake of last week’s news that funding will be frozen at its reduced rate for the next five years.

“They are eating into their reserves, they have realigned their business models, they have adjusted their cost basis – there isn’t more they could [do].

“The sector has already gone through two years of hardship, depleted reserves and cashflow challenges and instability,” added Mr Strachan, who owns the four-strong Strachan’s Chemist chain in Lancashire and Cheshire.

“They are all fatigued and battle worn,” he warned. “To endure potentially more attrition is going to be very impactful.”

Establishment payments – which will be phased out by next April – had been the financial “bedrock” of pharmacies, Mr Strachan pointed out.

“Those overheads that are inevitable in keeping the doors of a pharmacy open have been supported by establishment payments,” he added. “There isn’t a second round of resources that [contractors] can tap into.”

Details needed about service-focused future

While Mr Strachan agreed the service-focused funding model set out in the contract is “the way to go”, he pointed out that the details of many of the services that will replace funding lost by medicines use reviews and establishment payments are still missing.

“How can you align to a contract when you don’t know the details behind those services?,” he asked.

“People would welcome a move towards a more service-driven model, but that has to be in the specifics,” Mr Strachan said. “From what I’m seeing, that’s just not there right now.”

Read C+D’s breakdown of the funding contract, and read C+D’s analysis of how National Pharmacy Association (NPA) members are struggling financially