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Analysis: Hub-and-spoke will never dispense 40% of medicines

The government expects at least 25% of small and independent pharmacies to use hub-and-spoke

Large dispensing hubs will serve 1,500 pharmacies and cost £20 million to build, the government says

Pharmacists will still be expected to assemble at least 40% of the medicines they dispense, even if they embrace the hub-and-spoke model, the government has reaffirmed.

Despite its plans to allow independent pharmacies to legally operate dispensing hubs, between 40-70% of medicines dispensed by these 'spoke' pharmacies would still have to assembled on site, the Department of Health (DH) estimated in a consultation document published last month.

If 60% of medicines were dispensed through this dispensing model, it could cut pharmacist labour costs by 10%  and pharmacy technician costs by 25%  in 'spoke' pharmacies, the government said.

Removing the legal barriers for operating a hub will “create a level playing field” and “give independent pharmacies across the UK a wider choice as to which business model they adopt.” 

The latest government document echoes chief pharmaceutical officer for England Keith Ridge's claim last year that the model could dispense two thirds of the country's prescriptions.


The government's hub-and-spoke predictions in numbers*

Labour costs

  • 10% reduction in pharmacist labour costs at spoke pharmacies
  • 25% reduction in pharmacy technician labour costs at spoke pharmacies
  • 2.5-5% increase in pharmacist labour costs at hub pharmacies
  • 6.2-12.5% increase in pharmacy technician labour costs at hub pharmacies

Dispensing

  • Only 30-60% of the medicines dispensed by 'spoke' pharmacies will be prepared at a hub

Operating costs

  • A new hub, capable of serving an average of 250 spoke pharmacies, would cost £5 million to build
  • A "large" hub could serve an average of 1,500 pharmacies and would cost £20 million to build

Uptake

  • 25-50% of independent and small multiple pharmacies will use a hub-and-spoke model (large multiples were not taken into account as they can already legally operate this model)
  • It will take up to three years for this level of uptake to be reached.

*All predictions based on the government estimate that 60% of medicines will be dispensed through the hub-and-spoke model. This is the government's "high estimate" and its "central estimate" is that 45% will be dispensed in this manner.

 


What impact do you think increased use of hub-and-spoke will have the sector?

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20 Comments

George Romanes, Community pharmacist

I am sure that not nearly enough pilot work has ben done to publish stuff like this. The money paid in the UK does not allow the sort of model they use in Holland to work here.

Patients dont expect you to say, oh its not ready its at the hub and it will be here to-morrow on the van !

 

Pharmacy HLP, Manager

This seem well thought out ! I would say  30-60% is a big range and I understand that in the final analysis there is a negligable cost saving unless you are using vertical inegration models .

Let's get rid of a ESTABLISHED functioning unit that has a good patient facing role ( with flaws no doubt ) and replace it with a untried, untested mismash of ideas and if it doesn't work out too bad.

This is peoples lives and livelyhoods that cannot be put back together again after they are smashed up.

Please come up with a credible plan that has been thought through with all stakeholders involved and ready to participate  not one that came up during a cocktail party in the commons lounge.

G K, Superintendent Pharmacist

The government may wish to note that free services like delivery to the frail and elderly are paid for by the 40% or so of business being taken away.  It will not be possible to deliver the great level of service currently enjoyed by patients.  Its disturbing to think this is being taken seriously. 

Aryan Butt,

Multiples and large operators would have done this years ago if there was any significant saving to be made.  

N Patel, Community pharmacist

And, "on the back of the envelope" government predictions, where are all the other admin costs chargeable by the hub to the spoke, such as automation costs, transport, premises rent & rates, electrics, other staff etc. ?

Shaun Steren, Pharmaceutical Adviser

The government predicting how technology will develop in the future? Not heard this since the days of the Soviet Union and their five year plans. Listening to government types talking about technology is like hearing older people use the terms 'chill out' and 'selfie', quite excruciating.

Manish Jain,

Author didn't mention that these all are assumptions, the actual numbers will be  different. 

There is lots of guess work going around creating uncertainties which should be avoided. 

James Smith, Non healthcare professional

In the consultation document it doesn't even say which type of hub and spoke model these figures are meant to be based on. Well done C and D for sharing them. April fool brought a smile too.

L H, Community pharmacist

Numbers pulled out of thin air...or somewhere that gets less sunshine.

They seem to forget that the independent pharmacies they're trying to enable hub & spoke for are small businesses in the main.  Any estimate or predictions in cost?  How about viewing it from the position of the bank manager?  Show me, financially, how it is a good idea?  Care to sign your own death warrant?

As others have stated, the gov's trying to enable hub and spoke to justify reducing payments.  Quite simply, if they wanted to "create a level playing field" as they so frequently and harmoniously sing, they could examine the wholesale margins and then move to give independents the same benefits as the larger players (with head offices not in this country)...as the PDA are rightly saying.

Good luck.  You'll need it.

Anwar Master, Pharmacist

-the government agenda and intention is to drive down operational costs in pharmacy and subsequently pay  less  to contractors. i do not envisage this 'hub -and-spoke system working' for  contractors large and small.This will inevitablly cause a two -tier system to surface in which large chains will florish and small independents suffering financially  leading to inevitable closures-bad news all round if your a lonely independent! 

Paul Mayberry, Community pharmacist

10% reduction in pharmacist costs, how? Will pharmacists be allowed to go home when they've done all their work, or close shop after 36 hrs instead of 40hrs? It would be nice if these calculations were done after talking to someone who knew even a tiny bit about community pharmacy.

C A, Community pharmacist

The reduction in pharmacist costs will be due to oversupply, and possibly bullying from big corporations - you are only doing 350 items a day when you were doing 400 items... so we aren't giving you a payrise as you are doing less work.

G K, Superintendent Pharmacist

Has the government taken into account the possible rise in drug cost once the number of suppliers reduces creating a monopoly in that sector.  This again is a very short sighted proposal.  PSNC really need to pull their finger out.

A Hussain, Senior Management

Just sitting here with a cheque for £20k for my share of a hub.  Do I get the discount of a company with 250 shops? Anyone who has ever used a third-party supplier for items such as dressings realises what a shambles this is going to be.  Promises much, delivers (literally) nothing.

Kieran Eason, Superintendent Pharmacist

But if you have to check everything once its arrived back in the pharmacy whats the point? All this is doing is spending an extra day putting the sticker on the box. 

Leon The Apothecary, Student

I agree. Just centralise the entire process and deliver a prescription order directly from the hub. No need to overcomplicate.

Geoff Noden,

It appears the government are not bothered about making thousands more unemployed and the costs that go with more unemployment in the independent sector. Just as long as the multiples can monopolise the industry then it's ok!!

Farm Assistant, Community pharmacist

Who produces this drivel? The vast majority of politicians the world over are corrupt but ours are largely incompetent as well. The simple truth is that they have no idea what they are talking about because none of them have ever had a real job.

Dave Downham, Manager

Crikey - DH getting into the April Fool's day spirit as well.

Harry Tolly, Pharmacist

With Ridge and Howe, a comedic duo aka Laurel and Hardy,  we really have : "Thats another fine mess you have gotten me into. "

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