The “profit and loss five-year predictor” – available to download from north-east London LPC's website – uses the provisional funding that has been allocated over the next five years of the contract for England, to help give pharmacy owners “clarity about their individual finances”.
Using the calculator, contractors can input their pharmacy’s figures – such as dispensing volume, over-the-counter product sales and income from medicines use reviews – and determine how much profit and loss their pharmacy will make in the coming years, the LPC’s secretary Hemant Patel told C+D on Monday (September 2).
Contract brought on “uncomfortable feeling”
Explaining what prompted him to devise the tool, Mr Patel said: “At my first scan of the [funding contract] I got an uncomfortable feeling, as the details of actual income – never mind gross profit – that would make sense to a pharmacy owner were missing.”
Many pharmacists cannot fully grasp how their finances will be affected by a five-year flat-funding deal, which does not take into account inflation and rising staff costs, Mr Patel added.
He hopes contractors using his LPC’s tool will gain clarity so they have a “chance of surviving the planned strangulation”.
“More importantly, it will give contractors time to analyse [their finances] and discuss with colleagues and professional advisors a plan for the future,” Mr Patel said.
“Hard choices to face”
The LPC has had positive feedback about the “usefulness of the tool” from more than 40 contractors that it has shared it with so far, he claimed. But they are “angry and sad” about the implications of the funding deal.
Mr Patel suggested contractors now face the “hard choice” of either staying in the sector and managing through – especially those with long leases – “exiting and getting away from the situation”, or merging with another pharmacy to hopefully move to a more secure position financially.
According to the LPC’s list of “imperiled pharmacies” in north-east London, 60% are independents and 40% are multiples.
“The new funding contract is a device to cull pharmacies and make many more unsellable,” Mr Patel claimed. “Not just small pharmacies, but every pharmacy with low margins.”
The Pharmaceutical Services Negotiating Committee – which has seen a copy of north-east London LPC’s profit and loss tool – said it has refrained from publishing its own calculator tool for contractors, but it plans to publish indicative income tables once all the funding details have been finalised (read more in C+D's accompanying article).