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83% of contractors in England saw their personal income drop in 2018

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The average income decrease experienced by pharmacy contractors in England in 2018 was 15%

Four out of five pharmacy owners in England have seen their personal income decrease over the past 12 months, the C+D Salary Survey 2018 has revealed.

Of the 40 contractors in England who responded to the survey – which ran throughout October – none experienced a rise in personal income, while 17% said their income had stayed the same.

The proportion of pharmacy owners reporting a drop in personal income increased by four percentage points – from 79% reporting a fall in income over the 12 months from October 2016 to 2017, which coincided with the imposition of a 12% cut to the country's community pharmacy budget.

The average income decrease experienced by contractors in 2018 was 15%, the survey revealed, compared with 13% in 2017.

Who is to blame?

In July, C+D revealed that 140 pharmacies had closed in England between November 2016 – the month before the 12% funding cut came into force – and May 2018. Just two months later, the Pharmaceutical Services Negotiating Committee (PSNC) confirmed that this had increased to 165 closures by July.

The C+D Salary Survey 2018 suggested a large majority of contractors in England blamed the DH for their decrease in personal income, with 79% of respondents agreeing the government has not given the sector enough funding.

Meanwhile, 21% of respondents placed the blame on PSNC for failing to negotiate a better contract.

Funding cuts are biggest threat

Cuts to pharmacy funding in England were the biggest threat to contractors’ pharmacy businesses, according to 63% of respondents.

However, some contractors believed it was an accumulation of challenges – including funding cuts, the category M clawback and increased competition – that threatened their businesses.

One contractor said: “You can’t take one problem in isolation and say that’s the reason [for] the threat [to] my business.”

Find out – in contractors' own words – what it is like to be a pharmacy owner in England in 2018.

Personal financial adjustments

Contractors also had to make personal financial adjustments to weather the financial challenges facing the sector. One third (33%) of respondents said they had cut back on holidays, while a quarter (25%) said they had taken out or extended a loan.

One contractor said they had “supported [the] business with [their] personal pension fund” and another said they had “borrowed thousands from family”.

Another said they had to “cut back on everything”. “My divorce settlement is unaffected by the cuts so I need a relatively high salary to survive,” they explained. “Bankruptcy is looking like a sensible option”.

From reducing locum rates to scrapping services, find out what else C+D learned about how contractors in England are weathering financial challenges in 2018.

The C+D Salary Survey 2018 – which ran throughout October – was completed by a total of 1,916 pharmacists and pharmacy staff. C+D's coverage from the survey can be found hereThe number of contractor respondents from Scotland, Wales and Northern Ireland was too small for C+D to conduct a similar analysis.

29 Comments
Question: 
Has your personal income decreased since the funding cuts were introduced?

N O, Pharmaceutical Adviser

To all those Moro(e)ns and Prring cats, get your (F)acts right. Do not discount HISTORY. 

You would have already done your M(e)aths before you (F)actually tried to troll the other wise posters here.

With new funding cuts the 100 Pharmacy deal is just like "Gone With The Wind" just how they mushroomed with the earlier WIND. Also to consider, the fact that, there is no room (or funding) to open any new Pharmacy (new contract) without having to invest and build a customer base (may take 10 years to break even) that leaves desparator Pharmacists with cash to invest but not work for others.

 So, that leaves the standard hours Pharmacies.

Now with so many aspiring Pharmacists (as mentioned desparate above), most of them being Locums (not Pharmacy Managers) who have made their fortune from the Current Contractors, ofcourse the the Pharmacy Market is still buzzing.

Please note, contractors (whether owners or locums) are in business. And in business the first rule is PROFIT before anything else. Otherwise it won't be able to survive (even the charity shops/organisations)

Take this eqation for example (for Contractors).

One contractor buys a Pharmacy for future profits based on what they can add to the business to work for more profits. Hence pays a premium for that CONTRACT (in other words GOODWILL) and not for what EXACT profit/ business it is currently doing. For this they take help from BANKS/ SAVINGS. When the business has yielded enough for them and they see no point continuing to do the same work for less income they just pass on the CONTRACT (goodwill) to anyone HUNGRY enough to take the bate. This has been happening ever since the Pharmacy Contract Regulations have come in force.

Just like how anyone would invest their money in to instruments like Shares, Bonds, Property etc. tis is also an investment for the future to grow someone's money.

Coming to the Mor(o)ens and Perrs, if a contractor does not earn enough he/she will not pay anyone else (Locums, Staff, Driver etc)

So, just sip on your Christmas spirits and let the system change for itself.

Merry Christmas

S Morein, Pharmacy Area manager/ Operations Manager

 

Not quite sure what point you are trying to make. Simply if a person wishes to buy a pharmacy that of course is their choice. They take the risk and I salute them for that. However, they also benefit from a closed market. According to C&D only 5% of contractors amazingly see competition as a threat. What other business has such protections? It is patients (ie consumers) that have limited choice and there is zero incentive for contractors to either innovate or become more efficient due to these lack of competitive forces.

The best way to ensure that maximum value for taxpayers money is obtained is to open the market to new contraxtor entrants. The great and innovative providers will thrive the stale poor contractors will wither with the DH gaining better value for the global sum.

 

John Smith, Locum pharmacist

Well, they would say that, wouldn't they? No sympathy at all for contractors, I've seen excessive greed on thier part too many times. Why don't they reveal thier income, rather than expect us to believe that they are almost destitute?

Watto 59, Community pharmacist

I have been in business now for 25 years and have owned,operated and/or sold several pharmacies in that time. My actual experience is that for many steady state small to medium independent pharmacies from about 2007 for the next  9 years gross profits will have  remained at about the same cash amount. This despite increased administrative/regulatory/professional/prescription volume/labour/mental stress pressures.  For the last 2 years gross profits have fallen further by maybe an estimated 20% in 2017 and 2018 . So in effect taking account inflation over the last 10 years (up about 33%) for many small to medium volume pharmacies there could be easily an approximate real term decrease now of 40% in gross profit so for example a gross profit 10 years ago might have been £150k and now should be £200k but will likely only be around £120k .  I can assure you that buying a pharmacy with a large proportion financed by loans 10 years ago was hardly a no brainer decision.   What it must look like now is anyone's guess. I would not expect locum rates to be rising anytime soon if indeed there are as many pharmacies still open to pay you at all. I know these figures are back of a fag packet derived but all those operating pharmacies will recognise the direction of travel.  

S Morein, Pharmacy Area manager/ Operations Manager

They do John. Just look at the inflated goodwill prices and the extraordinary net profits of contractors on any transfer agents site. 

Dave Downham, Manager

It's Christmas, Ms Morein. Could you please just cut and paste your hyperbolic comments, my sarcastic retorts, your indignant reactions and my pithy ripostes from articles passim and save us all the effort?

 

S Morein, Pharmacy Area manager/ Operations Manager

Thank you for your courteous reply and I wish you, your staff and families seasons greetings. I do so enjoy the fiction of your "sarcastic retorts" as they certainly save you the bother of providing any facts . Have you ever thought of a second career as a fantasy novelist?  

Benie I, Locum pharmacist

How do loss making businesses command such hefty fees?

Sue Per, Locum pharmacist

If you are begging, you plead poverty, if you are looking for a buyer, you show hefty profits, to get maximum premium!!, Ask Christies, and they will confirm the premiums are still holding up. Sellers if you have had enough, ring christies for a quick sale, and book your cruise for the spring!!

S Morein, Pharmacy Area manager/ Operations Manager

Had a quick look at Christies website prices this year for pharmacies up 8% on last year. So much for Mr Downham's gloom

Dave Downham, Manager

If you think the prices on Christie's represent fair value, please put an offer in on my house.

Dave Downham, Manager

Fees? What fees? Been on the eggnog already?

Benie I, Locum pharmacist

Seems extraordinary that  businesses that are losing money annually would be so sought after and sell for millions(in some cases). Can somebody explain

Dave Downham, Manager

Yes, but you wouldn't understand. Just as you don't get that if contractors are being squeezed, locums ain't likely to see a rate increase anytime soon.

Benie I, Locum pharmacist

Please give it a go Dave. Hsving read many of your previous posts you seem to get very personal very quiclkly. It's a simple question and  I can get a someone of higher intelligence to break it down for me. A clever and successful man like yourself should be more than capable of providing a simple explanation. 

Dave Downham, Manager

I should quiclkly hsve provided a fuller explanation. You are making assumptions based on incorrect facts eg that I am clever and successful. Once you start on a false premise such that businesses losing money annually are sought after and sell for millions, you can extrapolate anything.

Benie I, Locum pharmacist

Are you able to provide any sort of explanation. You seem to be avoiding a simple question. If you can't a straightforward no will suffice. Otherwise I'd actually quite appreciate a reasoned answer

S Morein, Pharmacy Area manager/ Operations Manager

Do try and explain Mr Downham as pharmacists are all university graduates I am sure they will be more than able. 

Dave Downham, Manager

See above, Ms M.

S Morein, Pharmacy Area manager/ Operations Manager

I have seen above. You make a claim that contracts are transferred with a huge consideration for goodwill when they maybe unprofitable. Yet you will not provide any evidence or further information to support your claim. Why is that? 

Dave Downham, Manager

That's right, why is that? There is no evidence that contracts are transferred with a huge consideration for goodwill when they may be unprofitable. If you can't provide an explanation or evidence, a straightforward. "I don't know what I'm talking about" will suffice.

What you can't get your enormous graduate brains around is the disconnect between historic valuations based on previous outdated financial models of capital assets and real life dents to cashflows profitability and, yes, looking to make savings from all costs to the business, including locums.

S Morein, Pharmacy Area manager/ Operations Manager

Mr Downham I would refer you to any of the business transfer agents websites. The goodwill prices remain as elevated as ever, with Christies declaring an 8% uplift from 2017. Seasons Greetings

Dave Downham, Manager

As above - "It's Christmas, Ms Morein. Could you please just cut and paste your hyperbolic comments, my sarcastic retorts, your indignant reactions and my pithy ripostes from articles passim and save us all the effort?"

S Morein, Pharmacy Area manager/ Operations Manager

It is indeed the festive season. Perhaps you could grace this sting with some facts. I live in hope but no expectation

Dave Downham, Manager

Ditto. If you want facts, it's £50 a hour plus expenses.

Dave out!

Sue Per, Locum pharmacist

Theyare taking about current live prices, not historic, !!! Wake up, switch your brains on, and pay attention to what is being said, and lay off the spirits.

Merry Xmas

 

 

 

Dave Downham, Manager

Theyaren't as bad grammatically as you, and your ilk,!!! Maybe if you switched your brain on you will realise that, or are you on the spirits?

Barry Pharmacist, Community pharmacist

We cannot go on like this form much longer. The elastic is stretching to breaking point and when it does we will see a step-change increase in pharmacy closures.

Merry Christmas everyone!

Sue Per, Locum pharmacist

An evolutionary change.....yippee no more locuming!!!!!.... career change for 2019

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