Pharmacy 'kept solvent' by loan from wholesaler

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Marton Pharmacy in Middlesbrough was given 30 days extra credit from a wholesaler
Marton Pharmacy in Middlesbrough was given 30 days extra credit from a wholesaler

A pharmacy has had to rely on 30 days extra credit from a wholesaler to stay solvent due to financial difficulties, C+D has learned.

A “double whammy” of government funding cuts and a £9,000 category M clawback meant that “November was the month where we knew we were going to be hit hardest”, Michelle Myers, manager of Marton Pharmacy in Middlesbrough, told C+D last week (December 1).

Already “heavily into an overdraft”, the pharmacy “approached one of our wholesalers” for a “loan in effect”, Ms Myers explained.

The pharmacy now owes “about £20,000” to the wholesaler, which will be paid back in December – 30 days later than usual.

Swing in funding

Marton Pharmacy experienced a significant “swing” in funding from October to November. “There was a difference of £30,000 in what we got paid for that particular month,” Ms Myers said.

“All our costs are exactly the same,” she added. “We still have to pay the same rent, the same electricity, the same staff wages.”

“It really affects your cashflow, and if you don’t have the money in the bank things get worrying.”

“Loan was in the wholesaler’s interests”

Michael Maguire, managing director and pharmacist at Marton Pharmacy, told C+D that asking for the extra credit had been “very uncomfortable”.

“It wasn’t just the wholesaler being kind. It was in their financial interests to keep us going,” Mr Maguire stressed.

He explained that if the pharmacy had been forced to pay the wholesaler, it would have "gone over our overdraft limit" and "potentially gone bankrupt".

“They didn’t want us to go bankrupt because then we’d stop dealing with them,” he added.

“Particularly bad” for independent pharmacies

As an independent pharmacy, Marton Pharmacy’s situation is “particularly bad”, Ms Myers said.

“We don’t have a head office to do all of our books, our payroll and our clinical governance, so that’s an extra cost to the business,” she said.

“It’s really frustrating because we’re an award-winning pharmacy,” said Mr Maguire, who won Community Pharmacist of the Year at the C+D Awards 2009. "It’s really busy all of the time and we’re always doing innovative things, and yet financially it’s just not sustainable."

16 Comments
Question: 
Have you relied on credit from a wholesaler to kept your business afloat?

Michael Maguire, Superintendent Pharmacist

Just to clarify, in traditional Mark Twain style, reports of our demise have been greatly exaggerated! I didn’t go cap in hand to the wholesaler. The conversation wasn’t uncomfortable. I pro-actively approached them a few months ago like a good businessman would in advance of the expected November Cashflow issue. Yes our payment dipped by over £30,000 from October to November, but we were ready for it. Note it is cashflow not profitability that is being discussed.  There’s a big difference. It’s easy to cut and paste words to make a sensational headline. Lesson learnt by me to either request a proof read or just not to talk to journalists that I don’t know. 

Steven Marley, Community pharmacist

Contractors needed to unionise. Some might say locums and employee pharmacists also. But the unionisation of contractors could have prevented all of this. Too late now though.

Chris Locum, Locum pharmacist

Contractors didn't think of unions when many of them wanted front-loading of the old contract, removing financial bias towards the smaller operators. How time changes. Only offshore tax avoiding corporations will get through this shake-out in the coming years.

A LOCUM, Community pharmacist

Sad and shocking news, mike is a thorough professional and spends a lot of personal time developing pharmacy with the LPC, really tough time for all retailers at the moment, worrying times, 

Told Youso, Pharmaceutical Adviser

I wonder if this is the first time he has had to go cap in hand to the wholesaler? Doesn't this show that, if an ex Community Pharmacist of the year, with every low profit service in the world offered can't make ends meet then the game is up. The "Prozac Way Ahead Group" in the Tees area (especially the LPC) have, over the years, intimated that dispensing is for Luddites and that services are the only way forward yet, by collectively shouting out that we don't care about dispensing the DH have watched and realised they can cut it to the bone whilst we fill in Pharmoutcomes screens in the hope of paltry fees. Isn't this the same Mr Maguire who, in a C &D article a while ago told us that HLP had saved his business? 

Chris Locum, Locum pharmacist

Many people have been criticised here on the issue of dispensing and being seen as pill counters. The reality is that it used to be properly funded and ultimately, it would have supported the miserly service payments. The big dogs cannot hide - even they can be starved.

Ilove Pharmacy, Non Pharmacist Branch Manager

Clinical services are the future !! Oh wait a minute. lol.

O J, Community pharmacist

Couldn't agree more

Clive Hodgson, Community pharmacist

Well put Told Youso.

This unfortunate situation illustrates well the folly of pursuing a “services” path, innovative or otherwise. To those who proclaimed: “let’s show them what Pharmacy can do!” by providing a host of loss making services in the hope serious funding would follow….here is the inevitable result.

As an illustration, also in the Tees area, there was much fanfare for the HSV (Healthy Start Vitamin) service as a saviour for Community Pharmacy. Apart from the sheer triviality of the service, when the costs were factored in a pharmacy would be lucky to make (literally) a few pennies for each transaction. And don't start me on HLP.

That’s the services future for you.

Reeyah H, Community pharmacist

Fed up to the back teeth of it all. We should all get together and strike for a day. We simply can’t run like this! I want to shut shop and close the doors forever. 

Syd Bashford, Community pharmacist

I’m sure with the DT prices, and current wholesale prices for drugs, we would be better off just doing that!

Valentine Trodd, Community pharmacist

"We should all get together..."

Therein lies the problem. Pharmacists in Ireland went on strike for 11 days in 2009 (didn't achieve much, but that's another story...) - can't see that ever happening in the UK.

Steven Marley, Community pharmacist

So sick of all this, it is so disgusting what is happening, so angry at this injustice. There are literally a million little things that can be done to save costs to the government and NHS. Instead of consulting with people who know the industry they just slash the funding. With less community pharmacies, the communities health will suffer, ironically costing the NHS MORE. 

Reeyah H, Community pharmacist

Imagine we all strike .. just shut shop for one day. A and E would be put on lock down and the authorities would have to step in to control the crowds. That’s what we need. 

Syd Bashford, Community pharmacist

Can you imagine doing the two days worth of Rx’s the following day !

Pharma Tron , Community pharmacist

Talk about dancing with the devil! It is through their vertical integration, sitting on stocks till the market starves and reduced wholesaler model distribution that Pharmacy has gone from being a steady safe investment to the shower that community Pharmacy currently is. And investment in true clinical pharmacy? Not on the wholesalers watch I tell thee! Shame for the business owners, I’m sorry you’ve had sleepless nights presumably where other MDs and CEOs of the very said conglomerates lap up the tax savings for hiving profits away in off-shore tax havens! 

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