Layer 1

Well asks for rent reductions as COVID-19 triggers 25% income drop

Exclusive
Well has asked for a rent reduction from the majority of its landlords, due to COVID-19 pressures
Well has asked for a rent reduction from the majority of its landlords, due to COVID-19 pressures

Well Pharmacy has approached its landlords to ask for rent reductions following a 25% income dip as a result of the COVID-19 outbreak, C+D has learned.

Well has written to “approximately 580 landlords” asking for help with rent payments, including “reductions and to pay on a monthly basis rather than a quarterly one to ease the pressures on cashflow during these difficult times”, Well chief financial officer Lynn Krige told C+D earlier this week (June 16).

The “vast majority” of work in the Well branches during the pandemic has focused on dispensing prescriptions, which has “a very small margin”, she said.  Well currently operates 752 community pharmacies, of which 626 are leaseholds.

The outbreak of COVID-19 has meant a “significant hit on our performance”, with income across the business dropping by “circa 25%” in the period, Ms Krige said.

This is largely a result of the “restricted access” for customers created by social distancing measures and the fact that the multiple has “not been able to carry out the majority of the services we receive income for”, she explained.

 Well has “rightly” also spent “large amounts on protective equipment to keep our teams and patients safe”, she said.

“The success of Well and the landlords is inter-dependent, and we hope this spirit of cooperation and understanding during a time of national emergency will help us all be successful in the future,” Ms Krige added.

Boots

Well is not the only multiple is conversation with its landlords about rent payments and schedules. The COVID-19 pandemic has “severely impacted” trading at Boots stores, which have recorded a significant reduction in footfall, a spokesperson told C+D earlier in the week (June 16).

Many Boots branches “have just not had any customers over the past eight weeks” and the multiple has had to temporarily close around 100 branches. 

The multiple recently approached some of its “larger commercial landlords” to suggest changes to rent and service change payments. It “reached revised agreements with many landlords and while some discussions are still ongoing, we have paused some payments,” the spokesperson told C+D.

Lloydspharmacy

Lloydsphamacy has asked its landlords to accept rent payments on a monthly basis rather than every three months, the multiple told C+D on Tuesday (June 16).

This measure has received an “overwhelmingly positive response” from landlords, a spokesperson for Lloydspharmacy’s parent company McKesson UK told C+D.  The multiple believes this change will help the business “keep liquidity in the supply chain” and enable it to continue  to help patients during these “challenging times” they added.

In a blog for Retail Gazette on June 15, Lloydspharmacy chief financial officer Chris Keen said retailers “are facing an existential threat” following investment in a number of health and safety measures introduced in light of the COVID-19 pandemic.

“We shall be serving our patients and communities long into the future. And that is why landlords need to understand that their forbearance will help secure their income long term, “ Mr Keen said in the blog, also published on the McKesson UK website.

“We’re not asking for rent reductions (unlike some), just that rents are spread evenly over the next three months,” Mr Keen said.

English pharmacies have received a total of £350m in “advance funding” in recognition of the “cashflow crisis” they are experiencing due to COVID-19, while pharmacies in Scotland received an extra £5.5m on top of the advance payments due for the end of April.

34 Comments
Question: 
Is your pharmacy in need of a rent reduction or changed payment schedule?

R A, Community pharmacist

I think the financial problems of pharmacy will accelerate thanks to COVID-19 for a couple of reasons:

1. The UK economy was struggling due to lack of direction since Brexit but COVID-19 has literally frozen the economy. Therefore how will the government fund the NHS? Cuts will have to be made and the goverment may argue that current fundings are not sustainable. 

2. Thanks to lockdown people have been using online retailers and contacting GP via web-cam. I think due to the convienence factor this trend may become the norm which jeopardises bricks and mortar pharmacy. 

3. In the world of business supply and demand dictates the profits of an endeavour. Often this is determined by your USP. I may get downvoted but since we no longer make extemporaenous preperations I think community pharmacy has lost its main USP. One may argue that due to advance in software and dispensing machines the work we do can be industralised on a large scale reducing the cost to pennies. One company I fear will takeover is Amazon. This company has been the harbinger of death for all traditional industries. 

In conclusion it may be in the interest of the landlord to help Wells Pharmacy (although it does make me feel nauseous to say this) for the greater good. Also given the rate physical retailers are being decimated who will the landlord rent out the premise to? Office, working from home is the norm. 

Soon-To-Be Ex-Pharmacist, Superintendent Pharmacist

Your three points are pretty much good - I'd only argue about the effects of Brexit which are small beer compared to corona (no pun intended.....) but lets not go down that well trodden road again.

Pharmacy has no real reason for being any more. It hasn't for many years in my opinion. I've said elsewhere, there is nothing we do that cannot be done by someone else at less cost. We do the degree, four years (three in my case) then the pre reg (which in my experience was the only relevant part of the whole process) but how much of it do we actually NEED in community? I used to be able to read a molecular imaging trace and tell you exactly what it was (can't now, obviously) but what was the point? So much of the degree was not needed for a career in Community Pharmacy (bad, bad career choice but there you go) that realistically an enhanced dispenser/act course would cover everything you needed to know. It only takes one little change to say that pharmacist supervision of prescriptions is no longer required and we are TOAST.

I know it sticks in the craw a bit to see super rich companies demanding rate and rent reductions but at least pharmacy didn't go down the furlough route and help should be available to all, regardless of who they are. Well, Boots et al are as valid a part of the economy as any single retailer, possibly (but not definitely, we don't know) better able to cope, but the rules have to be for all.

As for Amazon, with the losses they can stand when building up a business from scratch, they will make Pharmacy 2 U look like a little cuddly teddybear.

Benie I, Locum pharmacist

Boots billionaires asking for a rent reduction. Vomit inducing.

Greatly Pedantic and Highly Clueless, Senior Management

The usual trick with private equity is to go for a company voluntary arrangement (CVA) and screw the landlords that way. Travelodge which is owned by investment firms such as Goldman Sachs and GoldTree are currently trying this. 

Mr Anon, Community pharmacist

Landlords will not reduce their rent. Why should they? If a pharmacy closes or sells another will buy and the rent will get paid. If the pharmacy contract is somehow scrapt altogether, I'm sure that retail space will be rented to a new coffee shop or cafe.

Soon-To-Be Ex-Pharmacist, Superintendent Pharmacist

But who is going to start a new business now? No-one has the money, banks aren't loaning. Where I live there are still shop units in the town centre that have been empty for two or three years, and many more that won't be re-opening. Maybe in the southeast there is enough money sloshing around to make things viable but travel a bit and it's grim.

Cymraeg Locum, Locum pharmacist

Well Pharmacy are now preparing to "open" their consultation rooms for services. This information has been provided by the Superintendent Pharmacist and has been emailed to Locums in a PDF dated 5th June 2020. It states "where possible to provide the service over the telephone or via video consultation" but then goes on to provide a written procedure for consulting with a patient within the consultation room.

 

This is guidence from the Welsh Assembly Government regarding Coronavirus regulations :-

Business closures, work and physical distancing :

How do the restrictions affect businesses?

Many businesses, including non-essential retail, have had to close. Those which are open must take all reasonable measures to keep people apart – the 2 metre physical distancing duty is enshrined in Welsh law. 

 

Given the size of many, if not most, consultation rooms I would think maintaining a distance of two metres is not possible within the room itself. There appears to be a direct conflict between Well guidance and Welsh law which needs to be clarified.

 

Current “reasonable measures” of providing a service with the pharmacist in the consultation room and the patient on the shop floor whilst maintaining confidentiality via a ‘one in-one out’ policy seems most reasonable to me during this Coronavirus pandemic.

Ronald Trump, Pharmaceutical Adviser

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879108/T3_poster_Recommended_PPE_for_ambulance_staff_paramedics_transport_pharmacy.pdf

 

As I understand it the current PPE guidance for pharmacy- if less than two meters- wear a mask. So in a consultation room- wear a mask. Simples. This guidance is endorsed by public health wales.

We should be doing things remotely where possible. Anything that cannot be done remotely because you need to examine/touch the patient, or engage with them in some physical way- e.g. injection, blowing into a co meter- can be done in a consult room, with a IIR mask.

However, I expect Well pharmacy, instead of forking out on new remote and video consultation technology, will instead force the hand of its pharmacists and customers back into crammed consultations rooms, because they are struggling for service income. Again, profits over safety.

Boom Shakalaka, Locum pharmacist

All the money for the MUR service has been reallocated to the global sum.
Common Ailment scheme has continued regardless, but not in consultation area.
Smoking cessation service has continued for existing clients and new clients via telephone.
NMS funds reallocated to global sum in England.
DMR funds reallocated to global sum in Wales.
Therefore complaints of the nature conjured up by the multiples do not stand up to scrutiny.
If I was a landlord then there would be no compromise on rents.

Until flu season starts, there isn't a reason for consulation rooms to be used unless it is an urgent matter (MURs, NMS etc. do not count in my book). There may be some instances where a pharmacy provides a specialist PGD service like a Hep B vaccine, but these will be few and far between.

Stop smoking services can still be run without CO readings. Our local commissioner has provided detailed guideance so I'm sure other areas would have done the same.

The multiples in my area haven't helped themselves by the way they have implemented the social distancing procedures, especially early on in the crisis. The majority have relatively large shop floors, which could easily accomodate 3-4 people. The doors have been locked, only opened to let one person in who is frog marched to the counter and inquistioned as what they want. Then they often told it will be a half hour wait (having waited half an hour outside) as they are running days behind with scripts. I realise this won't be the case in all multiple branches and we are all working in challenging conditions, but there still has to be a decent level of customer/patient service. I think this would have impacted their sales significantly. 

C A, Community pharmacist

Also isn't this what the DOH "advance" was for? To ease cash flow problems? 

Leon The Apothecary, Student

The thing is that it is an advance and not in addition. It's like getting your next three months of wages early. You still need to budget for your rent and electric. If you struggled to pay them anyway, getting the wages early isn't going to change anything!

C A, Community pharmacist

Advance is in quotations for a reason... hopefully the PSNC are negotiating that not all of it will be recouped. Also I don't believe that most pharmacies are struggling to pay the rent month to month, the FP34c have been reasonably healthy of late and like yourself I've seen higher numbers, and closing for lunch actually let us get time to tidy, catch up a bit, eat lunch (wonders will never cease!) and chase people that have large bags full of meds to collect (because head office were moaning about the number of old scripts sitting in the region).

Soon-To-Be Ex-Pharmacist, Superintendent Pharmacist

That word - 'hopefully'.......not a chance.

C A, Community pharmacist

Hasn't everyone and their dog ordered extra medications to make sure they have everything they need? It certainly feels that way.

Leon The Apothecary, Student

Definitely saw that during the first couple of weeks. Many pharmacies I visited was full of patient orders, and many hadn't collected in a timely manner. The panic caused a lot of additional work. Certainly gave me a nice income boost at least.

Soon-To-Be Ex-Pharmacist, Superintendent Pharmacist

Really?? You can make a profit out if dispensing? You must be the only one who can. The average script value now is less than it was when I qualified 30 years ago.

CAPT FX, Locum pharmacist

Someone needs to educate me on what I am failing to see. Our business volumes increased during the last four months just like the Supermarkets which remained open. This attitude by Community Pharmacy to mourn about Funding at every turn is laughable. How about starting off with a bit of housekeeping first, and remember that it is a private enterprise. There is no creativity in the sector and you can see that with the attitude on the skills mix on the Sector. The Pharmacist is the only trained professional yet swamped and suppressed by operatives whose collective attitude is to continue begging for more profits from the NHS.

The Landlords are business people too and I suppose they should tell Well that if you can't stand the heat, get out of the Kitchen. I think the NHS should come up with an alternative parallel model to bring this point to our ever Moribund Multiples Executives. When you look at the Drug Tariff there are opportunities which have not been utilised at all. When you have a Private enterprise say on the one side I am not being paid enough and on the other that I am paying too much rent, I think there is something seriously wrong with their business model. 

Soon-To-Be Ex-Pharmacist, Superintendent Pharmacist

Supermarket takings have fallen dramatically since lockdown because the footfall is so much reduced - there are currently more people waiting outside than inside, spending money. I know for a fact that Tesco takings have been down by a two thirds since lockdown - yes, they made a mint on bog roll, pasta and hand sanitizer during the panic buying stage but at the moment, in my local Tesco, toilet roll is reduced to clear because no-one is buying it. In a similar way, pharmacies made extra at the start when everyone was running around like headless chickens, packing into shops and nicely creating a virus soup but now it's gone quiet because everyone has what they want for the next few weeks or months, social distancing has perforce had to reduce footfall for pharmacies as well and therefore over the course of several months, the status quo of reduced funding, pressure pressure and more pressure caused by us picking up the GP crap and general stress and malaise is maintained and will probably get worse because the lockdown phase has gone on for longer than the panic buying phase. Thnk on it - in a small pharmacy premises, you can only fit maybe two customers in the shop area at any one time (and I've worked in VERY busy pharmacies (16000+ pcm) where you could only get one person in the shop at a time and still maintain the 2m gap) so you can only serve two people at a time when your staffing and systems are set up for three times that number. Go back to the example of the 16000 a month pharmacy - if they can only serve one person at a time, even if the whole process only takes five minutes, thats 12 people per hour, 108 per 9 hour day and 2592 across the course of a 24 day month like June. I think the rest I can leave up to you to work out how short that pharmacy is per month on prescription receipts.

If you've suddenly got to stump up for three months rent that is a significant spend and while you say there is something wrong with the business model and I would not argue against you there, the wrong caused to that business model has not been the fault of the contractors but of outside forces against which we have few defences.

Pharm Druggist, Community pharmacist

You asked for an explanation to why being busy in this situation does not equate to increased profitability. 

Simple example - Patient A takes metformin everyday. The pharmacy dispenses 1 pack of 28 every month, so in 1 year (12 months) there will be 12 SAF. During covid if the GP issued 2-3 months worth in one go, that gets dispensed in one go and the pharmacy loses 1-2 months worth of SAF. There has also been a lot of unnecessary prescribing, a lot of shelves were, and still are, full to the brim waiting for patients to pick up. Wholesaler bills paid for, whilst stock is sat waiting unable to be claimed for reimbursement.

A true increase in business would be if the patient suddenly developed the need to take double the amount of metformin to cope with their diabetes, e.g. needed 2 packs per month... but this obviously is not the case, the patient will still only need 12 packs per year - the overall volume has not changed, it has just been given shifted forwards. Factor in the price hikes and tell me how this is not a real terms loss?

Contractors are not allowed to 'beg' for more funding, do you know how silly this idea is? In any other job, are people not allowed to ask for pay rises, or do they have to just deal with pay cuts year on year? As a locum, have you never wanted to be paid a bit more for your efforts?  If by your logic contractors should quietly accept whatever 'pay rate' they are given, then surely the same logic should apply to locums - stop whining about rubbish rates , if you can't stand the heat, get out of the kitchen. 

For the record i'm in favour of paying locums good rates, i'm using this to demonstrate your flawed logic. 

CAPT FX, Locum pharmacist

 Any contractor who continues to argue based on medicine packs and the quantities thereof is so moribund and so behind with a rapidly developing technological and professional environment. I have never whined about the slave-trade rates which Locums are paid nor the slave-like conditions they work. It is the reality of Community Pharmacy.

My argument was about innovation and creativity and making sure that the profession employs staff with the qualities to push for this process in today's technological environment. You completely missed my point because of the red mist which made you want to obliterate this Locum to smithereens.

You mentioned Locum rates, which is a highly emotive subject. In real terms factoring in inflation, the rates have been going down steeply in real terms. We have had, changes like the Responsible Pharmacist regulation that increased our responsibility and liability and then a plethora of paid services. Yet the actual wages paid for employees and Locums have been falling in real terms. My feeling is that Professional funding for clinical services provided by Pharmacists should be directed from Community Pharmacy to GP surgeries and that Community Pharmacy becomes a non-professional logistical conveyor belt for churning out packs of dispensed medicines. Either this or these so-called Contractors roll their sleeves up like business people and stop whining at every turn. 

Like my colleague said here, it's helpful for once for Contractors to experience what we go through every day. When a sector starts to chase away the professional whose name the business use for bargaining, I suppose it means you need to get another Professional that you can abuse as the Pharmacist has been. 

Pharm Druggist, Community pharmacist

The reality is that contractors are still currently paid based on number of medicine packs, that is what still pays the bills, not services. As long as that is still the case, in no way shape or form is this moribund. To say so, you are just ignoring the current realities that services don’t pay. In the near future we should be moving towards a service based contract and I welcome this, but it is not the reality at the moment. 

Your argument was not about innovation and creativity. You asked for an explanation why your perceived increase is business is not what it seems. Obviously you don’t like my explanation because it doesn’t suit your agenda, and now label my explanation a ‘red mist’. In your own words, I see you stooping low here. Put forward clear arguments.

On the point of innovation, staff skill mix, what is the ‘process’ you’re talking about? 

About locum rates, what point are you trying to make? Have you missed the fact I’m in favour of paying locums good rates? You have also just contradicted yourself by saying you’ve never whined about the ‘slave-trade rates’, not even going to elaborate on this.

The vast, vast majority of Independent contractors are going to be pharmacists working in their own pharmacies, because employing another pharmacist full time to do their job is unviable. They live and breathe pharmacy 24/7. To suggest they need to experience what you’re going through everyday (9-6pm?) is a joke.

What is destroying community pharmacy is the fact that there has never been one single pharmacy contract that is fair for both independents and multiples. We have never negotiated with the DOH. A negotiation is when we are willing to walk away from the table, and we never have been willing because there are too many vested interests amongst the differing business models.

Mr Anon, Community pharmacist

What you're saying directly influences you as a locum as well. If all contractors decided to close this means less work available to you. Given the fact that the number of pharmacy students qualifying every year is still very stable, ultimately your 'role' will come under attack just as much. 
Even if all clinical services were redirected to GPs and community became a simple retail establishment for medicines, what do you think will happen to you and other locums? GP surgeries will not employ several pharmacists. There are only so many roles available in Industry and Hospital. So again, your work pool and unemployment rate will be negatively affected. With all due respect, if contractors go down, a lot of locums are coming with us. Where else can they go? Out of the sector altogether I assume.

Axed Locum, Locum pharmacist

Locums asked for a rise with the increase in the global sum, but instead got a reduction in the fees; now at a derisory level of £19.00 ph. The contractors global sum needs to drop similarly, will know how it feels to be exploited.

 Join the band wagon of exiteers.

Pharm Druggist, Community pharmacist

Axed locum, you clearly have something against contractors, i'd suggest therapy and maybe actually speaking to one in person.

In my area I don't know of any independant contractor that pays their locums £19ph, in my experience that rate is offered by the multiples. Please direct your anger and discontent at the right places, independant contractors operate in a completely different world from your foreign owned, vertically integrated multiples. 

CAPT FX, Locum pharmacist

I see people stooping low here and instead of putting forward clear arguments I see words like anger against contractors or someone suggesting therapy for the aggrieved party. This essentially is what is destroying Community Pharmacy. This lack of harmony between the Professionals who work for the Contractors and the Contractors.

I see and hear Contractors mourning all the time and suggesting how this or that can be improved to secure our finances and viability. Someone mentioned the 5-year development plan. General Practitioners only approved this plan when they were guaranteed viability and more importantly when they were happy with the remuneration. Surely Community Pharmacy was involved in the negotiations and would have objected if this plan was not viable. But then we are so fractured and our objectives are so different. We have huge money bags who can absorb what Pharm Druggist is mourning about and are not worried about how many packs they dispense. 

We negotiated didn't we, and we got what we have and we're happy to implement it, so why are we mourning. We can not continue like this, make up our minds, split the Professional role and the Logistical conveyor belt role and start some serious negotiation. 

Otherwise, no one will ever take our collective mourning seriously.

Soon-To-Be Ex-Pharmacist, Superintendent Pharmacist

I'm assuming you mean 'moaning' not 'mourning'. Pharmacy ain't quite dead yet. Not far off but we haven't flatlined just yet.

Leon The Apothecary, Student

Excellent explanation. I feel from this stems an issue of uncollected medication and how should we be allowed to deal with it?

Fines to patients? Billed for the cost of the medication and dispensing?

Pharm Druggist, Community pharmacist

Thanks Leon, in an ideal world I think it'd be fair to be able to claim reimbursement for whatever hasn't been collected. I can't see the cost being passed onto the patient, and I definitely can't see the cost being passed onto GPs due to unnecessary precribing... leaves the cost being absorbed by ourselves!

cardiff pharmacist, Superintendent Pharmacist

all correct..apart from there would be 13 (x28)dispensings in a 12 month period.

We counted the value of uncollected but dispensed meds at end of MAY (and this wasnt the worst month)...£14,000 sitting on the shelves...to be paid for ie to wholesalers but not claimed for reimbursement

Pages

Job of the week

Pharmacist (qualified Independent Prescriber)
London (Central), London (Greater)
Annual salary to start at £52,000 based on a 40 hour week.