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Well hopes to ‘mop up’ extra workload from any closures across sector

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John Nuttall: Our use of hub-and-spoke dispensing gives us an advantage
John Nuttall: Our use of hub-and-spoke dispensing gives us an advantage

Not only does Well have no “strategic programme” for shutting its own pharmacies, but it hopes to “mop up the extra volume of work” from any other closures across the sector.

While it will be “for the new CEO to determine whether there's a change in strategy”, outgoing chief executive John Nuttall said Well Pharmacy “broadly wants to keep the pharmacies we have”.

Mr Nuttall is set to retire this autumn after 17 years leading the business – under both its Co-operative Pharmacy and Well guises – and will be replaced by Seb Hobbs, former president and chief customer officer of the world’s largest diamond retailer, Signet Jewellers.

Despite government funding cuts “squeezing” the sector, Well will only consider closing “one or two” pharmacies in certain circumstances, such as if a GP surgery closes and renders a nearby branch unprofitable, he told C+D in an exclusive interview last week (August 20).

Further pharmacy closures are expected across the sector in the coming years, according to Lloydspharmacy’s CEO, while Boots has confirmed it will close around 200 loss-making pharmacies.

Mr Nuttall stressed to C+D that he does not see these as “large-scale” closures, as those 200 Boots branches represent just 8% of the multiple's network.

Hub-and-spoke advantage

Mr Nuttall said Well is in a good position to pick up the extra workload should more pharmacies close across the sector, because of its 2017 decision to roll out hub-and-spoke dispensing across its 780 branches.

“We want to see how things shake out with the sector and if we start to see other pharmacies closing...the hub-and-spoke project will give us a bit of an advantage,” he said.

Without the use of hub-and-spoke dispensing, Mr Nuttall said he “struggles to see how the sector is going to accommodate” the new services proposed in the five-year funding contract for England unveiled last month.

While the multiple's decision to roll out a hub-and-spoke model was a “big” and “risky” investment at the time, “I think we made the right decision”, Mr Nuttall said.

15 Comments
Question: 
Are you aware of any pharmacies closing in your area?

Mark Boland, Pharmaceutical Adviser

'market data certainly shows that, the multiples aren't growing as much as the indys'

In the long-term, what does the market data tell you about the benefits of vertical integration, the economy scale of off-site operations and government preference for multi-national operators?

C A, Community pharmacist

Don't know much about vertical integration or economies of scale, other that they benefit the multiples. Got any info?

I'm not aware that any of the multiples having really got off-site dispensing to work - the multiples seem to be doing 20% from the figures I've seen on C+D and I think the American chains manage about that, maybe a bit better. Certainly P2U seems to run at a loss, so delivery costs for DSP seem to hurt them a lot? 

Chris Locum, Locum pharmacist

Maybe 'Well' staff will be getting mopped up from the floor after anxiety attacks and cardiac arrest!

C A, Community pharmacist

Funny story as someone else is going to 'mop up' Mr Nuttall's job when he steps down as CEO to spend more time with his family.

Leon The Apothecary, Student

What I've personally seen is the profitability of branches being protected by substantial staffing cuts using their "ProTime" model alongside the implementation of Central Fulfilment, their version of Hub & Spoke.

Respectfully, I feel it is very clear the direction that they want to take is automating as much of the process as possible to tackle the biggest cost expense in a Pharmacy - namely, staff.

Mark Boland, Pharmaceutical Adviser

It is correct that the pressure on all employees in your typical dispensary is immense, but it isn't necessarily because of absolute workload, more the way in which they operate - inefficiently. Most dispensaries you work in are a physical mess, staff randomly moving from one problem to another. 

The chains have demonstrated themselves incapable of operating a pharmacy efficiently. They have not used 'best in class' design and technology to get the most out of their employees. Over the last 20 years they have abandoned their staff. Aloof and arrogant, they have demanded service targets from afar, by whatever means possible, ignoring the chaos of the dispensary. Understandable in the sense that they didn't have the technical ability to solve the problems they faced - but a position nevertheless, they could never admit. 

A previously generous contract hid these inefficiencies. The cuts have made them face a reality - they do not have (and never had) the ability or technical expertise to operate a pharmacy competently. The only option has been to buy in expertise and take operations off-site. They are now banking on the monopoly privilege of control of entry and vertical integration to sustain them through a period of consolidation. They are likely to come out the other side maintaining a healthy EBITDA, particularly as they can book ‘profit’ in the more ‘tax friendly’ parts of the business. 

It is interesting that some pharmacists still don't understand that consolidation actually means 'getting rid of you'. But then community pharmacists have never really understood anything relating to their own survival. 

Cool story Mark

Leon The Apothecary, Student

There is true as you say, there are many inefficiencies within the workplace. From optimising the use of Checking Technicians and Dispensers as a standard way of working in the majority, JIT stock management, and consistent turnaround times for medication preparation, alongside the consolidation of as much of the workload into robotic dispensing in a Hub Pharmacy makes perfect sense, and it comes at the cost of the individual.

I think pharmacists stand with a number of other professions in the changing, diversifying, and optimising nature of their professional roles, and it seems like pharmacists do tend to drag their feet when it comes to change, preferring to lament the days of yore.

Many reasons and discussions to be had around that and my humble opinion on the matter is to better take control of your own fate, decide how you would want to exist in this new model, or be pushed anyway.

C A, Community pharmacist

Yes there will be plenty of profit in pharmacy, once they get rid of those pesky pharmacists on £40k+ pa.

For a few years, till they realise they have lost their USP or the DH catches up...

Mark Boland, Pharmaceutical Adviser

'Yes there will be plenty of profit in pharmacy, once they get rid of those pesky pharmacists on £40k+ pa.

For a few years, till they realise they have lost their USP or the DH catches up'

In the mind of some pharmacists, the USP of community pharmacy might be pharmacists, but it isnt in the minds of the key players. The customers dont want MURs or NMS, they want the quickest and least effort way of obtaining their prescription. The government has no interest in anecodotes of helping the 'community', they want the cost savings of vertically-integrated economy of scale.

So as long as they get what they want, the customer and government couldnt care less about unemployed pharmacists. What they want doesnt require many pharmacists, therefore the decision to dismantle community pharmacy, was an easy one.

Ranjeev Patel, Non Pharmacist Branch Manager

Great comment. The customers of pharmacies in the UK just want their meds, I doubt they have any understanding of the qualifications of the person who gives it to them. Just as when I order a steak, I don't really give a hoot about the person who cooked it as long as I get it, and it's right!

Like wise, the big pharmacy companies just want to provide for their customers in the cheapest way possible. Pharmacists on 40k+ must be hurting them a lot, especially with the cuts. Large scale warehouse dispensing and delivery is coming, and fast.

The only people to whom it is important to have a fully qualified pharmacist in every pharmacy is the pharmacist themselves. The employers want them gone, and patients are mostly unaware, they just walk away with their white bag of meds, if anything future changes to pharmacy in the UK will make their lives easier because it will be all on a huge delivery model.

And before people start assuming that I am a non-pharmacist manager, I am not, I am fully qualified with a breadth of experience in the industry I just don't agree with the C&D harvesting my GPhC number.

Chris Locum, Locum pharmacist

They will exceed the 'agreed' profit with DH, and the extra money will be declared as racketeering (Biased Broadcasting Corporation will provide the 'facts' on returning money to the public purse).

James Tibbs, Superintendent Pharmacist

Alexander the Great couldn’t agree more! 

Alexander The Great, Community pharmacist

He is a bit deluded. I have 2 well pharmacies right next to me, and the staff morale is rock bottom. Staff levels are skeletal, people are looking to leave and find other jobs. They cannot cope with current work levels, let alone "mop" up any work from other pharmacy closures. As an independent, I am mopping up your lost customers cos of your cutbacks.You carry on being a nodding dog to the government.

C A, Community pharmacist

Market data certainly shows that, the multiples aren't growing as much as the indys.

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