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'Contractors have asked me whether they should sell'

"The general feeling among contractors is very downbeat and disillusioned."

Pharmacy accountant Umesh Modi reflects on the "downbeat and sombre" mood of the sector since the pharmacy funding cuts began to bite.

Having attended a few pharmacy events in recent months, the general feeling among contractors is very downbeat and disillusioned.

They are very worried about the future after the 12% cut to funding hit in December. Not just about their businesses, but for their patients’ safety, the possibilities of staff redundancies and concerns about ongoing cash flow.

There is also concern about what will happen after 2018? We know that the Department of Health (DH) cut establishment payments by 20% in December, and they will fall by a further 40% on current levels from April 2017 – down to £1,255 a month for these pharmacies.

But we don’t know what the DH has in store for pharmacy funding after that.

Should I sell now?

With all this uncertainty, some pharmacy owners have asked me if they should look to sell now, because they are worried about their future income. Equally, they are not sure if they should continue to invest in their business. Because the day-to-day demands of red tape, paperwork, staff training and development is burdensome, contractors find themselves asking, is it worth it?

Advice from pharmacy bodies

I recently attended an event hosted by the Pharmaceutical Services Negotiating Committee (PSNC) and the National Pharmacy Association (NPA). The negotiator who spoke did their best to keep contractors updated, and advise them on how to take advantage of the government’s Pharmacy Access Scheme and quality payments criteria.

During the event, Alastair Buxton, PSNC director of NHS Services, reiterated the scale of the cuts facing the sector, and the potential loss of income for community pharmacies.

He mentioned that PSNC's judicial review is delayed until March, but if it is successful, it would at the very least ensure that future negotiations with the DH are more of a two-sided affair. Even if the judicial review is not successful, it is important to go through this process, to avoid similar unilateral decisions post-2018.

Hope for the future?

I feel there are reasons to be hopeful. The 'Murray review' into pharmacy clinical services was very positive for contractors and the level of services they provide. Pharmacists should be encouraged by this.

At the event I attended, PSNC urged contractors in deprived areas to appeal to be put on the list for the Pharmacy Access Scheme, even if they are located less than one mile away from the nearest pharmacy. Anything up to 0.8 miles could qualify, Mr Buxton stressed. The appeal should be filed before the deadline of the end of February – and PSNC and the NPA will be glad to assist contractors who need it.

Leyla Hannbeck, chief pharmacist at the NPA, hosted a session about the qualifying criteria to receive quality payments.

There are eight criteria, each of which can earn points. The maximum number of points that a pharmacy can earn across two review points is 100. Each point will entitle a pharmacy to a quality payment initially of £64 per point. Any funding remaining following the two review points in April and November 2017 will be distributed to qualifying pharmacies in 2018.

Encouragement during hard times

While pharmacy organisations do their best to encourage contractors during these hard times, pharmacists remain at a complete loss as to why the government is going down this road, especially when the NHS needs more help than ever from the sector.

There is a definite crisis going on in the UK’s health service, with long waiting lists and cancelled operations in hospitals and A&E departments, not to mention GP surgeries that are equally busy due to a shortage of doctors and staff. Why alienate the contractors at this critical time for the NHS?

The mood is sombre and I get the sense that contractors do not see much of a future in this profession, with the uncertainty prolonged post-2018. ​

Umesh Modi is a chartered accountant and tax advisor, and a partner at Silver Levene LLP.

7 Comments

Shaun Steren, Pharmaceutical Adviser

Please don't insult the intelligence of employee/locum pharmacists with the notion that the recent 'cuts' will be the cause of reduced wages/unemployment. These things have occurred independently of the recent changes to funding. The mass oversupply of pharmacists is more than sufficient to decimate the employment prospects of employee/locum pharmacists. Indeed, this pre-existing locum/employee employment problem will more than compensate for any 'cuts' to funding. 

Madni Sheikh, Locum pharmacist

All this points towards killing the NHS and promotion of private healthcare, a la american system ! where private healthcare providers would thrive.

Mr Smith, Pharmaceutical Adviser

The reality is more and more Pharmacists/Locums/Managers are seeking to purchase a Pharmacy and those with robust Pharmacy Businesses are looking to add to the portfolio.

Dave Downham, Manager

I believe you are a little ahead of yourself, Ms Trodd. 1. The cuts haven't started to hit cashflow yet, let alone been in place for a significant period of time. 2. Since when have you heard of an estate agent running down the market? 3. No-one will close down unilaterally to receive £0 when there is a chance of selling on for more than £0. It's only when loans start to get onerous that you'll see badly run locations close down, and yes, that means others will look to press down on costs such as wages and locums, although there will be upward pressure with the increase in NLW, compulsary pensions etc.

Valentine Trodd, Community pharmacist

We shall see. Somehow though, I don't think we'll be seeing high streets full of abandoned pharmacy premises, as predicted by our contractor colleagues...

Valentine Trodd, Community pharmacist

 11,688 community pharmacies in England and I've not heard of a single one that's closed down. On the contrary, as reported on this website - Pharmacy prices rise 12% despite funding cuts - "Tony Evans, head of pharmacy at Christie & Co, said the outlook for pharmacies is "not bad at all”, as the sector continues to be a “safe haven for private investors and family money”."

http://www.chemistanddruggist.co.uk/news/pharmacy-prices-rise-despite-cuts

So... the campaign of misinformation and propaganda rolls on . Although it is a great excuse to freeze staff wages and squeeze more work out of your poorly paid pharmacist.

S Morein, Pharmacy Area manager/ Operations Manager

 

 

Ms Trodd is absolutely correct. The same contractors have been ranting over the destruction of the so called "network" and how with every Cat M adjustment there will be a dramatic collapse in pharmacy numbers. Yet goodwill values of contracts continue to expand and contractors profits remain at extraordinary levels.

 

 

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