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‘My pharmacy's cashflow has become a diabolical juggling game’

"We stopped replacing staff once they left, placing more pressure on our existing team"

Cashflow may topple community pharmacies like dominoes due to issues with medicines payments, bank relations and staffing issues, says The Contractor

Buying a pharmacy was meant to guarantee contractors a future pension, as we are not entitled to one from the NHS. The goodwill in our businesses was supposed to do that instead, but this couldn’t be further from the truth in the current bleak climate.

When we bought our first pharmacy in 2011, the bank relationship manager told us pharmacies could be granted finances fairly easily. I remember she said cheerily: "People will always need medicines!" She was right, they would. What no one knew then was that the Department of Health and Social Care (DH) would see community pharmacies as just as dispensable as medicines.

Two years later, in 2013, we purchased two more pharmacies. By no means were we rich – we worked hard and had ambition. The first round of category M clawbacks had already happened, so what we earned was fair. We managed to pay staff, loan, rent and rates and had an income that was worth the stress.

Roll on to 2017. Overnight, we lost fees of around £3,000 per month from the busiest pharmacy. The combination of stopping of the practice payment and the deployment of the single activity fee was an absolute disaster for everyone. At the same time, category M clawbacks came in.

I sold a property I joint-owned with family, and used around £40,000 from the sale just to keep my pharmacies going. I still owe my family thousands. My pharmacy managers have been immensely understanding and have waited to be paid. I’m still behind on their wages.

The bank has not been too sympathetic, so overdrafts are not granted. I simply cannot get out of this hole, unless I sell. Guess what? No one wants to buy either. Cashflow is diabolical. We are stuck with loan and lease agreements. I am constantly playing a juggling game and begging wholesalers to wait. Most of them do not wait long. They give you a week to pay from your VAT return; if you go a day over, they stop your accounts.

We stopped replacing staff once they left, instead placing more pressure on our existing team. Locums are used to a bare minimum, and I work all hours I can with less than minimum pay. I haven’t been on holiday for three years. My stress levels are sky high. I’m surprised I’m not on a beta blocker, yet.

I can’t understand how a government can increase minimum wage (rightly so, some may say) without considering the impact on small businesses. How can we continue to pay out while they take from us? The measly business rates relief has had no effect whatsoever, as the minimum wage has gone up at the same time.

The category M clawbacks apparently stopped in April 2019. My FP34 payment schedule tells me that’s a lie. The income is just as rubbish as usual.

I am now convinced the DH wanted all this to happen. They want us contractors to go down like dominoes. I hope they have a plan, because once we are gone, the whole of the NHS will suffer. Or is that part of the long-term plan?

The Contractor is an independent pharmacy owner in England

C+D takes pharmacy pressures to parliament

C+D – in partnership with Pharmacist Support – is heading to parliament on September 9 to highlight to MPs the growing issue of pressures on pharmacists.

Find out more about the event, and share your own experiences with C+D’s features editor by emailing [email protected], or tweeting @ChemistDruggist using #PharmacyCrisis.

21 Comments

S Morein, Pharmacy Area manager/ Operations Manager

The government is susposed to fund the excessive goodwill values of pharmacies by allowing excessive profits. That sounds a great deal for tax payers especially those waiting on NHS lists for treatments denied by lack of resource due to the self same excessive profits contractors demand to maintain goodwill values. 

Reeyah H, Community pharmacist

I very much doubt pharmacy contractors are the cause of the downfall of the NHS. You sound bitter. 

S Morein, Pharmacy Area manager/ Operations Manager

Not suggesting contractors are the downfall of the NHS in fact most provide a wonderful service. It is the whining about loss of excessive profits that is the issue here. This particular contractor has is complaining about financial issues after paying a high goodwill value for contracts. The NHS has no responsibility to provide profits for this person folly in paying excessive goodwill values.

Lucky Ex-Locum, Superintendent Pharmacist

As an Area Manager I'm pretty sure you try to wring every last drop of profit you possibly can out of your staff and your whinging about other peoples profits suggests you aren't very good at it. Are you getting pressure from Upstairs? Welcome to the club!

Reeyah H, Community pharmacist

Let me reassure you, there have not been excessive profits for the last 8 years or so. The first Cat M reduction made sure of that. 

N O, Pharmaceutical Adviser

Where have you been ?? Mejorca??

Since you are talking about excess profits. Could you please throw some light on what constitutes fair profit? and please consider the Govt's contract with other health providers i.e GPs and then compare.

Ranjeev Patel, Non Pharmacist Branch Manager

I would postulate that community pharmacy is one place that the NHS gets the absolute maximum value for their money. Free consultations, free advice, free leaflets, free travel advice, prescription dispensing which is technical and dangerous is done en masse for peanuts, and they can even keep cutting the funding with nothing bad seeming to happen. They don't have to care about the pharmacists and give them pensions or anything like that. Because pharmacists never retaliate, the DHSC can just keep tightening the thumb screws even further with little or no repurcussions. When even big multiples are posting losses with their vertical integration and bulk-buying, I don't think pharmacy and excess profits should be used in the same sentence.

Lucky Ex-Locum, Superintendent Pharmacist

The NHS seems to be hell-bent on pushing every service onto pharmacy to do for free (or worse still, to line the pockets of multiple shareholders and CEOs) so that GPs get the cream to fund their villa in Provence to retire to, and if that sounds bitter, too damned right I'm bitter!!

Mr CAUSTIC, Community pharmacist

The government actually stated they wanted a reduction of thousands of pharmacies a few years ago in black and white ! Up to then there was tinkering with payments aimed at reducing low volume pharmacies income with no statements why . In the past few months we have had increased stress due to time wasting on sourcing out of stock items ,scanning for fmd,etc and the loss due to paying more for drugs than we are reimbursed  . quite how psnc can allow us to be paid less than we are paying for drugs astounds me .

Anyone considering buying a pharmacy should think again . Join southern  region as a train driver .

Alexander The Great, Community pharmacist

Im surprised your managers are working with no pay, they have families and mortgages to pay for too. The 5 year funding agreement has been announced and things will only get worse. I think it might be time to declare bankruptcy, as there really is no turning point for your business. You have tried to sell, but which sane person would buy it? Which bank would bankroll pharmacies anymore?? The PSNC has truly screwed you, and the entire community pharmacy sector.

You are totally correct that we have no pension, and our business is supposed to cover this. GPs and Dentists have generous pensions, and we got totally shafted. Another great argument that the PSNC failed to utilise.

I sympathize with you that you have put your heart and soul into your degree and business, working hard should normally pay dividends, but the harder you work here, the more you'll despair and sink. Speak to your accountant how best it will be to wind down your business.

And to those that think hub and spoke is the answer, it isnt. Look an trust pilot reviews on pharmacy2u (which look fake) and then look and reviews on reviews dot co dot uk. Their companies house returns show they are losing millions.

Lucky Ex-Locum, Superintendent Pharmacist

The reason that the Managers are working with no pay is - What option do they have? It's not like the sector is replete with jobs awash with cash or anything like that. It also highlights one of the major failings of Pharmacy. We, as a group, are far too tolerant. Just imagine if every one of us downed tools for a couple of days. Civilisation as we know it would probably come to an end. But it'll never happen because we aren't like that. For one thing, there would always be some weasel willing to work for a high rate and second I think we do, as a rule, genuinely care about the people we serve, who would be the real victims if we all went on strike.

Ranjeev Patel, Non Pharmacist Branch Manager

You got into the Ponzi scheme far too late, so you can only lose. The UK government knows from information about US pharmacy that hub and spoke and Amazon-style delivery services can massively reduce the need for bricks and mortar phramacies. The government now wants as many pharmacies to close to bring them closer to this vision, which they see as saving them potentially billions of pounds, and you are the fallout. To close the pharmacies they are using a financial hangmans noose, every time they tighten it a few hundred more pharmacies die.

Buying a pharmacy in 2011? 30 years too late at best, financial suicide at worst. We are moving towards a situation where each town only has a couple of pharmacies and 90% of people have their medications delivered, the government is licking it's lips at those potential savings from those thousands of closed pharmacies.

Get what you can from your business and open a pizza franchise. Plenty of teenagers have become millionaires after an initial investment of 10k to open a franchise - people will pay for things that they genuinely want, and many see medicines as an entitlement which is why you will never be able to get rich from it. This is how it is, either adapt and survive, or ignore the situation and become a statistic.

C A, Community pharmacist

The Government are being naive if they think the can save a large amount from decreasing pharmacy funding. Lets say they save a billion in the next 5 years from the pharmacy contract, it's a drop in the ocean and they've already spent more than double that by increasing GP funding and setting up Primary Care Networks.

Then more pharmacies go to the wall, so what are the hidden costs of more 111 and more out of hours when there are no pharmacies nearby to go to?

ComPharm Pharmacist, Superintendent Pharmacist

Stop being condescending, its all very well having an opinion in hindsight back in 2011-2013 pharmacy was a good business to be in but i suppose you are not an owner and will not know.This person made a correct business decision at the right time its just pure bad luck by the way what do you know about  pizza franchises and their business models? 

Lucky Ex-Locum, Superintendent Pharmacist

I think you have to go back to well before 2011-13 for Pharmacy to be a good business. The writing was on the wall in 2008 with the financial crash if not before.

Ranjeev Patel, Non Pharmacist Branch Manager

My best friend from school set up a pizza franchise in our town (now has retired in his 30's), and my uncle owns a similar business which is raking it in hand over fist (I used to work for him in my holidays from university). I am not a pharmacy owner and never will be, thank goodness.

ABC DEF, Primary care pharmacist

It's game over to community. To date DH still believes there are too many pharmacies around and are determined to close down even more, so yes it's planned closures. I felt for you for your stuggle but there is nothing that we can do to stop this. Better find a buyer quick and sell up!

https://www.chemistanddruggist.co.uk/news/dh-bases-frozen-pharmacy-funding-belief-there-are-still-too-many

Reeyah H, Community pharmacist

I think this article was written before the announcements.

SP Ph, Community pharmacist

""""The category M clawbacks apparently stopped in April 2019. My FP34 payment schedule tells me that’s a lie. """

Don't think it was written before the announcement.

C A, Community pharmacist

Haven't April payments been out for like a month? I've had the figures back from Head Office for a while

Reeyah H, Community pharmacist

If you’re a contractor, you would know that information was available end of June ie the payment made on the 1st of July. So yes, that was way before the announcement.  

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