It’s looking like 2017 could be one of the most challenging years ever for community pharmacy. As the Department of Health funding cuts start to bite, contractors up and down England will be forced to take a very close look at their operations in order to weather the storm. And that’s assuming this is a storm, and not a permanent climate change.
Although pharmacy bodies and patients are united in believing that widespread pharmacy closures are against the public interest, it seems inevitable that there may be some attrition in numbers. I still find it ironic that the growth in pharmacy numbers in recent years has been caused by the government’s own agenda of relaxing the control of entry regulations.
While there will be some protection for those wishing to merge pharmacies, at the moment this seems to be limited to the life of the current Pharmaceutical Needs Assessments. This means that the protection could disappear at the next round of assessments.
With less than two years of guaranteed safety, could merging with a neighbour be a good idea – either in the short-term or the long-term?
No two potential pharmacy deals will be the same, so I guess the answer will depend on each individual case, but independents shouldn’t exclude considering this as a potential course of action.
Interestingly, this is not a process that pharmacies have done historically to a large extent, unlike, for example, GPs or solicitors, for whom merging practices has become the norm. Multiple groups with co-located shops are in a much less complicated situation, of course.
I know of a number of pharmacies in Scotland that were opened in a consortium fashion. Local contractors who would be affected by the opening of a new pharmacy (usually at a medical centre) were given the opportunity to form a consortium. The contractors own a proportional share of the limited company and were appointed directors for the running of the company. It’s not a widely used model, but I have seen it operating successfully with a mix of independents and multiples alike.
Many people would consider this type of option a last resort, but I don’t think it should be. Someone, somewhere, once told me that sometimes you have to give up a bit of your independence to keep the rest of it. This feels like it could be one of those situations.
You may decide to hang on until all other options are exhausted or, indeed, to see if others succumb to the cuts first. However, at that stage you may be in a weaker position than you are now, and you might find it more difficult to find a partner willing to agree acceptable merger terms.
You should be considering merger options now. Starting a conversation with the relevant people is unlikely to do any harm. Indeed, with overheads such as rent, rates and staffing costs increasing all the time, you may find that combining two into one makes for a better financial picture rather than worse. What’s to lose?
Noel Wicks is an independent pharmacist.
No two potential pharmacy deals will be the same