Are small independent community pharmacies about to be squeezed out of the market, or are there opportunities there for the taking?

Many independent community pharmacies – particularly the small ones – are having a rough ride at the moment, compounded by the recent 2.9 per cent increase in the threshold for practice and establishment payments, which now means that the minimum dispensing volume pharmacies have to reach has gone up from 2,430 items per month to 2,500 – something that critics believe could wipe out smaller pharmacies and those in deprived and rural areas.

Certainly many independents are not making as much money as they did in the past, but is this what could be seen as a conspiracy against smaller pharmacies, or is it simply a reflection of the current pressures on the wider healthcare landscape?

Ash Soni, RPS president, LPN Chair (Pharmacy) London and Clinical Network Lead at NHS Lambeth CCG, thinks the pinch is being felt everywhere. ‘There’s such a squeeze currently in the NHS financial situation that everyone is feeling quite bruised and it’s very challenging,’ he says. ‘This is impacting on cashflow as much as everything else because the amount of slack in the system has gone. Everything is very tight and requires high levels of efficiency, which is much harder to do on a smaller scale where small changes make a big difference.’

Volume of work is also an issue. At Numark, members are reporting that they need to do more simply to stand still, and many are short staffed. ‘Some of our members tell us that it is getting harder to hire good quality staff and it is often the contractor that has to pick up the slack,’ says Mandeep Mudhar, Numark’s director of marketing, ‘and more of our members than we would generally expect are starting to talk about retirement as a result.’

Government has signalled an intention to drive even more patients to pharmacy for services that will help the increasing pressure on the NHS, but Mr Mudhar’s concern is that this is ‘with no real recompense. The contract funding settlement offers no suggestion that pharmacists will be rewarded for all this effort, and increased workload with no financial reward does not lead to a happy profession.’

PSNC says it is ‘working hard’ to ensure that pharmacy can make the most of what it sees as opportunities for the sector – for instance in reducing burdens elsewhere in the NHS through services such as minor ailments schemes, and the provision of flu vaccinations – but PSNC regional representative and independent community pharmacy contractor Mark Burdon admits that ‘working for a cash-strapped NHS is never easy’.

So why the change to the threshold?

Mr Burdon says it is in line with the routine annual increases that were made as part of funding settlements agreed from 2006 until the NHS reforms and it ‘recognises the increases in prescription volumes that have been seen in England’. He admits that PSNC’s analysis suggested that a small number of pharmacies will be affected but these are ‘roughly an equal number of independents and multiple branches’.

However, Mr Soni says PSNC needs to ‘do more in ensuring access to pharmacies in areas of need’, but he says, ‘I’ve also not seen anything that says as part of the NHS England process they are carrying out Health Impact Assessments. Small pharmacies might be serving very vulnerable populations – such as in rural communities – so if you are taking them away you should consider this before you do it, and reflect on the pressure that is brought to bear on those pharmacies that fall just below the threshold.’

Independent community pharmacist Graham Phillips – owner of Manor Pharmacy Group – is also concerned, saying: ‘The tiny changes to the contract that PSNC recently negotiated demonstrate no vision or commitment and is an opportunity lost. We need to be the future and fight together for a bigger piece of a bigger cake, otherwise it’s a case of do what you’ve always done and you’ll get what you always got.’

Future-proofing

Of course, there is a future for smaller independents but it’s going to take some adjustments now to make it a viable one.

Mr Soni says that what independents have on their side is ‘fleetness of foot and the ability to adapt quickly to changes in demand and need’, thanks to a shorter chain of management which means they can react at high speed. He believesthat localism won’t go away, but it needs communication, ‘especially because, in terms of the opportunistic stuff that may arise, it may involve being collaborative. It’s really important for independents to have their eyes and ears open and think about the best way to deliver on these opportunities, and if it means joining forces around some services, then so be it.’

Single prospects

All this extra work, just to stay competitive, leaves some wondering if single-pharmacist pharmacies will, by default, be ‘managed’ out of the market.

I certainly hope not,’ says Mr Soni, ‘because that would be very bad for the healthcare needs of a lot of people. We’ve already seen how the growth in general practice has led to the loss of your local family doctor, and pharmacy needs to be careful of adopting something similar which loses that local relationship. Of course, we have to make sure pharmacists are fit for purpose and they appropriately invest in their premises so they are as good as can be, but we also have to be mindful of the financial challenges that puts on them.’

Mr Mudhar says the question of lack of quality is wrongly skewed. ‘GPhC inspections ensure there is a robustness of quality checking, so there is absolutely no reason why an independent pharmacy should provide any lesser quality of service. If anything, I would say it would be greater as it will be a more personalised service from someone who knows it really matters to their business.’

Survival savvy

While there is still consolidation in the pharmacy market, and alternative medicines supply channels are emerging, Stephen Fishwick, NPA head of communications, says independents are ‘holding their own’. Despite the ongoing pressures, pharmacists have the opportunity to take centre stage as the healthcare professional on the high street, if they are willing and able to put in the work.

According to Mr Mudhar, in order to remain ahead of their competitors, independents need a highly effective, competent and motivated team. They must ‘always go that extra mile for the patient’ and have good, strong, links with local surgeries, nurses and other healthcare professionals and social services ‘to ensure that the support to patients living in the community are both integrated and delivered in a holistic way’. They must also be commercially savvy, ‘taking quick advantage of new business opportunities’; and strive for continuous development ‘through monitoring and patient review’.

The importance of this kind of feedback from across the community cannot be understated, according to Mr Soni, who says pharmacies must‘make sure they understand who their customers are and offer high quality customer service because word of mouth will out. Get to know your local influencers and show them the things you can do and the difference you can make. Engage with GPs. You have the ability to have a close relationship with the community and health system locally that can strengthen your position. Become invaluable, and this will enhance your reputation and standing.’

Mr Phillips believes that high-quality independents will be fine if they move to a more clinically based service, which he says means focusing on medicines optimisation and public health. ‘NHS England’s Five Year Forward View is actually looking back at the Wanless report of 2004, which even then said the NHS had become an illness service, not a wellness service, and that’s simply not sustainable. Wanless put £30 billion as the price of continuing to ignore public health and patient empowerment back then and lo and behold that is now the same amount we are short.

‘Pharmacy has the capability to play a huge role in this potential realignment, but it needs to become more about individualising care for the local community and less about the volume of prescriptions, which is good for independents – but only if they are good. If we can get the best independents to work together then there’s a bright future.’