Is break even enough?

Leela Barham offers an alternative view on the widely reported results of the PSNC 2023 pharmacy pressures survey. She argues that focusing on 7 per cent of community pharmacies being profitable is missing the bigger issue... 

In April, the PSNC (now named Community Pharmacy England) released the second-year findings of two surveys known as the pharmacy pressures survey. 

One of these surveys was filled in by 900-plus pharmacy owners, representing over 6,200 premises, the other by 2,000-plus pharmacy team members, with the survey running from 31 January to 27 February 2023.

Grim findings

The survey results don’t make for happy reading. Ninety-six per cent of respondents said costs are up this year; only seven per cent considered their pharmacy business to be profitable – that makes 93 per cent who don’t. The best that can be said for them is that their community pharmacy breaks even. 

But things are even worse than that, if the survey is anything to go by. Looking at the more detailed results, there is a split. Forty-eight per cent said they were only just profitable, while 44 per cent said they are losing money. Ouch.

That, presumably, is why finance was selected by 78 per cent of respondents as an area that they are extremely concerned about, almost neck and neck with medicines supply, which came out as the biggest concern.

Cost drivers for community pharmacy, according to the survey, include unreimbursed medicine costs, increasing wages and rising utility costs. It’s taking longer too for community pharmacies to source medicines, so it’s hard to be as efficient as they could be.

Mike Hewitson, superintendent pharmacist and managing director at Beaminster Pharmacy as well as non-executive director of HubRx and member of Somerset Council, sums things up: “Pharmacy finances are shot to pieces right now.”

Then there is the uncertainty that comes from not knowing when and how much reimbursement you’ll get for prescriptions dispensed. Hewitson describes this as the “boom and bust cycle of margin”.

Add in predictions for rising interest rates, and pharmacies paying back investments funded by loans, and the future looks less than bright.

It must be the case that most community pharmacies are simply hoping for the best and making do.

Can that really continue? Nick Hunter, chief officer at Nottinghamshire LPC says: “We can’t carry on like this, just hoping that there will be more money.” 

That community pharmacies are, on the whole, just about keeping their heads above water has an unambiguous and seriously negative impact on investment sentiment. Hunter says: “It’s having a huge impact on investment. It’s affecting investment in workforce development, equipment, you name it.”

He believes that it’s not just his locality either, suggesting that the sector as a whole is “apprehensive about investment”.

Yet investment is precisely what is needed to make the shift to the clinically driven service that has been at the heart of government policy over the years. It’s also not just the current financial situation, but experience from the past too that is shaping investment sentiment. 

“Pharmacy has gotten their fingers burnt so many times now. We’ve made investment, but we can’t make a return on that now,” says Hunter. 

Reticence to invest

This poor track record means there’s a reticence to invest in initiatives of the day, such as independent prescribing, in case there isn’t sufficient payback.

“We still don’t have an announcement about funding for the independent prescribing pathfinder programme,” points out Hunter.

Since the PSNC survey, there has been an announcement from government of more money – as usual, with strings attached. 

On 9 May, a new GP access recovery plan was announced, with £645 million for community pharmacy over the next two years. Under the plan, contractors will be able to earn more when patients visit to get prescription medications for seven common conditions; there is also to be an expansion of pharmacy oral contraception and blood pressure services. Negotiations on implementation are being held between the Department of Health and Social Care, NHS England and Community Pharmacy England.

But this doesn’t go far enough, believes Hunter. “£645m might look like a big number,” he says, “but if you break that down, it doesn’t cover the losses we’ve had over the last five years, let alone allow us to invest.”

It’s not just trying to get funding back to where community pharmacy has been in the past, but a more immediate cash flow that’s needed. Government funding announcements can be put together quickly, but getting the cash takes longer. “Not a penny is going to hit bank accounts any time soon,” says Hewitson.

It’s unsurprising that the sector says more money is needed. It’s not a new call, but it’s the urgency that feels different now. It’s money to keep the lights on – today.

The Government also needs to win hearts and minds to engender the confidence contractors need to be able to make investments for the future.

Contractors need to believe that there will be a return on investment – something few are likely to believe today. “We need confidence put back into the sector,” says Hunter. Will the Government deliver that?