How Government Policy Translates to Community Pharmacy
There have been three significant announcements recently that impact community pharmacy in England. Within this blog post our Co-founder and Superintendent Pharmacist, Kevin Murphy, explores how they’re inter-related.
Recent changes announced by the Government
Over the last few months, the Government has released a series of changes that impact community pharmacies across the UK.
Three key changes you need to be aware of:
- The Pharmacy First scheme is set to launch at the end of January 2024 in combination with a redesigned CPCS/Contraception/Hypertension service.
- Minimum wage is set to increase by almost 10% to £11.44 in April 2024.
- Full expensing for investment in equipment is now permanent.
The impact on community Pharmacy
From the perspective of a group superintendent pharmacist, this translates into three clear messages from the government:
- We have the opportunity (and the urgent need) to grow revenue and provide more valuable clinical services to our local community.
- The human resource needed to handle this, on top of growing workload from pharmacy closures is going to be significantly more expensive.
- The government is incentivising businesses to invest in technology to boost productivity.
The rising tide of minimum wage increases will impact on pharmacy support staff costs, estimated to cost an average pharmacy with five full time equivalent staff around £10,600 per year, or more like £12,200 by the time other employment costs are factored-in (NI, pension, holiday/sick leave etc).
Minimum wage has risen around 40% since the pharmacy cuts in England in 2015 which is completely unsustainable juxtaposed with 30% real terms funding cuts in the same timeframe.
Anyone holding out hope of any additional funding over and above the £645million NHS Recovery Plan funding is kidding themselves. Recently announced cuts in National Insurance mean that future governments will have zero wiggle room on public spending.
The Productivity Problem
It is well understood that in general, The UK economy has a problem with low productivity growth. Productivity is a somewhat abstract concept but McKinsey puts it simply that “productivity measures the amount of value created for each hour that is worked.” The key word in that definition for me is value.
With that in mind, there are two important questions I would encourage pharmacy owners to ask themselves:
What proportion of support staff hours are spent dealing with patients simply collecting a bag and walking straight back out of the pharmacy?
Is this interaction adding value or simply using human resource that could be spent more productively elsewhere like handling the promotion and admin of revenue generating services?
Clearly process automation is the most impactful way of increasing productivity and there has been a huge growth of this across the pharmacy sector, whether that be PMR/App functionality to improve processes, or hardware solutions for MDS, Pack dispensing or hub & spoke, not to mention the explosion in the number of collection points.
All too often when looking at return on investment, the conversation is boiled down to an equation of the theoretical reduction in the cost of staff resource as opposed to the value that could be created by redirecting that human resource in a different way. Or to look at it another way, what is the opportunity cost of that resource being tied up on mundane low value tasks that could easily be automated.
With Pharmacy First and associated services we can see there is a clear opportunity cost where staff do not have the time to engage with a patient about any one of these services, or a patient being frustrated by the length of a queue and going elsewhere for treatment.
The value lost is £15.00 for perhaps 10 minutes effort. That’s far more than the “cost” of that staff time which is £2.00 – £3.00. Overall, pharmacies achieving the minimum number of consultations stand to earn £18,465 additional fees in 2024 alone and £17,400 annually thereafter.
With the number of consultations capped at 3,000 per month, the fastest to adapt will earn much more than this, as we have seen with other advanced services.
Queue management is key
Managing the implementation of these services in-store is especially important given that it has been confirmed patients will be able to access remote consultations from the comfort of their couch for six out of the seven clinical pathways.
So, complacency in queue management in pharmacies will prove extremely costly with internet and corporate pharmacy groups well positioned to provide remote consultations at scale and secure an oversized share of the limited advanced service funding.
Lessons can be learned from our experience in Scotland, where Pharmacy First has been a core part of pharmacy funding for years. The highest performing pharmacies recognised the importance of queue management to give staff the time to engage with patients that need advice and importantly for remuneration, record consultation activity on the PMR system.
It is not a coincidence that there are a disproportionate number of automated prescription collection points installed in Scotland as a result.
I have written before about how automating prescription collection is “entry-level” automation that is beneficial for pretty much every pharmacy, many of whom cannot justify the cost or space of more expensive dispensing automation.
To put this into context, the ballpark annual cost of automating collection over a ten-year lifespan is circa £5,500 per year (including ongoing costs). That’s roughly the same overhead as eight hours of a medicines counter assistant on 2024 minimum wage. This of course does not account for where minimum wage will be in three, five or even ten 10 years’ time.
Given the historical trend and continued inflationary pressures, it is reasonable to assume significant increases in the years ahead. The table below illustrates an assumed 5% increase per year and the equivalent cost over time.
|inc 15% employ costs
|MedPoint cost equivalent staff hours
Add to this, the full expensing scheme being made permanent means that businesses can be confident that the corporation tax benefit of investment in equipment can be realised in year one, an immediate cash saving of up to 25p per pound invested in new equipment such as a prescription collection points.
Giving your pharmacy a competitive edge by extending to 24/7 access at a time when convenience is king is just the cherry on top.
So, it feels like there has never been a better time to embrace automated collection as part of your Pharmacy First strategy. To support pharmacies in England on this journey, we are offering a time limited match-funding of the £2k up-front fee from the NHS to build capacity for the new service. So, there are 4,000 reasons to act now to secure your installation date in the first quarter of 2024!
Find out more
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Save time and resource
Automating prescription collections allows pharmacy staff to spend less time retrieving dispensed prescriptions and reduce patient waiting times.
Increase your market share
Get ahead of the curve and attract new patients by being the first in your area to offer 24/7 prescription collection