Despite fierce opposition from MPs, contractors and the public, a parliamentary debate in November finally ended with a vote in favour of pharmacy funding cuts. From 1st December 2016, community pharmacies now face revised funding arrangements. The new contract includes a 4% reduction in the total sum of pharmacy funding for contractors in 2016/17. As the PSNC outlines, this equates to a drop of £113 million in funding for community pharmacies, given that the 4% cut will be squeezed into the last four months of this financial year, meaning an effective reduction of 12% compared to current levels. For 2017/18, a further cut of 7% will follow across the 12 month period, equating to the loss of an additional £95 million.
Now the New Year is upon us, the real effects of the cuts are now starting to be felt. Quoting NPA chairman Ian Strachan, Training Matters Magazine recently relayed that many community pharmacies are expecting to encounter heightened financial difficulties in the period up to April 2017. According to a recent NPA survey, 86% of its members are “likely to reduce staffing levels”, while over three quarters could have to reduce services and opening hours during the coming months as a direct result of “the cash flow challenges presented by the cuts”. The article also expressed the opinions of Avicenna CEO, Salim Jetha, who stated that funding cuts are equivalent to taking one full-time member of staff out of the business. According to Jetha, the next few months will see contractors forced to “question the viability of providing certain services”, which could affect patient care.
While the full effect of the funding cuts remains to be seen, it’s imperative that contractors act now to do all they can to minimise disruption. Following a simple PREP plan (Purchasing, Reimbursement, Extra income generation, Proactive retailing) will hopefully enable pharmacists to offset the impact of the cuts by protecting revenue:
Make buying processes as efficient as possible. Rule-based ordering systems can be particularly helpful here as they enable pharmacists to streamline activities and create savings. With Positive Solutions’ PMR agnostic Analyst OrderManager, rules and preferences can be set to cap the prices paid for specific items, ensuring that supplies are always purchased within budget. Cost-efficiencies are also secured through the substitution of branded UK products with more profitable non-branded alternatives. This can be implemented for all branded products or just DTP / RWM lines.
Ensuring correct reimbursement for prescription items and other expenses is a key step towards improving cash flow. The effective use of a pharmacy’s PMR system is crucial in helping to make a reasonable estimate of overall NHS income and allows payments to be monitored accordingly. As discussed in a previous blog, PSNC best practice guidelines recommend that pharmacists should opt for fully functional PMR systems that facilitate easy prescription sorting, prescription charge exemption information recording and the endorsing / sending of prescriptions for reimbursement with the correct information. These features will help to simplify the remuneration process and ensure pharmacies are being paid correctly.
Extra income generation
Services such as MURs, flu vaccination and smoking cessation are effective ways of generating extra income and boosting customer loyalty. It’s important that pharmacists make the most of their PMR systems to segment customers and easily identify those who are suitable for advanced services. A PMR system with enhanced functionality will allow for segmentation by several variables, enabling pharmacists to identify the most suitable patients to approach. Other services that can be offered to drive additional income as well as enhanced patient care include new emergency supply service capabilities, by which patients who call NHS 111 for urgent repeat medication will be directed straight to a community pharmacist, instead of out-of-hours GP surgeries. The forthcoming quality payments scheme, a points-based system linked to certain requirements, such as healthy living pharmacy accreditation, is also capable of providing pharmacies with an extra source of funding as is the Pharmacy Access Scheme (PhAS), which aims to ensure a baseline level of patient access to NHS community pharmacy services is protected by providing additional payments based upon a contractor’s location.
Retail sales can be a lucrative part of the pharmacy business, so it’s essential that contractors stock their most profitable lines and the best-sellers within each product category. A robust EPoS system can play a significant role in helping pharmacists to boost their OTC offering. Software such as Positive Solutions’ Analyst EPoS, for example, has the capability to analyse existing sales data to ensure that pharmacies only stock items that are proven to sell. Information about national and regional sales trends can also help contractors ensure they have the right products available. Positive Solutions’ Stock Advisor report monitors and informs pharmacies on the best performing lines in their area, enabling businesses to maximise their OTC retail opportunity and minimises the risk of money being tied up in unwanted stock. An effective EPoS system can also help to increase revenue by managing promotional campaigns and driving sales of specific stock ranges. Analyst EPoS in particular can also speed up stock control processes as a result of the Mio Cortex, a hand held wireless scanning device that links to the Epos system, saving time associated with retailing activity.
2017 will be an uncertain time for pharmacies of all sizes, but taking steps to improve these key aspects will ensure contractors are best placed to cope with the challenges the next twelve months will bring.