Is there a future for small independent pharmacy?
After a year like 2011 I would normally just be glad to be still upright and in business. Following on as it did from the past three to four years of cut backs and attacks from the HSE/PCRS. But we still have 2012 to look forward(?) to. More of the same would seem to be on the menu. Certainly we have had the minister say that he does not foresee any further cuts to pharmacy but he may have forgotten the switch the reference pricing that is being scheduled as I write. Perhaps he does not realise that this will be a reduction in moneys paid to community pharmacy. And reduced money means reduced viability for many pharmacies.
We have already seen some pharmacies go into receivership or administration as they have ended up in a form of negative equity. Too much was borrowed to buy them and now with reduced income they cannot meet loan repayments. The receivers for the most part are keeping these open and trading because they know that if closed they will lose any remaining value straight away. But sooner or later somebody will be taking a financial hit on these. The latest round of cuts go even deeper. And it is the smaller pharmacies that are being hit hardest. Figures from the CSO would indicate that total sales are back to 2005 levels and payment for all GMS schemes back to 2006 levels. And that is the schemes that have survived. Hands up who remembers the Psych and Hardship schemes. However volumes continue to grow. So we are doing a lot more work in 2012 but only getting paid 2006 amounts. We’re running faster to stand still.
The larger pharmacies have more scope for making cuts within their businesses. Many small pharmacies don’t have that fat to trim off. Over the last few years opening hours have been cut, there has been no replacement of departing staff and reductions in salaries paid. There is no more scope for cuts. Expenses have been cut to the bone and many have joined buying groups to get a better price but there is a limit to how much can be saved.
Just on a side note here there is one expense that we have no control over and have no choice. I refer of course to the PSI registration fee for pharmacists and pharmacies. When compared to the docs, dentists and vets we have the highest cost of registration. However when you look at the €2,500 cost of pharmacy registration it really bites home. This represents between 500 and 700 GMS fees. So as you look back on your January figures just think to yourself, “The first 500 items that I dispensed this year were to keep Ambrose in the style to which he has become accustomed.” And as I wrote previously it would seem that we are all contributing to the PSI’s fighting fund in case any of us see fit to challenge them legally at any stage. The Department of Health seem to be using pharmacy legislation as a template for regulation of the other professions. And because of this I suspect that they are hoping that somebody challenges the PSI style of regulation so that at least they can have a marker for future regulations.
So how does it stand for small independent pharmacy? Not well. Before I continue please let add this rider. What follows is purely conjecture on my part based on current behaviour of the PSI, HSE and Department of Health and tempered by 32 years working in community pharmacy.
I am of the opinion that the PSI and HSE would like to see about half of the pharmacies in the country close. From the HSE’s position the reason is clear. While there would be still be the same number of scripts to process they would only have to deal with half the number of pharmacies. Also they would all be on the lower end of the fee range so they would be saving on money paid out and numbers of staff needed. For the PSI I feel that it is slightly more ideological. I feel that they would like to see at least two pharmacists working at all times in every pharmacy. It has got to a stage now whereby many pharmacies have a S.O.P. for staff on how to act when the pharmacist is not available. He/she could be in the consultation area with a patient of heaven forbid need to go to the toilet. But to be able to pay the salary of two pharmacists you need twice the level of income and twice the level of business. The PSI are doing their part by not having any control over the numbers of new pharmacists coming on to the register. While many years ago there was a shortage of pharmacists that time has past. Now we need to see if we need to keep training 200+ pharmacists per year or could we just import them from Europe*. From a national point of view a proper manpower study of pharmacy is now well overdue. The more pharmacists the country has the lower will be their salaries. And if there is also a reduced number of pharmacies then the pharmacy owners will have more power when it comes to pushing down salaries. Ultimately this would make pharmacy less attractive as a profession and I have no doubt that we would see a lowering of the calibre of students wishing to study pharmacy.
They have also said that they would like to see a return of geographic licensing but no mention of how this would operate or be paid for. So they do their part by piling on the red tape and issuing “guidelines” with a dubious legal standing.
So I foresee things getting a lot tougher for the small independents (like me), prescription numbers probably increasing slightly but the payments still getting smaller, front of shop getting squeezed on margin and volume and loads more time spent on red tape and bureaucracy.
It’s going to be rough and tough for the next couple of years. I just hope that I’m still here to write this article next year.
*This should not be taken as any denigration of pharmacists who have qualified outside of Ireland. It is just a recognition of the numbers of them on the PSI’s register.