Five Hidden Business Costs Every Pharmacist Will Recognise
The task of running a successful and profitable independent pharmacy is different in many ways to that of running any other retail business.The first major difference is the fact that the majority of the income for the average pharmacy, with the exclusion of larger high street pharmacies and supermarket based pharmacies, comes from the NHS pharmaceutical services contract. This means that a pharmacist is, more than most other businesses, at the mercy of the vagaries of government policy.
Bearing this in mind, it’s vital that pharmacists do as much as possible to maximise other sources of income, and to secure the finance needed to so without impacting on standard cash flow. Another factor necessitating investment is the increasing demand being placed on pharmacists by the general public. According to a survey of the sector carried out by management consultants A.T. Kearney, 44% of patients surveyed felt that pharmacy opening hours did not reflect their lifestyle needs, 50% said that prescription waiting times were too long and 79% were concerned that the privacy on offer during formal or informal consultations was inadequate.
Additional costs which an independent community pharmacist might therefore require funding for include the following:
Legislation passed in 2014, via the Health Care and Associated Professions (Indemnity Arrangements) Order 2014 made it compulsory for all healthcare professionals to have indemnity insurance in order to be allowed to practice. The section of the legislation dealing explicitly with pharmacists is Part 8. The cost of taking out Public Liability Insurance and Employers Liability Insurance will vary from case to case, but the temptation to keep premiums low by skimping on the amount of cover offered must be resisted. Fighting and losing a clinical negligence case which isn’t adequately covered by the scope of your insurance could, on its own, be enough to close a pharmacy down.
If you buy an existing pharmacy, or wish to alter your own in order to respond to changing client dynamics and demands, then it may be necessary to undertake a partial or full-scale refurbishment. The call for more private consultation areas detailed above, allied to government determination to establish pharmacists as a ‘ first port of call’ front line aspect of the NHS will, in particular, lead to the more successful pharmacists opting to remake themselves as multi-disciplinary walk in centres, a process which will require significant investment.
The increased demands and expectations being placed on community pharmacists, such as those detailed at the Royal Pharmaceutical Society (RPS) Annual Conference 2015 mean that pharmacists have to offer the technological infrastructure required to meet these demands. In particular, once regulatory change has taken place, this may mean a gradual switch to a system of centralised dispensing. In order to move with the changing times, pharmacies will need to offer cutting edge software and hardware systems capable of meeting client demands for increased efficiency, government calls for frontline savings and the all-round requirement for secure and reliable confidentiality.
None of the changes detailed above will have the desired effect unless fully trained and qualified staff are on hand to help deliver them. Expanding to meet increased demand will therefore involve the cost of either retraining existing staff members or taking on and training new people from scratch.
Partner Buy Outs
Expanding your business, changing the focus of delivery and taking advantage of changing trends in pharmacy may mean having to buy out any other partners running the business with you. Add this to the financial demands outlined above, all of which, with the possible exception of insurance costs, sit over and above standard day to day running costs, and it’s clear that additional finance will be required if the pharmacist involved is to maintain working cash flow.