As the cost-of-living crisis in the UK deepens, The Pharmacist will follow three pharmacies to find out how they are coping:

The small rural pharmacy

‘We’re hoping to grow our way through the problems’

Mike Hewitson, a rural pharmacy owner and superintendent pharmacist says he has significant overheads, which are making it hard to run his business as business costs increase.

If the cost of living levels continues as it is, he estimates that he will be spending an additional average £70,000 per year across his two pharmacies in Somerset.

'It's painful, I don't know how we are meant to cope without huge adjustments,' he explains.

He tells The Pharmacist that one of his largest expenditures is staffing costs, which he is increasing to take account of the national living wage increase - which rose to £12 per hour earlier this year.

‘I’ve had to pay all my staff more, so that working at a pharmacy is still appealing,’ Mr Hewitson says.

‘Working at a pharmacy involves getting lots of grief from customers, whereas working at somewhere like Lidl you can make more for doing a job which involves fever skills and less stress.

‘To compete with jobs like this I’ve increased everyone’s salaries, for no increased productivity,’ he says.

Energy costs are also a problem. According to Mr Hewitson, he now pays ‘double’ what he did 12 months ago. And much like his patients, the business is also facing increased fuel prices, which is not only impacting his own deliveries but medicine orders too.

The increase in fuel prices appears to be hitting rural towns worse than urban areas, he tells The Pharmacist. ‘There is no competition so shops can sell fuel at whatever price they like,’ Mr Hewitson suggests.

On top of this, medicine wholesalers are passing on their increased fuels costs.

‘Every drug supplier is loading fuel surcharges on everything. They need to build them into their base pricing and not use this as indemnity against rising costs.

‘We’re facing the same rising costs but unlike wholesalers we can’t pass these onto our customers,’ he says.

Instead, Mr Hewitson is considering dropping his free medicine delivery service. ‘It’s just not sustainable with the current fuel costs in rural’.

‘This will inevitably impact older and more vulnerable people,’ he explains.

However, Mr Hewitson plans to offer more services from his pharmacies to help bring in additional revenue.

‘Instead of cutting down on services we are planning on launching more, whether that be vaccinations, travel services or prescriptions.

‘We’re hoping to grow our way through the problems, unlike many multiples who seem to be cutting back on things like opening hours and reducing their services.

‘If we can outgrow the problem by offering more services than our competitions - which honestly is not difficult at the moment – then we might not have to start downsizing.’

 

The small city chain

‘Being just average at the moment doesn’t help, you have to be exceptional to survive’

Ashley Cohen, managing director at Pharm-Assist (Healthcare) a small chain of independent pharmacies says the Covid vaccine service is helping him survive the financial crisis many pharmacies are facing.

Mr Cohen said his business, which comprises of three stores in Leeds, is facing ‘the worst inflationary pressures ever’.

This includes having to pay locums over double what he paid six months ago to cover for staff isolating with Covid.

‘As a pharmacist, I want my profession to be paid well, but locum prices are spiralling out of control, and it’s just not sustainable,’ he says.

‘I understand that locums want to be paid at a rate which matches inflation, but they seem to be driving the prices up extortionately.’

He tells The Pharmacist he worries that locums are ‘biting the hand that feeds them’.

‘If locums continue to drive up the prices in this way they will be somewhat responsible if pharmacies have to merge and close. Simply put, many independents will not be able to continue paying these prices to keep their pharmacies open.’

Mr Cohen also tells The Pharmacist that he feels that the lack of uplift in remuneration is 'near criminal’ in light of the current circumstances.

PSNC has already warned contractors that the sector will not likely see any additional funding as part of the CPCF for the two remaining years of the deal.

In an exclusive interview with The Pharmacist last month, the chief executive of PSNC warned that without a funding uplift during the upcoming annual review, pharmacies in England would face more closures, reduced opening hours and many could be forced to opt-out of advanced services.

‘There isn’t any recognition of the work we did over the pandemic, let alone inflationary pressures such as utilities, fuel, energy prices and wages,’ he says.

‘The NHS continues to launch all these clinical services, which really don’t make us a lot of money when you take into account of the effort that goes into setting them up and the price of the equipment,’ he explains.

Much like Mr Hewiston, Mr Cohen is also considering discontinuing his free delivery service for which he says he currently spends upwards of £100,000 on per year.

‘I just can’t afford to do it all for free. The future of free deliveries from my pharmacy will be based on the outcome of Year Four negotiations’.

However, if he stops his free delivery service, he fears he may lose his patients to a pharmacy that can afford to deliver their medicines free of charge.

Despite the potential lack of uplift, Mr Cohen says has been able to keep his pharmacies afloat thanks to the revenue stream coming from the Covid vaccine programme.

‘All of the income we’ve earnt from vaccinations, we’ve pumped straight back into our pharmacies, just so we could survive really,’ he explains.

‘We almost run the vaccine clinics as a separate business and have managed to deliver around 50,000 vaccines in 10 months,’ he adds.

Mr Cohen says that another income stream has come from hitting New Medicine Service (NMS) targets.

‘We do our NMS consultations remotely, which helps us bring in about £6,500 per month. This is money that goes straight back into paying our staff pay rises’, he says.

While acknowledging that times are tough for businesses, Mr Cohen suggests all pharmacies need to focus on being ‘1% better than their competitors’.

He says: ‘You can’t just be average at the moment; you have to be exceptional to survive.’

Mr Cohen says his business doesn’t rely entirely on the NHS contract, and they are making an effort not to rely on the Covid vaccine prorgamme either.

‘I’ve got prison contracts; care home contracts; hospice contracts – you have to be innovative and entrepreneurial with your pharmacy to make it work right now.

‘The vaccine programme will stop, so you have to make sure you have a successful business behind that,’ he adds.

 

The medium-sized chain

‘It’s hard to know what to do’

Mimi Lau, managing director of Mr Pickford's, discusses how operating a larger pharmacy group during the cost of living crisis comes with its own challenges.

She manages 21 pharmacies across Leicester, Hampshire and Doncaster, which she says has been ‘very challenging’ because of inflationary pressures.

‘It’s hard to know what to do because you just don’t know where it’s going to go, is inflation going to plateau soon or continue to rise?’ she asks.

She said that the increase to the national living wage has ‘seriously impacted’ the group.

‘We’ve got lots of staff to pay, not only in pharmacies but in our central office. Staff in our central office require additional training and pay increases just like our pharmacy staff.

‘We’re also paying a lot more for locums at the moment as demand for cover is increasing as many community staff are leaving for primary care networks.’

In December, the National Pharmacy Association (NPA) called on local NHS teams to consider the impact that the continued recruitment of pharmacists and technicians into primary care networks (PCNs) might have on the delivery of community pharmacy services.

This comes as the number of full-time equivalent (FTE) pharmacists working in PCNs in England increased by 177% in September 2021, compared to the same month in the previous year.

In its quarterly report, published in September, NHS Digital said that 2,626 pharmacists were working in PCNs, which amounted to 1,679 more pharmacists than in September 2020.

Buying powers, which are usually reaped by larger groups, are not benefiting Ms Pickford’s pharmacy right now.

‘You can’t negotiate buying powers with the likes of fuel and gas,’ she explains. ‘We just have to buy more of it at the same price as everyone else’.

She said that her group is working at maximising NHS services over the next few months rather than looking to provide private services.

‘A lot of our pharmacies are based in quite deprived areas where private services just don’t really work. People just can't afford to pay for a service in the same way as patient can in richer areas’.

The Pharmacist will continue its series on the cost-of-living crisis facing pharmacists over the next few months. Get in touch with our reporter, Isabel Shaw, at [email protected] if you would like to share your thoughts.