Numark MD: Hub and spoke may not be attractive option for independents

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Numark MD: Hub and spoke may not be attractive option for independents

Numark managing director Jeremy Meader has warned independents that hub and spoke presents them significant upfront costs and uncertain future income.

Meader said the models used by medium and large multiples have "by and large" worked well, providing additional operational capacity and allowing them to maintain service levels while mitigating cost.

However, in a blog for Independent Community Pharmacist, he said hub and spoke "poses a different set of challenges" for independents, including set-up costs that could prove to be prohibitive.

A consultation on two models – one where a patient’s prescription is assembled by the hub and sent back to the spoke to make the supply, the other where the hub supplies the prescription directly to the patient – closed this month.

"It requires independent pharmacies to make an upfront investment in IT and training to gear up for a new dispensing model. The government estimates that will be around £4,000 per pharmacy," he said.

"Given pharmacy funding austerity, 30-year high inflation and workforce wage pressures pharmacies are already struggling to remain commercially viable. So where is this additional investment going to come from? Not from government it would appear."

Questioning who will invest in building the hubs, Meader suggested more than £300m will be needed "to achieve the operational scale."

"Some have announced their intention to build a regional hub here and there, but that is nowhere near the ‘at-scale’ infrastructure envisaged by the community pharmacy contractual framework," he said.

"Independent pharmacists may opt to struggle on with current ways of working, not least because future income streams for patient service provision are unclear and uncertain. Therefore, what is the incentive for change? So, upfront cost with uncertain future income. Not an attractive offer."

He warned hub and spoke could lead to "providers adopting a hub-to-patient through the mail," taking bricks-and-mortar pharmacies out of the equation in the process, if the proposals are rushed through without proper consideration. Meader also questioned whether the models would work efficiently when there are manufacturer solus and reduced wholesale arrangements.

"Presumably, pharmacies will still need to source from multiple hubs which surely is economically inefficient and contrary to the NHS’ carbon net zero commitment," he said.

He asked how IT will enable dispensing doctors to access hub and spoke and what impact the model will have on original pack dispensing as well as changes to supervision regulation and workforce issues "both of which are hard-wired into any future model focused on the provision of patient services." 

"Hub and spoke is proposed in the absence of a clear 10-year plan how funding will move from dispensing to the provision of patient services and the impact that will have on Category M adjustments," he said.

"Hub and spoke is just one piece of a wider policy and service delivery jigsaw. Its merits and impact can only be understood in terms of the bigger picture."

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