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If I want to remain relevant and continue to serve my community, I need to become clinical.Hub and spoke is the biggest driver for change I’ve seen in many years, says Terry Maguire…

The introduction of clinical services by the Department of Health has been glacial but it is now possible to generate decent profit from government-funded clinical services, such as urinary tract infection, emergency hormonal contraception, sore throat, smoking cessation, and so on.

In addition, the collapses of our health service, and less access to doctors and hospitals, offers significant opportunities for private pharmacy services; travel vaccination, weight loss, and ear wax removal are the most lucrative but there are many more.

Younger independent contractors, especially those with low dispensing pharmacies, are already mining these opportunities, generating decent income, building profitable businesses and adding value back to the communities they serve.

Every pharmacy business is experiencing a sharp increase in staff costs driven by the market, minimum wage and national insurance contributions. Staff also become a rate-limiting step claiming, justifiable so, that workload and professional responsibilities to ensure safe dispensing, limits involvement in service delivery. So, how do you do this in a busy dispensing practice?  

Technology solutions

The application of cutting-edge IT and robotics always promised a solution but until now it has never been realised. Investment in a standalone pharmacy robot, for example, has not, to my knowledge, allowed any pharmacy to downsize its workforce or extend its non-dispensing activities.

It just seems to have grown the dispensing aspect of the business; more prescriptions, more monitored dosage systems and more time ordering and trying to find prescriptions. But hub and spoke is different.

Hub and spoke 

HubRx and Pharmacy+Health in Leeds offers a vision of how independent contractors might use IT and robotics to efficiently streamline medicine supply, allowing the time and flexibility to take on more lucrative services at scale without increased cost of additional staff.

MediCare Group in Northern Ireland is investing in a similar operation for its 52 pharmacies. This is a bold investment with significant risk but I believe it is the right one at the right time.

MediCare will use the FlowRx technology, building a state-of-the-art Hub in Belfast, that will process 3,000 prescription packs an hour. I calculate that the proposed MediCare Hub will have at least twice the capacity needed to serve its own pharmacies.

This means that in the long term, like HubRx in Leeds, MediCare could offer the service to other contractors for a fee. I must emphasise that MediCare has not said this but it would be transformational for the community pharmacy network in Northern Ireland if the company saw us as part of the plan.

In Leeds, the fee charged by the hub for assembling and returning the bagged medicines is 50p per item less than half the current dispensing fee. Five thousand items a month assembled through this system would cost £2,500 in fees but it would attract £7,000 in dispensing fees, so £4,500 still going to the business and more free time to deliver clinical activities.

Risks

I accept that such a fundamental change to pharmacies’ day-to-day operations and practice will likely bring unintended consequences and these will need to be considered, addressed and mitigated.

Hub and Spoke puts an operational layer between contractors and wholesalers and I’m unclear yet what that will mean. Becoming a spoke to a hub will certainly reduce stockholding; a direct benefit to the business initially, but what about margins on medicines supplied in the hub?

I would imagine that those who own and run hubs will be operating on the scale of a small wholesaler and, therefore, benefit significantly from the margin on medicines.

Will the hub share this with the spokes? With greater automation and efficiency, will the Department of Health eventually decide to cut dispensing fees?

There is a more fundamental question. Could this model spell the demise of the community pharmacy? If Amazon, for example, were to adopt the hub and spoke model, they could very quickly consume businesses and run a supply chain that would not need any physical community pharmacies.

Existing community pharmacies would become virtual postcodes in a hub and spoke warehouse and patients would simply get their medicines delivered to their door. This would require legislation change but then that was done for hub and spoke development when it suited the government. 

Progress marches forward and now that hub and spoke is with us and may become available to independents, in Leeds at least, it will be even more urgent that pharmacies start investing in a clinical future.

Otherwise, we might soon find that the supply service we have held on to so dearly over the years will no longer sustain our businesses. Hub and spoke is the biggest driver for change I have seen in many years.

If I want to remain relevant and continue to serve my community, I need to become clinical. And to do this, I need become more efficient.

Terry Maguire is a leading pharmacist in Northern Ireland.