Cash flow critical
Thereâ€™s only oneÂ undisputed issue inÂ community pharmacyÂ right now and thatâ€™s cashÂ flow, says Mukesh Lad
The consistent income fluctuations reflected in every PPA statement is a major concern to almost every contractor. While we expected the latest round of funding cuts to really bite, very few owners anticipated the enormous wrecking ball that has smashed into their cash flow. According to the PSNC, this fluctuation in income relates, not only to the Â£95m cut in 2017/18 funding, but also to the changes in Category M dispensing.
However, the situation has been further worsened by changes in the generics market. The current level of shortages in many commonly prescribed medicines really does raise questions of market manipulation.
Regardless of its cause, independent contractors are desperately seeking advice on how to weather this financial storm and look for signs of brighter days. All I can offer is a slight hope signalled by the pharmacy minister, Steve Brine MP, in his promise of â€œa fair, realistic and sustainable 2018-19 and beyondâ€.
The funding formula negotiated by the Department of Health (DH) and PSNC is due to be settled by April 2018. Letâ€™s hope Iâ€™m not misguided in my anticipation. In the meantime, pharmacy owners have a few options available to help them ride the market turbulence. Itâ€™s imperative to review every single expense every week and again, every month.
Try to hold back as many payments as possible until the spring and concentrate on key profit and loss expenditure that are drug stock and staffing costs. The generic market is currently in turmoil with daily sales calls from short-line suppliers talking about price increases on many products. Itâ€™s therefore important to know your product turnover and ensure you buy enough stock for at least 30 days. Donâ€™t forget to shop around for products when the market is so volatile.
Controlling staff costs is always a difficult issue. We need staff, especially those who are committed and great at what they do. However, we have to lower expectations of pay increases and bonuses by impressing upon them just how tough the current market is for our sector.
Itâ€™s good that they understand this financial crisis is in part due to NHS efficiency savings affecting the entire health industry. At the same time, itâ€™s important to reassure staff that these challenges will be overcome and they should remain resolute and committed in their role as things can only get better â€“ eventually. The recent announcement by Celesio of the sale of 190 pharmacies underlines the consequences of poor cash flow.
Itâ€™s a particularly sad and bitter blow for the staff involved especially with Christmas just around the corner. On a more positive note, you always have the option to increase turnover and improve the cash flowing into your business by embracing new pharmacy services such as the NHS flu vaccination programme.
This isnâ€™t just about increasing your revenue; youâ€™ll also be part of an emerging pharmacy healthcare culture that supports NHS outcomes and provides your patients and customers with much greater choice of and access to healthcare services. If youâ€™re struggling to cope with staffing to take on additional services, then think a little differently.
There are many professionally trained and accredited locum pharmacists perfectly able to support the growth of your business. Itâ€™s fundamental for the independent pharmacy sector to maximise all opportunities to deliver more advanced services including the Medicines Use Review Try to hold back as many payments as possible until the spring service and the New Medicine Service. Again, there is trained and qualified support available on a locum basis to support your responsible pharmacist in delivering greater patient care from your pharmacy in the heart of the community.
Retail sales is another significant opportunity. Christmas is your once a year opportunity to increase product sales by promoting seasonal merchandise as well as OTC products. Donâ€™t leave it to the last minute to present your merchandise attractively and make sure you have sufficient stock of key OTC medicines.
Autumn and winter are critical times of the year when the NHS is actively promoting pharmacy as the first point of call for patients needing to alleviate the symptoms of winter ailments including coughs, colds and flu.
Finally, no pharmacy can afford to ignore the additional income available through the Quality Payments Scheme. From the PSNC, through local LPCs and even full line suppliers and buying groups, thereâ€™s no shortage of information and explanation of how to achieve the quality criteria. The scheme was introduced almost a year ago and the first claim point passed back in April 2017. Thereâ€™s another chance to cashin the points that make pharmacy prizes by Friday 24 November.
Achieving additional funding is only part of the equation. Thereâ€™s also alignment with updated regulatory measures to ensure best practice and raise the quality in each and every participating pharmacy. Pharmacy owners have until Friday 8 December 2017 to achieve the criteria claim payment. Whichever way you choose to look at your professional future, donâ€™t make the mistake of believing that Santa Claus will bring more financial support from central government.
While the DH seems to have acknowledged the current cash flow crisis, a revenue increase of 15p an item is, Iâ€™m sure, a once in a lifetime offer. The only effective route out of the present situation is to trade your way through it until a semblance of normality may hopefully be restored in 2018/19. Your pharmacy business is still a valuable business as long as you pay meticulous attention to your cash flow. Review your business plan, project your cash requirements for the next six months, believe in your skills and the capability of your team to navigate you through the storm. Bon voyage!