Questions remain over hub-and-spoke for independents
Jeremy Meader says the model, which was recently the subject of a government consultation, may not be an attractive option for independents...
The government’s proposals to amend regulations to allow all pharmacies access to third-party provided hub and spoke dispensing arrangements has provoked much debate with a wide range of views expressed. What has become apparent is that these proposals need further considered thought and not rushed through because they have highlighted fundamental questions which need to be addressed.
We need to get this right. The economic basis underpinning the community pharmacy contractualframework (CPCF) in England is that hub and spoke will be adopted at scale, thereby creating efficiencies which enable funding to shift from dispensing to the provision of more patient services. If hub and spoke is not adopted at scale, then the whole funding framework is called into question.
Hub and Spoke models have been adopted by medium and large multiples: by and large those models work well, provide additional operational capacity, and maintain service levels whilst mitigating cost, but rolling out hub and spoke to independents poses a different set of challenges.
First of all, 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 £4k per pharmacy. 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.
Secondly, who is going to invest in building these hubs? To achieve the operational scale required is a £300m-plus investment: in a cash-starved sector, who has the money to make that kind of investment? Yes, 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 CPCF.
Thirdly, 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.
Then you need to consider that there are alternative models already in existence, such as Phoenix's Golden Tote solution, which can drive efficiencies utilising existing supply chain infrastructure and which, importantly, retain the patient-pharmacy connection.
The government’s consultation paper throws up a whole host of unanswered questions, including:
- How do hub and spoke models work efficiently when you have 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.
- Unless carefully implemented hub and spoke could lead to unintended consequences with providers adopting a “hub-to-patient through the mail” service thereby bypassing bricks and mortar community pharmacy. That would drive a coach and horse through the funding foundations of CPCF and undermine government policy to encourage more patient service provision at local community pharmacies. In turn, taking the strain off other parts of the NHS and improving patient outcomes through improved chronic condition management and wellbeing support.
- What is the IT solution to enable dispensing doctors access to hub and spoke solutions?
- What about original pack dispensing?
In addition, the proposals do not address issues such as changes to supervision regulation and the current workforce crisis 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.
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. Whilst the pieces of the jigsaw remain fragmented, there is no clear picture for the future of community pharmacy in England; its unique contribution to the NHS family of providers alongside GPs and A&E; or how one particular efficiency lever impacts on the economic ecosystem and sustainability of the sector overall.
As matters stand, the current hub-and-spoke proposals leave a lot of questions unanswered.
Jeremy Meader is the managing director of Numark.
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