Too slow Gordon, this is already being discussed on another thread.
Must have missed that Sparky. Thanks I will have a look.
Lets be honest. Specials should have a price formula to avoid capitalist exploitation by the greedy few.
Certainly £1500.00 for a £2.00 moisturiser in one transaction is much more profit than the company would pay a pharmacist for a week's gruelling work with 200 to 300 miles of daily driving to next location thrown in.
That's going to be the least of their problems for the multiples.
With all the consolidation the chains have been carrying out they have played into the hands of the NHS! Previously community was fairly fragmented like the doctors and nurses this made it difficult for NHS to negotiate payments for contractors in the past i.e. prior to 2000. However, given the fact that through consolidation only three chains are left with a handful of mini-chains and independents; pharmacy is an oligopoly entirely dependent on NHS as a source of revenue. Couple that with the fact that traditional skills such as compounding and extemporaneous preparation are not needed the tables have turned and NHS will squeeze the margin to the breaking point in pharmacy!
NHS will continue to reduce reimbursement and the multiples may have profited on this occasion however this activity is not sustainable since such loops holes will be closed down eventually. This sector is a sinking ship and is heading only one way down. In the long term, the multiples will lose spectacularly.
An example of the long-term effects of decreasing profit margin is Carillion. Carillion operated on tiny profit margin and eventually, it collapsed under its sheer weight because it couldn't service its debt or pay its worker. Carillion often did not get paid on time or less to what was agreed this is a common issue for community pharmacy a sector with no price elasticity is not a good business to be in.
Unfortunately, I have no idea when this will happen but given the fact that the profit margin is shrinking at a fast rate it's not a good sign. Will the NHS care? Not really because it will lead to the restructuring of the sector giving rise to mail order pharmacy.
Last edited by jzd4rma; 4th, February 2018, 12:01 PM.
So it doesn't matter if there are only 3 contractors or indeed 11,000; they are obliged to accept whatever the Committee negotiates.
Also since contract restriction, the Gov't can always threaten to return to the pre 1987 freedom of entry status.
I am sure that the best negotiators get employed (there's enough money with the multiples to ensure that) and that they do their level best. But when someone has a gun pointed at your head it's best to call him "Sir" until you can talk him into putting it down. Yes, even if you are a QC with 30 years negotiating experience.
And then get on with your life.
I don't disagree with what you're saying but all I am saying is that through consolidation the sector has made efficiency which in private sector should lead to more profit but given the fact that community pharmacy is dependant on NHS revenue completely the NHS has clawed back profit. In the past, the operation of the system was less transparent because it was dominated by independent and the performance of not all independents was equal. This made it difficult for the NHS to determine a minimum fee leading to more generous payments. These days given the dominance of multiples the NHS knows it can pay a lot less because of the all back-end efficiency of multiples. Sadly all the management of pharmacy are recruited are non-pharmacists these days if they knew this I think most would have second thoughts about working in this sector.
Last edited by jzd4rma; 5th, February 2018, 09:11 AM.
I seem to recall that the last cost of service enquiry found that multiples cost significantly more than independents to deliver the supply service. Many more mouths to feed.
Hi Viru hope your well.
I'm not saying these companies are more cost effective simply multiples made more money in the past then an independent due to bulk buying which afforded them more discount. I was explained about this concept in 2007 when I worked for a local chain but I was told even back then the government had cottoned on to this and introduced Category M.
Hi jzd4rma. Very well thank you. Hope you are the same. I see your point.
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