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Five ways to drive revenue in your pharmacy
Read time: 4 mins Added date: 06/09/2024
Sanjay Patel is a Director and Management Consultant at Innovate Pharma Services, which provides professional advice and consultancy services to pharmacy and healthcare companies across the UK. Here are five ways community pharmacies can boost revenues in the current environment.
There’s no doubt that the UK pharmacy sector is under enormous pressure and ripe for reform.
Much of the sector’s issues have been blamed on the fact that the global sum – which makes up a significant proportion of community pharmacy funding – has been frozen for eight years. But that’s not the full picture.
Yes, prescriptions are often dispensed at a loss, but pharmacy is not the only business model where the core offer is low margin or even loss making.
The truth is, we can’t fix the problems in pharmacy by cutting costs. Instead, we must be forward thinking and invest for the future.
Dispensing still drives demand
Dispensing prescriptions is still most pharmacies’ core business.
The trouble is, the payment per prescription has fallen in real terms, while pharmacies’ costs have gone up.
Though it is less profitable than it has ever been, dispensing still has great value as a driver of footfall, which in turn creates opportunities for offering more services and additional payments. And prescription volumes continue to rise; ten years ago, around 950 million prescriptions were dispensed, while today it is more like 1.1 billion.
In the same period, there has been a 5% decrease in the number of pharmacies, which means more patients coming through every pharmacy door.
The upskilling opportunity
At a time when workforce costs keep going up, there is a definite opportunity to upskill. In my view, pharmacies should be aiming to upskill all colleagues to be at least dispensers, and more than half the team should be technicians and checkers. The more skills colleagues have, the greater value they can add to a business. This will enable your pharmacists to get out of the dispensary, interacting with customers and providing extra care – and extra care means extra income.
New legislation has been passed that will soon give pharmacy technicians extra powers to provide more services, such as dispensing prescription-only medicines like contraception and antibiotics, which will generate more efficiencies. And pharmacies should also be thinking about employing independent prescribers; pharmacists who have gained an extra qualification which means they can write prescriptions in a particular clinical area.
As of March 2024, only 27% of pharmacists were also independent prescribers. But due to educational reform, by September 2026 all new pharmacists will be graduating as prescribers.
There is currently a trial ongoing where 200 pharmacies have been given an NHS contract for independent prescribing, which is worth around £50,000 a year of income. Although currently the cost of running the service is high in the longer term it is hoped that a successful pilot will lead to better terms.
These contracts are based on a particular local clinical need, such as blood pressure, female care, minor illnesses or respiratory disease, and if a pharmacy agrees to manage the care of a cohort of patients from a local GP surgery. If these trials are a success, these contracts could become the mainstay of some pharmacies’ revenues.
Healthcare Confidence Index
After two years of falling confidence, pharmacists’ outlook bounced back in 2023 – with three in five pharmacists expect to grow profits in the year ahead.
Perfecting your procurement
Drug margins are decreasing, which is a problem that will have to be addressed by Government.
While funding has been frozen, the cost of drugs and the volumes being prescribed have been increasing. So, how do you purchase them?
Many pharmacies agree rebate deals with drug company representatives, but in reality, the deals they are getting might not be as great as is claimed. But there are web-based automated systems that optimise procurement by scanning a range of suppliers to get the best deals available.
You can’t change the government funding formula, but you can boost your margins by purchasing correctly. At the same time, systems like these can help ensure you can secure supplies of drugs at a time when shortages are ever more common.
If you can’t supply the drugs that a patient relies on, they will go elsewhere.
Pharmacy First in focus
The Government believes that pharmacists have the potential to help fix a broken NHS, and Pharmacy First, which enables patients to be referred to a community pharmacy for minor illnesses is a core part of that strategy.
It’s fair to say that the £645m scheme has had a bumpy start, but it remains a massive opportunity for pharmacies, which can earn a £15 fee for every consultation, as well as a £1,000 bonus every time they hit a monthly target. If you deliver this service well, the average pharmacy could make £20,000 to £30,000 a year in extra income, and some will even make more. This will help offset some of the recent cuts and lack of investment in the sector.
To be successful, you need to have consultation rooms at your premises and every member of the team must be trained on how to promote the service. Not only that, but you must have a good relationship with your local GP to generate a strong pipeline of patient referrals.
In my experience, it can require some persistence to get that off the ground, but Pharmacy First can be mutually beneficial for both pharmacies and surgeries, taking potentially hundreds of appointments off their workload every month and freeing up much needed capacity.
Go with the (lateral) flow
Providing Covid vaccinations may not be as popular now as it was during the height of the pandemic, but it is still a worthwhile endeavour.
The patient cohort is now much smaller and eligibility for free jabs is now similar to what it is for the flu; people aged 65 years and over, those in care homes and anyone who has an at-risk health condition or treatment that means they have a weakened immune system.
It’s a two-year contract, including an autumn jab and spring booster, which can also be combined with patients’ flu jabs. The highest risk patients are also eligible for free lateral flow tests.
Providing these services is another way to drive footfall and customer loyalty by providing total care, and every appointment is an opportunity to have a wider conversation about a patient’s needs. If you’re not doing it, you are driving your patients to another pharmacy.