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Three quarters of independent pharmacies could face closure by 2024, study finds


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By Isabel Shaw

04 Sep 2020

Almost three quarters of independent pharmacies in England could be forced to close by 2024 if current contractual arrangements remain unchanged, a new study has predicted.

The analysis commissioned by the National Pharmacy Association found the sector was underfunded by £497m – with 72% of pharmacies forecast to be loss-making within four years. It estimated that the average pharmacy will be losing £43k a year by 2024.

‘Persistent financial deficits of this scale will likely result in businesses having insufficient cash to continue trading and a contraction of the network,’ the report said.

‘No industry is likely to be sustainable with so many operators in deficit,’ it added.

The report also predicted that around a third (28 – 38%) of the network is already in deficit, with 52% of owners planning to sell their business.

‘Lack of incentives’

The study, which was carried out by Ernst and Young (EY), examined 105 pharmacies and looked at the impact of the current funding, policy and economic environment.  

It found that despite NHS England’s attempts to expand the role of pharmacy by encouraging contractors to open for longer and take on more commissioned services to relieve pressure on GPs, there were very little incentives for pharmacies to do so.

According to the study, 87% of pharmacy contractors cannot afford to take on the extra staff needed to deliver commissioned services. Many contractors also expressed concerns that service uptake was very low in pharmacies and subsequently brought in little revenue.

The study also found that pharmacies with above-average opening hours are twice as likely to be in financial deficit than those who open normal hours.

‘Reduced access to healthcare’

The report concluded that without intervention from NHS England ‘only the financially strongest pharmacies will survive’.

Many pharmacies closing would have significant implications for patients access to local healthcare services, it said, as well as hindering NHS England’s ambition for community pharmacy and  increasing the burden on other healthcare providers.

EY suggested that NHS England set prices and funding at a level that supports its strategic priorities and puts the right incentives into the system.

The report said that prices based on a ‘fully-loaded cost with reasonable certainty over future funding’ would help to incentivise investment in capacity and support pharmacies to sustainably offer services.

‘Precarious situation’

Andrew Lane, NPA Chair, said: ‘This report from EY shows the precarious situation facing pharmacies up and down the country.

‘Community pharmacies act as a vital lifeline in communities across the land – and there is a very real threat they could close unless ministers act now.’

He added: ‘Health Secretary Matt Hancock describes community pharmacy as a critical part of the NHS family. He has also said that, if the Government asks pharmacies to offer more services, they need to be paid properly for those services.

‘Those words urgently need to be backed by further investment to underpin viability, change and improvement in our sector.’

Jackie Doyle-Price MP, Chair of the All-Party Pharmacy Group, said: ‘Pharmacies are at a crossroads – and must be given the funding they need to look after the nation’s health.

‘The pandemic has highlighted what a pivotal role they played and continue to play in delivering frontline care when many doctor surgeries were closed. Going forward if the NHS is to deliver a truly 24-hour seven day a week service, then pharmacies must be at the forefront of that.’

‘Urgent funding needed’

Simon Dukes, PSNC Chief Executive welcomed the report and said that financial pressures on community pharmacy contractors are ‘increasingly treacherous’.

He added: ‘We concur with their finding that the position of the NHS as a monopsony purchaser is dangerous for community pharmacy: the sector has been feeling the consequences of only having one customer for the past decade.

‘We also agree that community pharmacies are in an incredibly difficult financial situation now, with many of them already making a loss and the situation set to worsen in the next few years.

‘This is in line with PSNC’s recent letter to HM Government arguing for an uplift to the Community Pharmacy Contractual Framework (CPCF): this is critical to ensure that pharmacies can continue to deliver what the NHS needs them to both through the pandemic and in the post-Covid world.’

Claire Anderson, Chair of the English Pharmacy Board, said: ‘During Covid-19, pharmacy has played a key role in supporting patient care by remaining open to the public throughout the pandemic. Our profession has demonstrated incredible resilience in facing up to the difficulties presented by the crisis.

‘With upcoming winter pressures and a potential second-wave, it’s more important than ever for the government to back pharmacy financially and make the most of our profession. The increase in demand for our services means many community pharmacies are facing financial insecurity. They deserve urgent funding support.’


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