#PSC10YearsTrading
Our sixth year of trading was a pivotal year for the sector. October 2016 saw the announcement of the detail behind the planned funding cuts. These amounted to £113m for the financial year ending March 2017 (a 4% reduction) with a further £95m cut announced for the following financial year. The situation was made even harder for contractors due to the late announcement of the settlement for 16/17 which meant the £113m reduction was implemented over just 4 months from December 2016, resulting in pharmacy owners seeing 12% reductions in funding for those months compared to the previous years.
Unsurprisingly, this news led to a significant cooling of the pharmacy sales market with some buyers either negotiating price reductions or even withdrawing from acquisitions completely. As a result, many pharmacy owners who were considering selling, decided to put their plans on hold and there was very little activity in the market for a period of time.
In order to protect those pharmacies that were deemed to be essential for patient access, the Department of Health introduced the Pharmacy Access Scheme (PhAS), where pharmacies located more than a mile from their nearest competitor (or 0.8 miles in a deprived area) would be protected from the worst of the funding cuts. Whilst the list of eligible pharmacies was set by the Department, there was an appeal process where contractors were able to request a review of their case where specific local circumstances, such as steep hills, made access to other pharmacies difficult. We were able to help a couple of our clients successfully overturn the decision to exclude them from the PhAS, a decision that would save them tens of thousands of pounds in additional funding cuts over the next 5 years.
At the same time as the funding cuts, the Department of Health announced some minor changes to the Market Entry Regulations to permit the ‘consolidation’ of two pharmacies to help reduce the perceived clustering of pharmacies. Whilst no financial incentive was offered to compensate pharmacy owners for closing pharmacies, the changes provided some protection against new contract applications being made following the closure. Whilst it would take two or three years for some contractors to become comfortable with the idea of merging pharmacies, this would become a valuable service we were able to offer our clients in the coming years.
There was plenty of other activity to keep up busy this year including several relocation applications for clients looking to improve their position to mitigate the effect of the cuts and further 40-hour contract relocations to 100-hour premises.
Here’s a recap of years 1 – 5
