Business Basics for Community Pharmacy

The basic understanding of a business is simple. It is based on the three line accounts:

  • Income
  • Overheads /expenditure
  • Profit

If a business does not make a profit then it makes a loss. That may not be too much of a disaster if it is temporary. But at some point the director or owner may consider that the company has no reasonable chance of trading out of the deficit and it must be closed.

Many business owners would say you are fairly stupid to create a business model that has one main customer. It is dangerous and diversification is necessary to provide a margin of safety. So I can’t understand how some community pharmacy owners have let their business be 95% NHS, but that is a different matter.

If you are faced with a planned reduction in income – such as the planned cuts in core contract then you have three choices:

  • Increase income through other means
  • Reduce overheads / expenditure
  • Accept reduced profit or even a move to a loss

For many businesses reduced profit (income for shareholders and directors) may not be acceptable and in the extreme may lead to closure.

Reducing overheads by simple efficiency savings might be possible – changing workflow for example or stripping out services that have no return on investment. Reducing staff number or trying to pay less would work, but it might have an effect on performance and morale that devastates the business in other ways.

The obvious answer is to increase income. Remember that the NHS and the Local Authorities are in financial meltdown – so asking them for more money to run services must be an outside chance. And anyway many may want to see evidence of current performance and assurance that commissioning through community pharmacy will be federated and value for money.

Your eyes must drift over your front line staff and the customers that come into the pharmacy. I am sure that you have heard that 1.2 million people go to a pharmacy for a health related issue every day and another 400,000 wander in for other reasons. Think about it. How many of these have a health related issue? Include the ones that don’t really realise it or have not really thought about it. What is that – a mouth-watering million people a day that might buy something from you if they knew what that was and you offered it sensitively and appropriately?

We are at a time when the NHS has no money – it has no resource to provide all the care that people need. While NHS England warbles on about a national self-care policy – go on community pharmacy – just do it.

Let us give the clinical community pharmacist, technicians and counter assistants the freedom to deliver and reach their potential.

The guys at realise this and  are busy creating parcels of care that can be delivered in a community pharmacy. Pop over and have a look.

You don’t need a business plan or a SWOT. It is not about culture and skill mix. It is simple a business priority – so get on and do it.

Gather all your staff in a huddle and tell them. Look guys we need to increase our income from offering more parcels of care to our customers. We need to engage more, we need to explore the gaps in the NHS, we need to deliver parcels of care, and we need to improve the outcomes for our customers. It is down to us – lets get out there and help people live healthier lives.


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