Category M for "muddle"
04 February 2008
The recent adjustments to Category M are beginning to bite hard with reports of some pharmacists finding themselves with little or no money to pay themselves in January.
The situation has not been helped by the Conservative Health Spokesman, Andrew Lansley, issuing a press release stating that community pharmacists had been paid £811m more than agreed. He did not, of course, take into account the £500m retained purchase profit cap agreed with the PSNC which will ensure any excess above that figure is clawed back from pharmacy: hence the recent Category M adjustments combined with reduced practice payments.
The issue Andrew Lansley should have highlighted is not the alleged excess profit - which as noted above will be returned to Government coffers - rather the impact all this has on the ability of pharmacists to manage their finances and invest in their business sensibly.
Reimbursement ought to be fair, simple and transparent. However, at present, pharmacists have no advance view if excess profits are being made and only find out when the Department of Health, in effect, issues a big bill: around £400m this coming year.
In practice, this makes it very difficult for pharmacies to predict their financial flows as you would expect any business to do. That in turn makes it difficult to plan for investment in areas such as providing new professional services, staff training and refits.
Like any other business, in order to succeed pharmacy needs a stable financial environment free from turbulent swings and unpredictable outcomes. It needs to be able to plan sensibly for investment in premises, staff and services. It needs to be able to develop coherent business plans when seeking finance from banks or from wholesalers such as AAH's Statim Finance service.
One way forward would be for the Department of Health to provide more funding to pharmacies to provide patient services. This would create a new, more predictable income stream for pharmacies alongside the less predictable reimbursement flows from dispensing. Scotland has already made moves along this path.
However, that would mean the Department of Health committing to nationally agreed, nationally available patient services such as minor ailments, Chlamydia screening and diabetes testing. This is exactly what the PSNC, NPA and others have been calling for.
From a wholesaler perspective, the more financially robust our community pharmacy customers are the better, both for them and for us.
Mark James
Group Managing Director, AAH Pharmaceuticals Ltd
