Hub & Spoke: An unexpected journey

Earlier this week saw the great and the good of the pharmacy world gather again at Birmingham’s NEC for Pharmacy Show. Those in attendance on the Sunday may have seen our non-executive director Mike Hewitson speak about the hub and spoke opportunity and what it can help independents to achieve. For those that missed it, we’ve summarised Mike’s session:

Earlier in 2021 the government committed to changing the law on hub and spoke as part of the Queen’s speech and engagement sessions have been on-going throughout the year looking at different aspects of hub and spoke implementation. We know that the hub and spoke opportunity is no longer a question of ‘if’ but very much of ‘how’. The stated intention is to create a level playing field for independents but this must be level for all.

We know from our own research that some of the major challenges for independents centre around time, lack of time to innovate and focus on emerging NHS services, lack of capacity due to growing Rx volumes which require more staff and space. This is coupled with being stuck with a fixed dispensing revenue contract and the constant need to chase buying margin.

So, as many multiples free up their time with new technologies what does the future hold for independents? And what is the solution?

Is technology the answer?

The pharmacy industry is not short of new technologies, but how much of this innovation is realistically accessible for independents and how much is really only a benefit to large chains with significant access to capital is a vital question.

One example is store and pick robots. These can alleviate some stock handling and space issues, but these require capital investment, maintenance, space and often staff changes, not always things that are realistic to smaller independents.

Likewise automated collection points reduce staff time dealing with collections – improve customer service and reduce non-pharmacist hand overs but again, require capital investment to implement.

There are also other great efficiency improvements such as PMR dispensing workflow improvements and tote-based product- assembly solutions which are all making positive changes.

These may all provide some incremental improvement and possibly part of the picture but do these solutions alone address the main issue of releasing pharmacists’ capacity in a significant and profitable way? Or is it a more transformative step that is required for independents to implement service-based revenue streams?

We know that there is a hunger for hub and spoke from independents, our recent research tells us that 60% of independents are interested in accessing it. The uptake of new technologies from independents is also gathering pace as many look to secure the future of a viable independent presence in the community. With primary legislation in place and the Department for Health and Social Care’s review complete it’s now a case of ‘how’ rather than ‘if’ for independent access to hub and spoke. The big question now is why the delay? As the multiples are forging ahead with their hub and spoke plans why can’t independents do the same? What’s the hold-up for that much promised level playing field?

What does hub and spoke really look like for independents?

What HubRx is doing is taking some of that transformative technology and making it available to independents with between one and 25 branches without that capital investment requirement.

Take for example the very latest prescription assembly technology from Knapp. This technology uses the latest in barcode and optical scanning technology to offer improved assembly accuracy at large enough capacities to future proof independents if growth increases their assembly volumes. What it doesn’t do is take that essential dispensing responsibility or the patient relationship away from the community pharmacy. Sealed and labelled bags return to the spoke pharmacy for handover by the patient’s preferred method.

HubRx’s business model is that of drug cost plus provision of service which equates to roughly half the current cost of in-pharmacy assembly. The company isn’t a wholesaler or a big buying group selling drugs to pharmacies and it’s transparent in its reporting of drug costs.  It is this breaking of the vested interest that has convinced me that hub and spoke can be of real benefit to independent pharmacy. As a pharmacist I will be able to quickly determine that average basket margins are significantly improved working with HubRx. If over time that does not transpire, pharmacists can leave the HubRx service, it’s simple really.

Conclusion

For me as a contractor it has been quite a journey over the last few years, from initial scepticism that hub and spoke was a suitable solution for independents to one where I think the radically different approach that HubRx are taking is the way forward for my pharmacy business.

In conjunction with customer-facing technology improvements, I need HubRx in 2022 to be my partner in order to deliver:

  • Capacity – for me and my pharmacists to identify and deliver new profitable private and NHS services as they emerge. We are growing our patient-base and having a scalable ability to dispense without adding staff gives me the continuing trusted relationship to offer these services.
  • Space – With 70% of my dispensing handled by HubRx I will carry less stock, release capitol and dispensary space and am in the middle of a transformation re-modelling of my pharmacies to a professional, modern, clinical space that promotes the provision and delivery of services.
  • Profitability – whilst the move into services is an obvious one for me we are in a transitional phase, especially with NHS commissioned services. Core NHS dispensing has to be profitable and the combination of at-scale low-cost assembly and maximised at-scale purchasing by HubRx will deliver this for me.

The team is waiting to hear from you, whether you’re one of that 60% already interested in hub and spoke or if, like I was, you’re more sceptical about how it can work for independents we’d love to have an open and honest conversation.

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