WITH the 60-day dispensing measure confirmed in last night's Budget, pharmacy is faced with a real concern about its viability and patient safety, confirmed RSM Australia's National Director, Pharmacy, Kian Ghahramani.
The Guild has predicted that on average each pharmacy will be $177,000 worse off per annum.
The equivalent average new revenue a pharmacy needs to recoup lost dispensing fees is $505k to $590k, Ghahramani shared.
"No easy feat," he commented, adding the other side of this change is the opportunity cost of further revenue.
"With reduced foot traffic, it is not unreasonable to expect a revenue decline from the pharmacy's remaining categories.
"Reduced script dispensing also decreases the pharmacist's ability to provide services such as MedsChecks.
"The potential revenue loss will add further pressure to an already stretched industry experiencing high wage costs, due to pharmacist shortages and stressful working conditions.
"It may create upwards pressure on service charges across the board."
Some free services may well need to now attract a fee, or there could be cuts in services and opening hours, Ghahramani explained.
RSM has seen some benchmarking that puts the impact at 3-4% of revenue coming off the bottom line.
This will reduce pharmacy profitability by well over 30% if these trends are correct, Ghahramani estimated.
As this change rolls out, he says owners should focus on the "financial hygiene" of their pharmacy to minimise its impact.
Key considerations include inventory, which represents tied-up working capital.
Ask yourselves, he says, if you are carrying the right stock and what more will you need to order to meet 60-day scripts? Can you even procure the inventory you want? Can you drop any nonperforming inventory?
"Revenue per square metre will decline so ensuring you have the right lease and space is more critical than ever," Ghahramani said.
Can you bring your landlord to the table to negotiate the rent now?
"Work with your financial advisor and banker to begin a financial assessment and the policy's impact on your covenants and bottom line."
Lastly, focus on maximising alternative income from the 7CPA, Ghahramani concluded.
The above article was sent to subscribers in Pharmacy Daily's issue from 10 May 23
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