Dispensing practices are forced to cut staff

Practices under pressure to cut costs as accountants confirm that drug profit fell by 29 per cent in 2007/8.

Dr David Baker
Dr David Baker

Dispensing practices are being forced to lay off staff as drug profits fall, say accountants.

Figures for 2007/8 show dispensing practices have already had to reduce staff costs to maintain net profits.

The average profit made from drugs dropped by 29 per cent from £45,949 in 2006/7 to £32,948 in 2007/8, according to Paul Kendall, from specialist medical accountants Dodd & Co.

The firm blames the drop in profits on the recent reclassification of category M drugs, the withdrawal of a VAT allowance and the offer of a reduction in discounts by the drug wholesalers.

Mr Kendall said the only way to maintain profits and keep businesses viable was to cut practice expenses, most of which relate to staff.

'There was a total drop in profit of only £5,489 per partner in 2008, which, given the drop of £13,001 in the gross profit from drugs, is less than the reduction that would have been expected. Most practices have achieved this position by reducing practice expenses.'

Dr David Baker, chief executive of the Dispensing Doctors' Association, said it was a tough decision whether to try to maintain profits by losing the very staff that help to generate them.

Campaigning against the pharmacy White Paper 'Building on Strengths' at the Liberal Democrat conference in Bournemouth, Dr Baker said dispensing would be 'finished in a few years anyway' if DoH proposals went ahead.

The White Paper proposes changes to the distance allowed between pharmacies and dispensing practices, and the transfer of workload from GPs to pharmacists.

tom.ireland@haymarket.com

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