Hub and Spoke Consultation: Time and Technology Have Moved On

“The second long awaited consultation on proposed changes to UK legislation to allow all community pharmacies to access hub and spoke dispensing is finally underway.

Six years on from the original consultation, there remains speculation within the pharmacy market that the proposals may allow larger chains with automated hubs to charge smaller chains and independent pharmacies for “prescription assembly services” leading to an erosion of profits that cannot be recouped by any amount of patient facing services.

Unfortunately the impact assessment into hub and spoke published by the Department of Health and Social Care (DoH), alongside the new consultation, does little to dispel this myth and suggests the cost of a hub is beyond all but the largest of pharmacies. This in fact could not be further from the truth and had the impact assessment looked at hub and spoke models that are being used today by pharmacies other than what appears to be the big players they would have come to a very different conclusion.

By its own admittance the impact assessment has focussed on the large scale hubs that have been in operation for some time as well as responses and figures from the original 2016 consultation. But time and technology move on and the reality today is very different from the picture painted in the DoH assessment.

Other hub and spoke solutions exist

The DoH impact assessment claims it is only aware of six pharmacy businesses out of 3,000 across the whole sector who are using automation. We know this number is far higher and the six referred to appear to be the larger groups who have established large central hubs using multi-million pound technology. The figure does not include other hub solutions that are currently available and in operation across the market today. At Centred Solutions we are already working with six pharmacy groups representing hundreds of pharmacy spokes who have implemented or are in the process of implementing our scalable and affordable repeat dispensing hub and spoke dispensing technology. These are the early adopters who are already demonstrating that hub and spoke dispensing technology is an option for pharmacies of all sizes, including smaller groups with as few as three branches.

Perhaps most concerning are the figures and formulas used as a baseline throughout the assessment. We’re told in the assessment that pharmacy businesses processing less than 250,000 items per week, 12m per year, may lack the scale to invest in their own hub and could instead benefit from proposals to outsource hub operations. Such a statement shows that only one hub solution was considered as part of the assessment and it is not an accurate reflection of the market we know today. There are hubs already established that process far fewer items than 250,000 per week. We are already working with several pharmacies who have installed automation for significantly lower volumes and who are now seeing efficiencies in terms of costs, increased staff satisfaction and the ability to provide revenue generating services without increasing staffing levels.

There are scalable solutions on the market that are available and already in use. There are of course lots of factors to take into account, but we think a starting point for hub and spoke requires a capital investment of under £100,000 for a group of 3 plus pharmacies with a combined total of 45,000 items of month.  Space will always be a consideration too of course but you could start your hub and spoke journey with around 10 square metres of space.

This technology can then be scaled up for larger groups. So for a group of say 18 pharmacies doing 120,000 items per month you’d be looking at a capital investment of under £500,000. This investment would provide capacity to do double the volume in a single shift. The scaled up solution would obviously require additional space and you would be looking at around 40 square metres as your starting point.

The advantage of setting up your own hub

The assessment rightly points out that as hub pharmacies are likely to have a higher volume of dispensing, they may be able to negotiate better purchasing terms. However, it goes on to say that even where hub pharmacies do secure a better price due to their size, there is no guarantee that the savings will be passed on to the spoke pharmacies, and indeed, it may be the case that they could charge a slightly higher price as a way of recouping the service costs of the hub. This is exactly why it could be advantageous to establish your own hub as a smaller group of pharmacies or independents. Outsourcing and using fewer, larger scale hubs will result in charges for independent and smaller multiple pharmacies and there is the potential that the benefits of volume buying will not be passed on to spoke pharmacies. The more hubs the healthier the market. As the assessment says, under new legislation, hub and spoke dispensing may be possible between two or more pharmacies on a local level without any automation, with assembly or part dispensing carried out manually. We would go one step further and suggest hub and spoke dispensing would be possible between a few higher volume pharmacies with the option to automate.

Affordable hub and spoke technology and business models do exist for all pharmacies allowing for a higher the degree of competition and greater share of benefits for spoke pharmacies. Statements that only 40% of items can go through a pharmacy hub and set up costs for spoke pharmacies will cost £4,000 once again appear to have been based on large scale automated hub technology. Affordable and scalable technology designed specifically for smaller independent pharmacies or groups of pharmacies have not been taken into account here. These smaller solutions can and do already process 70% of items through the hub. There are also hub solutions for spoke pharmacies available that cost hundreds of pounds, not thousands. In addition, cost estimates quoted in the DoH Impact assessment, that technology for dispensing hubs costs in the order of £1-2M are not based on the technology that is available now. Hub dispensing technology is readily available for less than £100,000.

Easy to implement

The lack of varied hub and spoke models considered as part of the assessment also impacts on the perception of what implementing such a model means in terms of a change programme. We are told there would need to be significant staff hours to manage change and training in the spoke pharmacies and a requirement to get people qualified and working at the hub. Whilst there would undoubtedly be a change to workflows and ways of working, this does not require a significant change or training programme. Centred Solutions technology is so intuitive that staff can be trained in half a day.  Pharmacy staff are primarily required for managing prescription data and verification.

There are suggestions some spoke pharmacies might also require a change to their Patient Medication Record (PMR) system in order to be compatible with the hub. This is not necessarily the case, Centred Solutions automated hub and spoke technology can be integrated with all main PMR providers. The hotly contested topic of data sharing also rears its head again with a reminder that in the 2016 consultation many respondents raised concerns around patient consent and data protection across different legal entities. Since 2016, Centred Solutions has developed hub and spoke repeat dispensing technology which simply plugs straight into the pharmacy PMR. This means patient sensitive data is only transferred between Centred Solutions software and the PMR provider. This data is 128 bit encrypted and is never shared with any other third parties.

The impact assessment makes some great observations around improving patient safety and freeing up time for clinical services. However, we find it concerning that the assessment has only considered the large scale hub and spoke model which requires significant investment. This is totally unachievable by the majority of pharmacies. As a result of this narrow view we believe the costs, statistics and statements made throughout the assessment are not reflective of the technology and business models available and already in use today. We’ll be responding to the consultation along these lines and would welcome the opportunity to speak to the authors of the assessment about the other hub and spoke business models that are already available and in use in the UK market.”