The new hub and spoke dispensing regulations involving different legal entities came into force on October 1.
The government hopes the new law will help independent pharmacies attain the efficiencies of the hub and spoke model, which was till now enjoyed by large pharmacy chains.
However, experts and other stakeholders are divided over the efficacy of this model, where the hub and the spoke happen to be different legal entities.
Shilpa Shah, chief executive officer at North East London LPC, a representative body for 375 community pharmacies across North East London, is not very hopeful that the scheme would help independent pharmacies.
She says that for independent pharmacies to get into such an arrangement would mean additional costs. With many of them already facing financial stress, not many would be keen to shell out more to get into a hub-and-spoke arrangement.
Another issue she highlighted was that if there is any error during dispensing medicines, the spoke pharmacy will have to take the entire responsibility. So, the spoke pharmacies need to be extra careful.
However, she did concede that in the long run, it may improve efficiency and the staff can focus more on patient care.
Shaheen Bhatia, who runs PS Chemist at Ilford in London, feels the government still needs to do a lot more groundwork for the plan to succeed.
She said, though the system has some benefits, “but don't forget that we would still have to be able to do acute dispensing, so we would still have to keep some stock, at the pharmacy.”
She wondered because of the low margins, “Can we really afford to pay someone to do the hub dispensing?”
Shaheen said it is not economically feasible for independent pharmacies.
“When we've dispensed it ourselves, and if there is any problem, it can be discussed instantly, rather than referring it back to the hub.” She said these practical difficulties need to be sorted out.
However, Mike Hewitson, who runs the Beaminster Pharmacy, Dorset, which has two outlets, claims getting into a hub and spoke arrangement proved beneficial.
“What would have taken me hours and hours to sign off and check can now be done in minutes.
"Having the hub means that our team can be a whole lot more productive. With the minimum wage likely to rise again this year, we can actually start to save money on the staffing bill,” he said.
Hub and spoke players optimistic
The companies that help pharmacies implement the hub and spoke model also appear to be optimistic and claim they are getting many enquiries.
Louise Laban, Sales and Marketing Director at Centred Solutions, told Pharmacy Business, “There remains a misconception that hub and spoke is costly and only an option for large pharmacy groups, leaving smaller independent pharmacies with no choice but to continue to try and provide both dispensing and services in store or to outsource dispensing to a larger group. In reality there are a range of viable options for pharmacies of all sizes.”
She said they are educating the market on the different options available, each designed to suit different pharmacy group structures, from independents to large national chains.
“Our approach is inclusive, realistic, and achievable because there truly is no one-size-fits-all solution. Whether you’re starting with two stores or operating a hundred plus, we make the transition possible with minimal disruption and maximum value."
She pointed out that the types of pharmacy hubs are also changing.
New models
“The traditional “mega” fulfilment hubs - large-scale facilities handling huge volumes, heavy automation, expensive real estate, and complex logistics - are increasingly being complemented or replaced by more modest regional dispensing hubs. These regional hubs aim to get a better balance between efficiency, responsiveness, cost, and patient service.”
Louise claimed that interest in hub and spoke has increased ever since the legislation was changed.
Centred Solutions has developed three distinct hub and spoke business models tailored to the unique demands of the UK pharmacy market. They are as follows:
Intra Group: Pharmacy groups that are under common ownership or control, which have previously operated through multiple legal entities, can now operate a hub and dispense to all the pharmacies within the group, regardless of legal entity.
Managed Service: Pharmacies with existing hubs or looking to establish a hub facility can now offer assembly services to other pharmacies outside of their own legal entity for a fee.
Joint Venture Co-operative: Pharmacies can co-operate together and establish a joint ownership co-operative hub to offer an assembly service to their own pharmacies and/or to other pharmacies.Louise said there is a significant interest in each of the models.
She claimed that by adopting a hub-and-spoke model, an average pharmacy can reduce its total dispensing volumes by around 60 percent.
She said the installation of a manual FLOWRx Hub is around one week and for an auto FLOWRx hub it is around 2 weeks.
“However, it is important to stress that success won’t come from automation alone. It requires process and behavioural change, legal certainty, operational readiness, and end-to-end support both before and after install.”
She said that transitioning to a hub-and-spoke model isn’t just about systems and technology.
“It impacts your entire operation, including workflows, regulatory compliance as well as legal compliance.”
Louise said Centred Solutions has been working closely with pharmacy law experts to ensure that every business model they implement is compliant.
She said that based on the feedback the company has received after implementing hub and spoke, all customers claimed they could save average four hours of pharmacist’s time.
Eight out of ten (83 percent) said it had saved technicians' or dispensers' time in store.
HubRX commercial director Mark Pedder said small pharmacies with a few branches can either create their own hub or have HubRx to support their dispensing assembly operation.
“Having 40-60 percent of their prescriptions received next day, bagged, labelled and checked ready for their patients, transforms their ability to take advantage of all the available NHS and private services opportunities now and in the future,” Pedder said.
He claims there is a lot of interest despite cost constraints.
“Unlike creating a hub themselves, HubRx provides a pure plug-in and use service, without long term financing or maintenance commitments.
"The combination of released capacity to deliver profit-making clinical services, having HubRx dispensing at roughly one third the cost of doing so locally and improving their buying, transforms the profitability of a pharmacy.
"Our online benefits calculator demonstrates how using our service delivers financially.”
Pedder said after the law was passed, HubRX has been getting in touch with hundreds of pharmacy owners who had showed an interest in their service over the last few years and the response has been great.
“The majority of sign-ups are with business owners who are both ambitious about a services-led pharmacy and thinking strategically mid to long term. Our initial customer independent pharmacies went live on the first possible date, October 29 and we have a really busy few months ahead with signed-up customers already scheduled.”
Changing priorities
PillTime commercial director Sophie Bartlett said, “The new law opens the door for community pharmacies to access the same efficiencies and safer technologies that large chains like Boots have long relied on through their dispensing hubs.“
"When hub and spoke was first discussed a decade ago, the goal was to ‘level the playing field’. Back then, the focus for a community pharmacy was to increase revenue by increasing its NHS dispensing volume.
"Today, the landscape has changed. Pharmacies today need to balance NHS dispensing with higher-margin services to stay profitable. Third-party hub dispensing helps make that shift possible.”
When queried about the financial challenges faced by community pharmacies, she said, “It ultimately comes down to the Hub’s commercial model, it has to genuinely work for independents. The Spoke must retain control of the patient relationship and nomination, and outsourcing must show noticeable cost efficiencies than doing the work in-house.
“The opportunity then lies in how that freed-up time is used, whether to deliver higher-margin services or strengthen operations in a commercially smart way.”
She said that if done well, hub and spoke would strengthen the business of independent pharmacies and broaden their patient reach. She claimed that after the hub and spoke was announced, PillTime had received interest from independents.
“The key issue in the sector is trust. A spoke must feel confident that the hub won’t take patient nominations or disrupt the relationship. Our focus is on partnership; not on taking over dispensing for all items. We focus on providing our pouching expertise and service.
“We want to work closely with pharmacy associations and regulators to shape the future of compliance aids in the UK.”
Government safeguards
In order to make the hub-and-spoke dispensing work, the government has come up with some guidelines that could act as guardrails.
The contractors should not subcontract ‘core dispensing activities’ (broadly the assembly or part assembly of any prescription item, which includes labelling and bagging) unless certain conditions are met.
The spoke contractor must take reasonable steps to ensure that the owner of the hub pharmacy is a fit and proper person to carry out the core dispensing functions on their behalf and do this before entering into the hub and spoke arrangements.
They should make sure that the hub owner has suitably qualified and trained staff, has appropriate indemnity cover, and a business continuity plan.
The spoke contractor should give notice to their integrated care boards (ICB) of the hub and spoke arrangements (using the NHS England-approved written notification form) not less than 28 days before the hub and spoke arrangements are intended to commence.
The contractor may commence the hub and spoke arrangements if there is no objection from the ICB within those 28 days.
The spoke contractor should ensure the core dispensing functions are to be sub-contracted under written hub and spoke arrangements with the hub pharmacy owner.
The written arrangement should provide a comprehensive statement of the responsibilities of the spoke and the hub for the core dispensing activities.
There should be a provision that the hub will assemble or part-assemble patients’ prescribed medicines, and these will be dispensed/supplied at or from the spoke.
The arrangements must not allow the hub to fulfil the order directly to the patient.
