Concerns about the rate of pay for pharmacists are creating a crisis of biblical proportions for community pharmacy. Bruce Annabel and Mal Scrymgeour investigate
Jesus was a carpenter. If Jesus was working as a carpenter in Australia today, he could reasonably expect an hourly rate of $38.15* per hour.
If he was a foreman and, given his pedigree and his history of producing miracles, we could safely assume that he would be at this level; he would be earning $52.50** per hour.
Contrast those hourly rates with the hourly rates of pharmacists—which can be as low $29.93 an hour (+ penalty rates), less for interns, in some discount pharmacy businesses and many others. Pharmacists are often expected to work miracles in their own way—but they are paid less than a carpenter.
Given the educational differences and the responsibilities between the two careers, it seems Jesus made the smart career choice. He would have more pay, less stress and less responsibility.
Award pay rates have been an issue in community pharmacy for many years. We realise that we might be crucified for writing the words we have in the rest of this paragraph, but we’re famous for saying what we think, and that isn’t about to change.
Our firm view is that inaction to the point of near silence from the peak pharmacy bodies has made a significant contribution to this problem. These bodies have effectively played the role of Judas—through their inaction they have betrayed the profession. It’s simply not good enough.
The difficult questions
Pharmacists should be asking very direct and difficult questions of their peak bodies and Fair Work Australia. Pharmacists pay fees to peak bodies for ‘advice, guidance and protection’ and these bodies have not provided that.
We are aware that the best pharmacy graduates are going to hospital pharmacy positions where they are paid $9 more per hour*** on graduation, or if you like, nearly $19,000 more per annum. As a bonus, these pharmacists do a lot more clinical work, it’s more pleasing work, they work Monday to Friday with regular hours, get meal breaks and they also get paid a lot more to do it. Contrast that with community pharmacy where, often, pharmacists live out the back and count pills and put labels on bottles.
There is increased pressure on community pharmacy incomes where, despite benefitting from the ‘Black Swan’ 7CPA outcome, owners find themselves in the ‘pain amplifier’, working hard to constrain every cost they can. On the other hand, they are expecting more from their pharmacists—to do more vaccinations, sleep tests, clinical checks—as they build income.
Only the most optimistic would expect a pharmacist to do a lot more and then pay a lot less. It isn’t likely to be a recipe for success, but it’s where the profession and community pharmacy industry is headed.
An award structure for yesterday
The current award structure doesn’t sufficiently recognise the skill sets, potential resource and responsibilities of pharmacists nor the realities of today’s long trading hours. Although, award rates do suit hard discounters to maintain their lower cost structures and competitive model.
The employed pharmacists union, the PPA, has been campaigning for some years to have pharmacists’ award rates lifted. In 2019/20 the base rate increased by 8% ($27.19 to $29.41) with the current rate a very modest $29.93 in return for a four-year degree, internship and associated responsibilities. Jesus wouldn’t work for that rate.
The hourly rate moves up for senior pharmacists ending at $37.38 for a pharmacist manager (permanent employees working 8am–7pm Monday to Friday), hardly a reflection of their responsibilities. But, huge penalty rate loadings of 125% and up to 200% outside these hours/days significantly increases an employers’ wage costs over the week including the extended hours.
Our experiences show most traditional community pharmacy owners pay their professional staff above the award, beginning at $35 per hour and increasing to $50 per hour depending on their skills. In regional areas rates are much higher due to increasing shortages.
10 reasons for controlling wages costs
Many traditional pharmacy owners stick with or close to the award for different reasons:
- Hours: Outside the standard Monday to Friday 8am to 7pm period, costs can be prohibitive. Some pharmacies we are aware of trade 112 hours per week, many 84 hours and so on. Wage on-costs (super, work-cover, leave entitlements, payroll tax, loadings, etc) add another circa 25%. To reduce cost, owners often work the extended hours or use locums whose costs are increasing.
- Discounters: The issue is compounded for soft discounter pharmacies (GP% 30–34%), often with high overheads, leaving owners little option but to minimise wage costs.
- Water into wine: Some owners pay the lowest hourly rates because they can, thinking that’s smart business practice to maximise profitability—essentially, trying to turn water into wine.
- PBS focus: The dominant community pharmacy business model is typified by dispensing pharmacists while assistants engage the customers. Profitability is driven by maximising scripts processed (the PBS rewards throughput, not outcomes), maximising generic substitution and cutting costs.
- Dispensing addiction: The old model worked well for decades—therefore many are fighting to hold on to it. High dispensing remuneration perpetuates the problem.
- Attitude: Some employed pharmacists only want to dispense scripts and actively shun undertaking other productive activities.
- Debt levels: A lot of owners/partners overpaying for pharmacies find themselves over committed and with little profit growth because the business model often remains unchanged.
- Technician career path: The absence of an authentic dispensary technician career path in Australia compared with other developed countries compounds the problem.
- Pharmacist career path: The absence of pharmacist career pathing and recognition of specialist skills or qualifications is another problem. In essence a pharmacist begins as an intern, becomes a pharmacist, perhaps moves to manager and then that’s it unless ownership beckons.
- Margin compression: Aggressive price competition forces community pharmacy owners to lower prices. Owners often fund discounting by cutting wages when they should be adopting a service focus, allowing pharmacists to earn higher margins and maintain higher wages.
The fundamental issues
All of this results in underpaid and severely overworked pharmacists. Some feel compelled to leave community pharmacy, creating a bigger shortage, resulting in rising hourly rates.
In a nutshell the fundamental issues are:
- Pharmacy income model—cost minimisation (not productivity).
- Price discounting—necessitating cost/script throughput.
- Pharmacist’s role—those who only dispense scripts, yet want to be paid more.
- Dispensing net incomes reduction—demands lower cost inputs and increased automation.
- Inappropriate reward—pharmacists capable of delivering more are often not rewarded.
There are two major points of view—owners are trying to hold businesses together and get a return for their efforts, while pharmacists are an underutilised resource who would like to earn more. Both need a different approach to achieving their aims.
Challenge of increasing the award
Our own ‘Sermon on the Mount’ is—if the award, including roles structure was seriously addressed, hard discounters would be forced to look at their cost structure, finding alternatives to keep a lid on costs, as winning on price and range will remain their key objectives.
Soft discounter and traditional pharmacy owners would be forced to confront their failing business models, which would be supplanted by improving efficiency via process changes and embracing the income productivity model, i.e. paying pharmacists as a productive resource where the wages/income % would be optimised via income growth, instead of minimised via cost cutting.
We sense a crisis is fast developing and must be resolved for the sake of owners, employees and the profession.
The miracle of turning five loaves and two fish into the feeding of the 5,000 isn’t something we will discuss next month, but we will provide the solutions as demonstrated by outstanding pharmacy owners and brilliant pharmacists who are showing the way.
So far, you’d have to conclude Jesus’ career choice as a carpenter was the smart choice.
* Talent.com survey of 100+ carpentry foreman wages.
** Talent.com survey of 100+ carpenter wages
*** 2019/20 Community Pharmacists Employment Report. PPA, 2020.