0: Welcome to the AJP podcast,
a podcast for pharmacists by pharmacists where we discuss current events,
relevant topics, and emerging issues. I'm your host, Carlene McMaugh,
and together with the AJP,
I'm bringing you the opinions and expertise of different pharmacists to discuss
their views and insights on topics relevant to pharmacists.
Please like and rate each episode and subscribe to the podcast so you don't miss
an episode.
1: I thought I might start by asking you to introduce yourself, if that's okay?
2: Okay. Well good morning.
My name is Bruce Annabel and I'm a chartered accountant by
qualification,
but I've been working with pharmacies since about
1986, 1987 and 30 odd years
ago.
I devoted my whole professional career to working with pharmacy owners
and
trying to work with individual pharmacists as well
to help them improve their businesses.
And you can't have a quality
service in a medicine sense unless you have a quality business,
so they go together. So that's what I do.
I was a founding partner of the what is now called Picture
Pharmacy Services, a division of picture partners in Brisbane.
I founded the pharmacy services division in the late 1980s
and
I sold out of that division about 16 years ago,
and I now practice as a consultant, advisor, writer,
presenter,
member of a couple of boards and general pain in the neck around the
industry. But you can probably delete that bit if you like.
But yeah, I'm passionate about pharmacy
and having with my various conditions,
been a customer of pharmacy since I could walk.
I truly believe in the people in the white coat and what they can do for people
like me and others.
And I see in the industry and the profession a massive,
massive opportunity, which I've seen for many years.
And I'd like to think this community pharmacy agreement or set of
agreements will actually finally help facilitate that.
And it's good to be a part of what's going on at the moment.
But my other,
I guess qualification is I'm an associate member of the pharmaceutical society,
which is a privilege for me and I enjoy it.
So that's me.
1: Thank you.
I wanted to ask what your thoughts were about the 8CPA agreement.
I understand that you've well versed in the 8CPA agreement,
so please share your insights.
2: Well, the 8CPA agreement,
and I guess you're predominantly talking about the agreement that the guild
negotiated with the federal government
is unequivocally a very successful
negotiation and a very good outcome
for the industry.
It provides sustainability for the industry, at least for the next five years.
The remuneration platform for dispensing and
the medicine related services that are contained within that agreement are very
strong. So pharmacy I think has done well.
I think the Guild has done well and the negotiating team headed up by Anthony
Tassone backed up by a number of people who assisted
and they achieved a very good outcome,
particularly when you think about where it all started from,
which was rather rocky,
but it finished up being in a very good
situation for pharmacy.
And I think there are a number of elements to it,
one of which is the recognition of the need
to provide some financial compensation for the impact of 60
day dispensing on pharmacy viability. If it had been left the way it
was,
there would've been significant angst and stress and
also I would say financial failures within community pharmacy,
which had the potential to impact on the distribution
reliability for the PBS.
But I think when you stand back from it a little bit,
we're seeing the wholesalers will have their own agreement for the second
time, and we don't have the details of that as yet.
I understand they're negotiating around the CSO,
but I dunno whether there's anything else going on.
So hopefully we'll see the result of that very shortly.
But also the PSA for the first time and the groundbreaking achievement
has managed to achieve their own services documents. Now,
those services don't include things like deas and meds checks and so on,
which are still within the 8CPA medicine
related supply agreement negotiated by the guild.
So the areas that the PSA will be looking into are things like NIP VIP
and also some of the other programs,
which used to be part of the Standard Guild government agreement.
So pharmacy's not losing any services at all.
And the second agreement, which the guild, sorry,
which the PSA has negotiated with the government is the new and
expanded agreement.
And the new and expanded services agreement potentially offers
significant improvements to the professional service opportunities
and a very strong role for community pharmacy in the broader health
spectrum.
And there is a development plan over a number of years for that to be
negotiated,
modeled and then rolled out towards the end of the current five year agreement.
So there are a lot of elements in that which I think could
assist with the evolution of the industry or the profession.
And when you look outside that agreement and you look
outside the guild government agreement for supply and
related medicine programs,
there's about 1.4 billion or a little bit more of
services that are funded outside these agreements and
they're funded by the federal government and they are quite
significant. And on top of that,
you have the state-based scope of practice initiatives as well.
So there is even presently no shortage of opportunities
for community pharmacists to expand their professional
areas and also for community pharmacies to embrace
them.
So I think if you take a broader look at this as
well as a narrow look,
I think overall this has been a very,
very successful outcome and negotiated outcome for community
pharmacy and pharmacists.
1: So you've mentioned the PSA strategic agreement and extra money for
medical related services,
you are talking about increased scope of practice, thinking about prescribing.
Is that kind of some of the services you're expecting to see potentially?
2: I suspect so.
And I think part of it is also the opioid dependence
program.
Another one will be the pharmacist in aged care facilities and
how that's going to work and how that will be serviced.
And I suspect there'll be an opportunity there for community pharmacies as well
as individual pharmacists and also pharmacists and GP
practices I should think because the PSA has been very strong and very
consistent on that for a long time.
So I think there's plenty of potential in that strategic agreement.
So we'll, a little bit of an unknown at the moment.
1: I'd say the impact of 60 day dispensing and some of the forecasts
that you've met,
when you're looking at some of the reimbursement models that have come out of
8CPA, do you think there imbalance? Do you think that,
yeah, I guess how do they offset most of the losses from 60 day dispensing?
2: The answer to that, it depends on the individual pharmacy,
but if you take a fairly broad view,
and I'll look at the numbers that I've worked out,
it all depends on the uptake rate.
And the uptake rate to date is something like 15%
and I'm seeing some as low as 10% or even below that.
The uptake rate has so far been quite modest,
and that doesn't appear to have been very heavily driven by the medical
sector or by consumers for that matter.
There are variations depending on whether you're in a provincial area or low
socioeconomic area or whatever. So
I think when you look at the numbers of the reimbursement,
there are two elements to it. One is the additional AHI,
which will be $4 .79 from the 1st of July,
and that is indexed each year.
And that will apply to scripts that are dispensed as 60 day.
And then there's an additional compensation which is quite
significant and I'll explain why in a minute.
But that is 78 cents per
PBS and RPBS government subsidized prescription
will be paid to pharmacies.
So $4 79 for the 60 day scripts dispensed and
78 cents for all PBS and RPBS
prescriptions, whether they're 60 day or 30 day.
So I think that's a real coup, but when you look at the structure of it,
there's in total 2.111 billion
being applied over the five year term
to fund compensation for 60 day.
Now,
if the 60 day dispensing uptake gets to something like
60%,
I don't think that compensation will be enough to cover the losses.
However,
who knows what negotiation could occur if it does actually get to that.
But in the meantime,
at a 16% or lower or even up to 20% or
more,
pharmacies will be receiving more compensation than what they will lose.
It's according to my numbers,
when you get to about a 35% uptake rate,
pharmacy gets to a breakeven point.
So that's roughly more than double the uptake rate experience that
the experience that we're seeing at the moment.
But the uptake rate obviously is pharmacy specific and
also the drugs that pharmacies dispense a whole range of variables in it.
One of the other factors here,
which is important to understand is the government has agreed to
pay as part of the 2.11 billion of compensation
backpay for 60 day scripts dispensed from the
1st of April to the end of June this year. So in other words,
the current quarter,
so the 2.1 billion actually applies to five
years plus one quarter,
and that reimbursement will be $4
79 for 60 day scripts dispensed. In other words,
at the A HI from the 1st of July,
not the current A HI. So that's a positive.
And also the 78 cents will apply to all PBS and RPBS
scripts dispensed during that quarter.
So when you work the numbers out, given the low uptake rate,
pharmacy can expect to get a very nice dividend for that period.
I understand that this money will be paid somewhere towards the end of September
or maybe October. Haven't had that confirmed as yet,
but it's something like that.
So that will help pharmacy financials look pretty strong
for the year into 30 June 24.
I think achieving compensation for 60 day
dispensing has been a significant achievement.
If you look at New Zealand where they have 60 day and 90 day dispensing
for a lot of drugs, there's been no compensation.
And I think that's fairly consistent with other jurisdictions from what I
understand. So I think securing that,
even though it's probably not going to go a whole hog,
if uptake goes to say 60%,
it's a significant win to be able to achieve that.
1: I was going to ask you about, which you've mentioned some of it,
the potential for the eight CPA and how pharmacies can maximize their
returns utilizing the eight CPA agreement.
2: Well,
continuing on as normal pharmacy will get uplifts in
the rate prepared a HI and dispense fees and they get pick
up and the extemporaneous as well,
the DD fees will go up and also
the safety net recording fee will go up.
So I think in terms of supply,
community pharmacy will automatically get all those advantages.
If you look at the increase to the A HI and dispense
fee just by themselves,
the CPI uplift that we had on the 1st of July last year,
which was 89 cents,
there's another 47 cents combined for those two,
which will come into effect on the 1st of July. That's a dollar 36.
And when you work out the numbers and you multiply dollar 36 by the PBS and
RPBS prescriptions,
that's quite a significant amount. And also provided you're not a discounter,
you also get the advantage of that in the below patient copay area
as well. So
those amounts will go a fair way and maybe for some,
not all the way to covering the increased in overheads that pharmacy has endured
in recent years.
So I think that's a significant thing to recognize and
amounts like that.
And general CPI increases to other fees can get lost
in the maze of pharmacy day to day and can get taken for
granted. But I think CPI increases significant,
and I think pharmacy will do very well purely from that.
And of course the 60 day dispensing.
I think the other one is the pharmacy programs.
There's $1.3 billion which has been allocated to the
services programs that are within the Guild government agreement.
And that's over a five year period.
I think there's about 227 million which has been earmarked for the current year.
So the 1.3 billion obviously flags a
room for growth.
1: So I wanted to ask you,
so having read all of the finer details of the eight CPA,
is there anything that people might have missed or anything else you wanted
to really highlight that people haven't seen as the greatest opportunity?
2: There's a couple of things to think about.
One is the services funding, which is in the eighth agreement,
which we've already mentioned a couple of times.
So things like DAAs and meds checks,
DAA is a fairly type of program, but it's very beneficial.
We're talking about community patient VAs,
and it's a great way to help patients improve their compliance
and adherence and reduce unnecessary trips to the doctor if they can get in to
see one. And of course to hospital, but also for pharmacy,
it's a great way to look after the patients because they come back more
regularly. And also the financial benefits are there,
which I've written about before in a JP.
So I think just taking up these programs which are just sitting there,
these are funded programs and the
industry has provided these,
and pharmacies can take these up and they're not
that difficult to do. So I call these programs the
low hanging fruit, and every single pharmacy can do these things.
So those who've struggled to do any of them,
the best thing to do is to start with one or maybe two and work your way into
it.
The financial modeling that I've done with my clients and just
purely looking at their KPIs, the pharmacies who do this,
the financial returns for running a professional service style of
pharmacy model with a lot of professional services and
employing more pharmacists,
the financial benefits are significant and these pharmacies tend to
outperform the more traditional supply style pharmacies.
So the financial model has been proven.
So I think that's significant opportunity.
And in some instances you still come across the
occasional pharmacy that doesn't do meds checks or those who don't do
very many DAAs and they wait for someone to recommend it,
whereas the best thing to do is to talk to the patients.
And if you think they or the carer of a patient could benefit from one,
then it should be recommended.
So I think just taking those things up by themselves represent a
significant opportunity.
1: With the strategic agreement coming and with more of a
focus and discussion on services.
I guess I was going to ask what mindset changes might
be useful?
Resource changes for pharmacists as well and opportunities for them might
exist with this new strategic agreement as well?
2: Okay. Well, I guess you're talking about the practice model.
Our pharmacy and the practice model does need to evolve,
and there are a number of pharmacies who've already done this,
and we see it year after year with the pharmacies of the year and
often pharmacists of the year and the way that they operate.
So I think seeing pharmacy these days is a retail
operation, which it used to be and it was successful at that.
But a lot of the retail elements of pharmacy have been hijacked by
hard discounters and also by supermarkets,
discount department stores, and of course online.
So the way for pharmacy to compete in the marketplace and
also to have a financially sustainable model,
it's about operating in a different way. And that different way is, yes,
prescription dispensing is critically important,
it's the foundation of pharmacy.
And a lot of pharmacies still operate in a way that is
simply about supply and reacting to requests for prescription
dispensing. And I think if we can look at
the pharmacist's role,
particularly given their qualification skill sets, and in many cases,
particularly young pharmacists,
their own aspirations of what they want to do,
I think doing more than dispensing has become, I think to me,
a clarion call for a reorganization of the
practice model. So majority of my clients,
the dispensaries are run by technicians,
well-trained, highly competent dispensary technicians.
And the pharmacist role starts from checking the script and looking at
interactions and patient history and then speaking to the patient,
providing services,
working in consulting rooms or clinic rooms and looking at
what patients need and advising accordingly.
And if you have that approach, all the services funding,
even the ones that are currently available, you can maximize those.
So I think changing the mindset from being what I call,
which a lot of people don't like the dispensing chemist role to a professional
pharmacist practitioner.
I think making that change becomes critically important.
1: You've also mentioned that a majority of pharmacies are managed by cost
minimization versus productivity. Can you tell us a little bit more about that?
2: Well, more or less explained the foundation of that,
and that is that pharmacy does very well through
supply, through dispensing prescriptions.
A lot of the banner groups and certainly the majority of owners look at
pharmacy as being a place where supply of
prescriptions is maximized in the financial sense.
And then there's a retail offer out the front, which is
not often strategically created in a
professional healthcare sense.
I prefer to call that front of shop or retail area front of
practice, which has a totally different connotation.
And there are some banner groups who see that and have made adjustments
to their categories.
So the traditional model historically and in many
situations still is it's about maximize script throughput.
If I maximize script throughput, I maximize my income,
more scripts I do more income I get obviously,
and to improve the profit from that
substitute as many generics as possible for originators.
And that's become pretty standard these days anyway.
People accept generics and majority of cases,
and also to maximize supplier
buying terms or deals because then that minimizes your net into store
costs.
And then to look at minimizing overheads.
And the big target for minimizing overheads is wages,
particularly pharmacist wages.
And I think that approach has led to a number of
issues,
which in my view has created the
workforce issues that we're currently seeing.
The difficulty of getting pharmacists.
We know from the data that every year there's a record number of pharmacists
going through the pharmacy, schools getting qualified,
and yet it's so hard to find a pharmacist in community pharmacy,
particularly when you go outside the big cities. It's really, really difficult.
And I think part of that is the dispensing model,
which is about maximizing script throughput and then
minimizing cost and so on in order to manage the bottom line.
Now, there's an alternative to that.
The alternative is the productivity model, as you mentioned before.
The productivity model is looking at the wages
paid or salaries paid, not as a cost or an overhead,
but looking at it as an investment.
And like any investment you look at, well,
what makes up that investment? What am I investing in?
Am I investing in activities that don't give me much of a return
or could I invest in a different mix of staff, for example? In other words,
more pharmacists, more technicians, more nurse practitioners,
more mental health counselors,
more wellness consultants and so on.
What can I do with that investment?
Can I reshape that same amount of money but in a different way?
So the objective being what can these people do with the skills that they
have?
Can they attract more patients because of the skills and the additional services
they can provide? And in doing so,
can we therefore generate income by taking advantage
of the current services in the eighth agreement that the guild negotiated,
plus the new ones that are going to come through PSA.
So the productivity model is driving the top line,
not managing profit through trying to keep wages down.
So obviously efficiency and processes and getting rid of waste,
they're all important. Looking at different systems to speed things up,
that's important,
but it's about what people can produce and producing is about
attracting patients and then what you can do for patients and then getting paid
for it.
1: So that is all of my questions,
but I wanted to ask what I haven't asked you that you might want to share,
even if you have any other forecasting models that we haven't heard of,
but anything that I haven't asked you?
2: I don't think so. I think we've covered most of it,
but I think if you stand back and you look at the overall situation in
Australia's healthcare system, we touched on this earlier on,
I think pharmacy has a very unique opportunity now,
and many call it a once in a lifetime opportunity for pharmacy to come out
of just being largely supply with some advice,
of course,
but largely supply to becoming health
professionals operating in the broader health spectrum of Australia.
And I think pharmacy can do this. We've got very well-trained,
highly skilled pharmacists. I think a lot of them,
and I talk to them in my capacity as an adjunct professor at the pharmacy
school, QUT in Brisbane, they want to do more.
They don't want to just sit behind a computer and bash out scripts for their
career.
And that's why a lot of them leave. They want to do things to help patients.
They've learned a lot of skills at university and they want to apply those.
So they have skill sets, they have aspirations,
they have things they want to do with their profession,
and many of them get frustrated.
So I think taking up the opportunity in this unique situation that pharmacy's in
now where we can as the most accessible health
professional in Australia,
start to take the running to take up the slack,
which at the moment can't be, if you like,
associated by hospital or general practice,
huge opportunity, particularly in the primary care area and the services area.
1: Thank you. Thank you so much.
I think it's great to get the bigger picture,
and I think the audience will get a lot from that.
2: How do you feel? That's good.
I'd like to think there's some messages in there. I think
one of the things I'm seeing a little bit is a lot of negativity towards the
agreement at the moment. There shouldn't be,
I dunno why there is,
I know there's a bit of a splinter group within the industry,
but I think that whilst you can always argue
for more, I think men,
to look at what's been achieved for the industry and the profession
in order to grasp that unique opportunity,
which I think we are looking at at the moment over the next few years.
So rather than complaining about the things that people would like to have,
let's celebrate what we do have.
So I think there should not be a case for,
I guess an overly aggressive range of complaints
against this set of agreements.
1: Thank you. I'm wondering what
the negativity towards the A agreements are because we don't know much yet and
they just represent additional opportunities.
2: Look, I just think that
a lot of pharmacists seem to think that the government should keep paying more
and more and more and more and more, but there's a limit.
And in this agreement, there's an additional 3 billion.
You look outside the agreements,
there's 1.4 odd billion of services which
pharmacy can provide,
and these strategic agreements could lead to who knows what.
But it's all very positive. I think there's not a lot to complain about. I mean,
the New Zealanders didn't get any compensation for 60 day dispensing.
So I think we need to understand that pharmacy in Australia is
in an extremely fortunate position,
and the government needs pharmacy.
They really do.
And I think the Department of Health
with the 60 day dispensing policy,
which was dropped on the industry in April last year,
whilst it shouldn't have come as a complete surprise because this has been
coming since 2018,
and the PBAC recommended extended dispensing to the then Minister for
Health,
it was badly framed.
It was implemented very,
very quickly without any thought for the impact.
And nobody was consulted except maybe another
healthcare group external to pharmacy.
So I think that may have also assisted in this agreement,
but I take my hat off to the negotiators from the PSA and from the Guild.
I think they did a superb job,
and I think it places pharmacy in an extraordinarily fabulous position that
not many countries around the world can enjoy.
1: Thank you. Thank you for sharing that. That's a nice positive note.
2: That's good. No, it's a great industry and it's a fabulous profession.
And I often say that to young pharmacists that when I meet them in a
pharmacy or at a conference somewhere that this is a great profession.
Don't listen to people who tell you it's a lousy business and not to go into it.
It's a fantastic business because the difference that pharmacists can make
to the health of people is incredible.
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