Dispensing practices need to watch out for the ‘yo-yo’ effect in practice finances caused by the biannual changes in dispensing fees, DDA chairman Dr Richard West told delegates at the DDA 2017 annual conference.
Noting the recent reduction in dispensing fees announced from October, and news that the dispensing fee will increase from April 2018 in Wales (also expected in England) Dr West said that dispensers “need to be on the ball” about fee changes, to ensure fee income is maximised.
In his conference presentation on dispensary profitability, The business aspects of ensuring a profitable dispensary, Dr Richard West looked at influences on dispensary profit including:
- the drug tariff
- reimbursement – money for NIC
- remuneration – dispensing fee
- dispensary services quality scheme (DSQS)
- Private income.
He told delegates: “There is no doubt that dispensing is getting more complex” and he advised practices to identify somebody to lead on this important area of business. “It’s becoming almost impossible to do this as part of the day job. The dispensary really won’t look after itself.”
In his presentation, he gave delegates useful profitability hints and tips such as:
- Know what discounts are available in the market
- Consider a parallel import for products that have no manufacturer or wholesaler discount
- Dispense the brand for generics that are unavailable at a price below the drug tariff and which have not been given a concession price (see the updates on DDA Online)
- Ask prescribers to review orders for non-Tariff specials, which are usually loss-making, if clinically appropriate
- Ask wholesalers to price up your whole generics ‘basket’ rather than chase prices on individual items
- Negotiate with wholesalers to get their ‘best price’ for your practice
- Use a dispensing appliance contractor for appliance scripts, as this can be more profitable than ‘DIY’.
- Ensure nurses and GPs fill out the FP10 reverse side, to avoid wrong group movements. “Inhalers and dressings are common items where the FP10 is not filled in, and if it’s not filled in NHS BSA will assume the charge was paid and make a deduction.”
- Understand when personally administered items attract the NHS PA allowance, and when VAT can be reclaimed on dispensed items.
Dr West noted: “For HMRC VAT purposes, it’s what you do with the item that is important. Items are automatically classed as PA by the NHS, but they can also be dispensed and the VAT reclaimed from HMRC.” As an example he said, is administration by district nurses, who are not practice employees. If they do an injection, you have dispensed the item, and as a dispensed item, VAT can be reclaimed from HMRC in addition to the PA allowance, which will be automatically paid according to the listing in the dm+d.
DDA board members also offer face to face training on dispensary profitability.
For more information on these opportunities, click the relevant links and read Dr West’s conference presentation slides.