Kenny Black: 'We want a smaller, easier-to-manage business'
As Rowlands Pharmacy puts 70 pharmacies up for sale, its managing director Kenny Black speaks about how the business will change and the threats from online pharmacies and Brexit.
Source: Ant Clausen
Nestled among freight lorry parks and corrugated storage units, Rowlands Pharmacy’s head office in an industrial estate outside Runcorn, Cheshire, feels very far from the leafy headquarters of some pharmacy organisations.
These ordinary origins fit the ethos of the multiple pharmacy chain, which aims to sit proudly at “the heart of the community”. But managing director Kenny Black meets The Pharmaceutical Journal just weeks after the business announced that it had put 70 of its stores up for sale, equating to 14% of its 516 pharmacies across Great Britain.
Black — a witty, shrewd and occasionally sweary Scotsman — is very open about the company’s motivations. He says that a smaller company will be “easier to manage” and will enable them to invest in technology to free up staff from dispensing duties — although the recent 380% drop in pre-tax profit on their day-to-day activities may have also played a role in this decision.
We want to align with all the services that the UK government sees pharmacy doing — that’s easier to do if we’ve got a smaller estate
After some Six Nations repartee and confessions about his TV appearances (“I absolutely hated it”), we sit down to find out what Black thinks the sales mean for the future of the pharmacy chain and the communities it has served.
In February 2019, we learned that Rowlands Pharmacy is selling 70 of its pharmacies — a large chunk of its portfolio. Why the big move?
We want to invest significantly in the estate, which we are doing through automation and our monitored dosage system (MDS) pouches. We’re also looking at automation to take the burden of repeat dispensing out of the pharmacy and free up time for the pharmacist to carry out services — we want to align with all the services that the UK government sees pharmacy doing. That’s easier to do if we’ve got a smaller estate. So we want to invest in a smaller, easier-to-manage business.
Could automation mean job losses?
For years the industry has been saying “let’s reduce the waiting time and burden in GP surgeries”, but pharmacy is too busy doing — harsh to say — basic dispensing. The volume of dispensing in pharmacy has increased by 50% in the past ten years. Last time I checked, the headcount in pharmacies has not gone up by 50%, and the administrative burden is massive. This takes staff away from their primary function, so if Rowlands can remove some of the basic dispensing process — and up to 50% will be removed — we can tell government what we can do. We’re not saying, “let’s reduce our headcount” — we’re saying, “let’s point our staff over here”, so that we can make a difference to the greater NHS. We’re going to direct staff to where they can have the most effect on patients.
What’s your message to your employees who may be worried about what the sales mean for them and their patients?
The most positive area in the current market is the independent sector — 50% of the sector is owned by large multiples, which have not experienced the growth that the independents are seeing. The independents are more agile and faster to move with changes, and I think this is a great opportunity for first-time pharmacy buyers. Independents want the staff, and our staff are in the heart of the community, and they’re great with customers, so why would there be any issue? The message to staff is keep doing what you’re doing. You’ve been working really hard, and keep at it.
The feeling we’re getting from staff is that they understand why we are doing what we’re doing. They also see that there are opportunities for people to come in. Some of the pharmacies that we’re selling have had current managers expressing an interest in buying some.
One of the pharmacies earmarked for sale — in Kington, Herefordshire — is the town’s only remaining pharmacy. Do you feel responsibility towards the local community?
We’re not concerned, because we’re selling these pharmacies as ‘going concerns’ [entities that are assumed will remain in business for the foreseeable future]. This isn’t a case of us selling a pharmacy to close it. The buyer can adapt to the health needs of the area. So, yes, I’m sure in Kington, there are concerns about Rowlands, which has been there for a long time. But I don’t see it as a problem.
Have any offers been made yet?
Offers have been made.
Can I ask how many?
Well, you can ask, but I’m not going to answer [laughs]. We have had a lot of mainly positive responses. We’ve had some offers and we’re starting to progress with some of those offers.
During your appearance on the Channel 4 television series Undercover Boss in 2014, you said: “If things continue like this over the next five years, there’s a strong possibility that some pharmacies will have to close.” Are you disappointed that it has come to this?
No, well, if you look at the quote we were talking about pharmacies closing, not pharmacies being sold. I joined Rowlands when they had 78 shops. The view at the time was never to have the biggest pharmacy chain. Let’s have a pharmacy chain that people feel that they’re part of. To sell some pharmacies, if it’s for the longer-term good of the rest of the business, it’s a good thing.
A big highlight of the show was Jacky — a driver for Rowlands’s then free home-delivery service — and the valuable relationships he had built with your housebound customers. Why was the free service restricted for some customers in 2018?
The free delivery service that our pharmacies offered to all patients — you could say that it was being abused. There were some patients who were never in, which meant that staff were trying three or four times to catch them. There are vulnerable patients in the community who genuinely need the service, but it is under pressure because we are subsidising people who don’t. Some of the market was changing; some companies started to charge for deliveries and some just stopped offering the service at all.
That free prescription delivery service is still there for patients who need it — we decide which patients are most in need on a local level
That free service is still there for patients who need it. We decide which patients are most in need on a local level. When we changed the process in October 2018, a couple of patients fell through the cracks and got in touch with us. Sometimes you think, well, you’re right, you are vulnerable or you’ve got specific conditions that say you should get a free service — fine, so we put them back in the scheme.
Was there any backlash?
We had some. One woman got in touch to say that her mother couldn’t get her medicine delivered for free anymore; she got word three weeks ago, just before she went on safari! Really! For me, that summed the whole thing up. We don’t want to get to the stage where we can’t deliver to any patients at all. That’s unfair.
“Sky high” pressure on staff was a big theme of Undercover Boss — what have you done to address this since the programme aired?
For deliveries, we have spent a lot of time analysing how long our drivers need with the patient. They are very important to vulnerable patients — sometimes they will be the only person patients will see all day. The driver can pick up if something’s wrong, so we’ve built in some slack in the schedule to allow these conversations.
It takes 38 minutes for a member of staff to dispense a 28-day supply for one MDS patient — it’s unbelievable
For pressure on pharmacy teams, as I said earlier, the volume of dispensing is up. Pressure is up. Bureaucracy is up. This is why we’ve introduced, and will continue to roll out, an MDS-centralised solution, which takes the MDS process out of stores. Around 12% of all our prescriptions are for MDS patients, and it takes 38 minutes for a member of staff to dispense a 28-day supply for one MDS patient. It’s unbelievable. The automated process we’ve got for pouches takes 4 minutes, so by using this system you’re freeing up time for staff. We’re also about to start developing a centralised dispensing system to free up repeat dispensing time. We’re confident that these things will ease staff pressure.
Traditional pharmacy is coming under pressure from online dispensers. What are you doing to counter their threat?
It’s a completely different model. If you have a prescription, we want to talk to you and give you some advice; you can get some testing, or we could offer you a service. If you’ve got a new product, you should be coming into pharmacy and using the new medicine service. If you’re getting that through mail order, there’s no service. So how do you counteract it? You try to show the strengths of the current community pharmacy model, which is face to face, rather than getting a box through your door. All we can do is maximise the benefits that people see from our business.
So it’s not a model that you’re keen for Rowlands to embrace?
No. We’ve dabbled in e-pharmacy; we have an internet site that tells you where all the pharmacies are and what services we offer, but we don’t do prescriptions. I think pharmacy is about health and advice, and you’re not getting that from an online pharmacy. If you want that type of advice, [you have to] go and speak to Mr Google.
With Brexit looming, what are you doing to avoid drug shortages?
Manufacturers and wholesalers have been asked to deliver some extra stock, and we’re running through that. We’re running as a normal community pharmacy and we’re not stockpiling.
What could be a positive out of Brexit is pharmacies getting involved in switching drugs
But are you worried about 29 March 2019?
Clearly. Actually, I think what could be a positive out of this is pharmacies getting involved in switching drugs. I’ve looked at what some of the other Phoenix (Rowlands’ parent group) countries do. Generic substitution is very successful in some European countries. Why isn’t it in the UK? Brexit might actually force that and get people to realise that there’s an opportunity to use the skills and knowledge of a pharmacist.
It’s been quite divisive, hasn’t it? The British Medical Association isn’t happy about it.
And why’s that?
Exactly … exactly. No, you can’t say that [laughs]. But look at Norway and the Netherlands — generic substitution is absolutely ingrained in what they do. And if you’re trying to save costs for the NHS, there’s a cost saving there. It should just be part of the pharmacy contract.
What advice would you give to policymakers?
[Laughs] Very simply: allow us to be part of the bigger decision-making in the NHS. Decisions are being made about its future over here, but here’s pharmacy over there. Why is pharmacy not involved in some of this? There’s so much that pharmacy can do to help, and we’re excluded because we’re seen as commercial organisations. Let us in and talk to us, rather than make a decision and then tell us about it later. We can make a huge difference to the NHS if we can be allowed to be part of it.
Citation: The Pharmaceutical Journal DOI: 10.1211/PJ.2019.20206266
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