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	The Pharmaceutical Journal Vol 268 No 7200 p758-759 1 June 2002	This article Reprint Photocopy
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News feature

New services in pharmacies: how much are patients prepared to pay?

The idea of introducing new services in pharmacies and extending clinical roles appeals to many pharmacists. But do pharmacists think it is financially viable to offer such services? Clare Bellingham investigates

Some pharmacies are installing booths, such as this one at Boots, in order to offer more private consultations

How much are patients prepared to pay for services in pharmacies? That is a difficult question. Fix the price too high and the service will not be used. But if it is too low, the service is undervalued. This could lead to patients having a low opinion of services in pharmacies and to an expectation that all services should be similarly priced. In addition, patients might think that because a service is cheap it is not good, say when compared with services offered in private medical clinics.

Services up and running

At a meeting held by the British In Vitro Diagnostics Association in London earlier this week, the role that pharmacists can play in providing diagnostic testing in the community was highlighted.

Andrew Bellingham, project manager, health care development, Boots The Chemists, described a pilot study of a heart health check carried out in 20 stores since October 2001.

Before the pilot started, the company surveyed customers in one branch and found that a need exists for this type of service. Cholesterol level measuring was wanted by 65 per cent of customers, 48 per cent wanted their blood pressure measuring, 37 per cent wanted help with weight management and 27 per cent wanted help in taking up physical activity. Although this demonstrates a need, it does not answer the question: will customers pay for the services?

Boots piloted the heart health check at a cost of £20 per consultation. This fee includes cholesterol and blood pressure measurement, body mass index calculation, and risk factor assessment. Patients are then given a calculated coronary heart disease risk (using computer software) and are counselled by the pharmacist about appropriate lifestyle interventions. Referrals to general practitioners are also made where necessary.

"The trial has been successful and has demonstrated that customers want an accessible, walk-in service for this kind of health check," says Mr Bellingham. "Customers were receptive to the service that has traditionally been offered by a GP being delivered by a pharmacist." Results from a sample of 300 people showed that roughly one-third of patients had high blood pressure, 40 per cent had high cholesterol, and two-thirds were overweight.

A more structured care plan is now being designed. This will help patients but will also control the length of the consultation which varied from the expected 20 minutes to up to one hour. "Charging £20 for a 20-minute consultation, ie, £1 a minute, is profitable for us," says Mr Bellingham.

Perhaps one of the most interesting points to come out of last week's meeting was disbelief that pharmacists could offer service profitably at this price. Participants were also surprised by the hourly rate at which pharmacists are paid. Maybe this suggests that pharmacists are currently pricing their services at too low a level.

Lloydspharmacy has been offering a similar service for two years. Andy Murdock, director of pharmacy, explains that the company's "healthy heart check" is available in 68 stores and costs £20. Blood pressure testing alone is also offered in 260 of its beacon stores. Blood pressure is measured and advice given according to a standard operating procedure. Patients are charged £2.50 for the service.

One way to make services more cost-effective is to make better use of staff. Mr Murdock comments: "There is no reason why trained technicians can't carry out the testing with pharmacists counselling patients. But there has to be pharmacist input."

Moss Total Health also offers a cardiac risk assessment for £20 including a half-hour consultation. The £20 fee appears to be a standard cost for such a service across the multiple pharmacies and fits roughly into the £1 a minute figure for pricing services. Moss also offers blood pressure or cholesterol testing alone at a cost of £8 per test.

Is there a market?

Peter Roberts is managing director of Diagno Systems, a company that supplies testing machines to pharmacies. He carried out some research about service provision in 50 independent pharmacies at the end of last year. "Pharmacists wanted to provide services that will give them an alternative income stream, that increased footfall, maintained their professional image and was clinical without compromising the GP-pharmacist relationship," he says.

Diagno Systems has conducted pilot studies of food sensitivity testing in which £90 was charged for a 30-minute consultation. Uptake of the service was good (22 of 24 appointments filled over a two-day period). In addition, "tasters" were offered allowing customers to pick 10 food tests for a price of £5. "Even in places where you would not think the service would do well, we did get a good response," he says.

In addition to making money providing a testing service, it also builds a pharmacist's reputation, which can increase the number of people coming to the pharmacy, he comments.

Influence of the NHS

The trouble facing pharmacists wanting to charge patients individually for services is that people expect services to be free. This is because the public is used to health care being free under the National Health Service. Perhaps it is time that the NHS recognised that funding services through pharmacies, and therefore allowing them to be free for patients, is a cost-effective re-allocation of current funding.

Peter Cattee, chairman of the Association of Independent Multiple Pharmacies, says that in many parts of the country it will be difficult to make a business case for charging for services such as blood pressure, cholesterol and glucose monitoring. "The problem always seems to come back to the fact that the NHS is able to do many of these things for nothing if you are prepared to wait, and that many people either cannot or do not put their health as a priority." He believes that such services will need to have at least some Government funding. Savings made from early identification of undiagnosed conditions or avoiding the consequences of poor disease control could be invested in the service, he suggests.

"For those who are willing or able to pay, I think a tailored service might develop based on a range of factors, for instance convenience might be of value to some people. The charges would relate to service level but sums of £10 to £15 would not seem unreasonable for cholesterol and glucose testing."

Mr Murdock says that there has been a mixed reception to such services from the paying public. "This is a large dynamic to change. People ask why they have to pay when they can get something free from their GP," he says. However, if people do not want to wait they will pay, he adds.

Targeting a niche is the way to make services profitable. In particular, something that is not widely or easily available through the NHS is likely to be a service that patients will pay for. Lloydspharmacy has found this with food intolerance testing. Uptake of the tests, which cost £125 for a 42-food test and £245 for a 103-food test, "has gone beyond our wildest expectations", according to Mr Murdock. He adds that the uptake is across all sociodemographic groups.

But should these services be funded by the NHS or paid for privately by individuals? Tim O'Donoghue, Greenlight Pharmacy, north London, says PCT support is essential for pharmacists to provide additional services. "Unless you have got support from the PCT it is not viable to do so."

Mr Murdock says: "These types of services are not high up on primary care organisations' agendas at the moment." He adds: "The NHS views pharmacy as part of the NHS when it wants something but not when it has to pay for something." In addition, Mr Murdock believes that LPS is also low down primary care organisations' priority lists. In order to rectify this situation, he suggests that greater lobbying is needed so that the Department of Health and primary care organisations are more aware of what pharmacists can offer.

It appears that LPS has already failed to meet pharmacists expectations so perhaps should not be relied on as a sole source of funding. There also appears to be a problem in that many PCTs are not ready to receive applications this month.

Hemant Patel, a member of the Royal Pharmaceutical Society's Council, does not believe that LPS offers existing contractors any significant benefit. "LPS is a false dawn. It is possible to commission services without the bureaucracy of the LPS scheme: local services can be negotiated more quickly," he says. However, he does believe that in the future, additional services will be funded by primary care organisations. "There will be patches where patients are not willing to wait so will pay for services but there are not many examples yet where pharmacists have been successful in offering services privately."

Quality assurance

Another issue highlighted at the BIVDA meeting was that of consistency of results between different community pharmacists. Mr Bellingham recommends that all pharmacies should follow proper quality assurance procedures and national guidelines.

Mr Murdock comments: "Quality assurance has to be used to back the equipment or the service will fall into disrepute." There has to be seamless care between the primary and secondary settings so that the results found in pharmacies will dovetail in with those tests carried out by GPs or in hospitals, he adds.

The message to the Government is clear. At a time when policy is about increasing access to health care and preventing disease, pharmacists can provide services to fit the bill. But broadly speaking, patients are not currently willing to pay for the true cost of these services. A change in culture will not happen over night. Government funding is needed now.

Costing of new pharmacy services: issues to consider

So what should pharmacists think about when deciding a price for a service? Costs and income have to be considered. Fixed costs (often one-off costs) include alteration of premises, equipment, training and loss of sales through reduced shop floor area. Ongoing costs include salary, training, consumables (eg, wipes, disposable sharps, etc) and service auditing. In terms of income, an estimation of the number of people expected to use the service is needed. Finally, pharmacists need to consider what profit margin they want to make on services.

The length of the consultation is a major cost consideration. How much should be charged per minute needs to be decided and a figure that has been suggested a number of times is £1 a minute. Hemant Patel, a member of the Royal Pharmaceutical Society's Council, says that services should be charged on an hourly rate. "We should learn from accountants and solicitors," he adds.

One independent pharmacy that offers a number of services is Greenlight Pharmacy in north London. Pharmacist Tim O'Donoghue comments: "Providing a diagnostic test itself is quite inexpensive. However, counselling can take up to 15 minutes and this is time you have to be away from the dispensary." And time costs money. In addition, Mr O'Donoghue points out the need for follow-up or, in the case of blood pressure measurement, a number of tests to ensure a more accurate result. Greenlight Pharmacy charges between £10 and £12 for a consultation which includes a cholesterol test. Again, a figure of £1 a minute consultation time is used. However, Mr O'Donoghue believes this is undercharging.

Andrew Bellingham, Boots The Chemists, says: "There is no point in undertaking a diagnostic test unless you can do something with the outcome." This is an important point and when services are costed, it needs to be taken into account. Although carrying out a simple blood pressure measurement may take little time, it is the counselling, follow-up and possible referral that will add significant time and costs to services. These should not be forgotten or pharmacists will find themselves underpaid, and possibly unable to cope with the demand on services.

Mr Patel cautions that pharmacists should not start negotiations at too low a price. "When any product first comes on the market, it carries a premium price. As volume increases, price then falls. However, in pharmacy services, people start at the bare minimum, which in negotiating terms is wrong," he says. He adds that providing new services carries risks and the price needs to reflect the need to recover initial investment. On entering an agreement to provide a service with a primary care organisation, a longer agreement, such as for three years, would allow this to be incorporated more easily.

Whether or not VAT has to be charged on a service also needs to be considered. The area is complicated and pharmacists can get advice from the Pharmaceutical Services Negotiating Committee. Although each service has to be considered individually, as a general rule the PSNC says that if the service can only be provided by a pharmacist (ie, has a major element of counselling), then it is likely that zero rate VAT will apply. However, if a service is mainly a supply function or can be offered by people other than pharmacists, it is likely to be subject to standard rate VAT.

Tricia Kennerley, superintendent of Moss Pharmacy, says that whether patients will pay for services depends on local demographics, what is available locally and individual patient needs. "The community dosage system is a good example of services which patient may or may not pay for depending on local circumstances. Offering a service with a fee of £3 per week may be more viable in the more affluent areas where such services are not funded by social services or the NHS. However, in more deprived areas, patients or their carers may not be able to afford this service." She advises that in order for services within the pharmacy to be financially viable, pharmacists should:

• Identify income streams, eg, NHS, public or private funding

• Identify gaps in the market

• Optimise capacity through a review of skill mix, competencies, training needs and standard operating procedures

"If all the above are achieved, this will ensure financial viability. Good planning is crucial to the success of a service," she says.

Who will actually pay for the service is an important consideration: private payment by the patient or funding through the NHS or other organisation. The NHS might pay per patient or as a lump sum for the service in which case an accurate estimation of users is needed.