Moving to a hub and spoke model can deliver an 81% reduction in payroll costs per item
A new report has suggested that adopting hub and spoke dispensing model could be a realistic and affordable option for many pharmacies across the UK, not just a select few.
The report released by Centred Solutions highlighted several evidence-based benefits of this model, including a return on investment (ROI) within two years for an average pharmacy, debunking the skepticism that has long surrounded the model.
Analysis by the software and technology company found that the ROI, from setting up a hub and all operational costs (excluding transport), can be achieved through either re-directing time saved into delivering services, improving resource efficiencies, or a combination of both.
One of the key findings is the 81 per cent reduction in payroll costs per item—from 99p in a pharmacy to just 19p in a hub.
The report also revealed that by shifting to a hub and spoke model, pharmacies could offload 50 per cent of total dispensing volumes (70-80 per cent of repeat dispensing) from their branches, creating much-needed capacity.
The report also projected an average stock reduction of 50 per cent in the first year for pharmacy branches moving to this model of dispensing.
Louise Laban, Sales and Marketing Director at Centred Solutions, said that while it has long been believed that the hub and spoke dispensing model could increase capacity within pharmacy branches, there has also been a lot of skepticism due to a lack of evidence to support this theory.
Centred Solutions, having provided hub and spoke solutions to various pharmacy groups for over three years, evaluated the effectiveness of the models in different environments.
Laban noted that their report is backed by both local and national data.
The report found that a pharmacy dispensing 8,000 items could see significant profits over five years from adopting hub and spoke dispensing:
- A group of five pharmacies could make an average profit of £909,000.
- A group of ten pharmacies could make an average profit of £2.1 million.
- A group of 20 pharmacies could make an average profit of £4.9 million.
With changes to hub and spoke legislation expected to take effect on January 1, 2025, allowing the model between different legal entities, Laban encourages all pharmacy businesses to explore the potential impact of the dispensing model on their cash flow.
“For pharmacies who have the appetite for it, hub and spoke has the potential to be a hugely profitable venture for pharmacy despite the ongoing funding challenges,” he said.
Currently, this model is available for pharmacies that operate under the same legal entity.
