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Profit from an onsite pharmacy

Lukman Patel explains the benefits of leasing space at the surgery to a community pharmacy.

Have you considered finding a pharmacy tenant?

If you and your partners own your medical centre or surgery and part of the building is not being used or is used inefficiently, you may find that enough space can be freed up to accommodate a community pharmacy.

Not only will patients find this very convenient, but the pharmacy should generate a useful income stream for the practice from the lease; the rent it pays should be more than enough to offset any loss of premises reimbursement for space the practice no longer uses.

Premises underused

Space is inefficiently used in many buildings. While there may seem to be constant pressure for more space, this is often because the space that is available is poorly used.

Space savings may be achievable, for example, by going paperless and thereby freeing up areas used for storing medical records.

Alternatively, you can generate room for a pharmacy by moving non-front-line (office) staff upstairs and generally reorganising who in the team goes where on the ground floor.

Subject to the necessary consents and planning permission being in place, finding a pharmacy tenant should not be difficult.

It is well known that community pharmacies generate a sizeable slab - often the bulk - of their revenue from dispensing NHS prescriptions. In England nearly 100% of community pharmacies have an NHS contract (under which they can now provide additional services). This means pharmacists should be keen to relocate to, or open a branch at, your site because a high percentage of your patients' prescriptions will then be dispensed by the onsite pharmacy.

While most community pharmacies are not in buildings owned by NHS organisations, leasing accommodation in premises constructed under NHS local improvement finance trust (LIFT) schemes, for example, commands a significant premium, or upfront payment, and a rental exceeding, perhaps by 25%, the levels for most non-pharmacy tenants.

Pharmacy owners generally compete to position themselves within NHS buildings, including practices, because this will enable them to capture about 70% of the prescriptions generated in them.

Location

Physical position is critical for a pharmacy and by attracting one into your building, there is not only the possibility of receiving a significant premium and substantial rent; the pharmacy will also contribute towards overhead costs such as energy bills and buildings insurance.

Particularly if you have space which is not being used and therefore lies outside reimbursable areas, a pharmacy's presence may provide a handy windfall for the practice in these straitened times. Best of all, your patients will be pleased.

However, it is important that you choose your pharmacy tenant carefully; once it is in your building, you will have to live with it for at least the duration of its lease.

  • Lukman Patel is an associate on the real estate team of specialist medical solicitors Hempsons, www.hempsons.co.uk.

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