McKesson-owned LloydsPharmacy has called for health centre landlords to recognise the impact of reduced footfall and renegotiate unsustainable rents or risk further closures of unviable pharmacies.
Having already exited 99 pharmacies in the last 12 months “as a result of mounting cost pressures and declining footfall”, LloydsPharmacy is appealing to some of its largest landlords as they “fail to acknowledge the harsh reality living with this pandemic is having on community pharmacies”.
Citing a recent report commissioned by the National Pharmacy Association which revealed up to 72% of English pharmacies will be in deficit by 2024 under the current funding, LloydsPharmacy argued that keeping its doors open during the pandemic had come at a cost. This included significant investment in Covid-19 safety measures for its staff and customers.
Chris Keen, McKesson UK’s Chief Financial Officer said: “As we deal with the second wave of Covid-19, some of our landlords continue to refuse to engage in discussions about unsustainable rents. Many health centre landlords base their rents on the number of patients on their register, but these patients are currently being encouraged not to visit sites as GPs provide video and telephone consultations.
“Some institutional landlords have engaged to discuss alternative solutions but the majority, including NHS Property Services, are refusing to recognise the impact of reduced footfall. This is clearly unsustainable and puts at risk our ability to continue providing vital healthcare services to the communities we serve.”
Keen revealed that a lot of its landlords had agreed to move to monthly rent payments or to work towards a lease re-gear. He stated that this, together with the business rates relief, had helped to maintain the stability of the pharmacy network. However, he stressed that many pharmacies are no longer financially viable, with nearly a quarter of its English LloydsPharmacy sites being loss-making after incurring significant Covid-19 related costs.
After several failed attempts to engage in rent negotiations with NHS Property Services, LloydsPharmacy is now insisting on a 25 % discount to the rent in these locations.
Keen said: “Institutional landlords should not be insisting on unsustainable and indefensible high rents, which will only impact on our ability to provide patients with essential access to healthcare. We need our larger landlords to acknowledge this and provide more tangible support during these turbulent times. I’d hope their interest – just like ours – is in a sustainable and long-term business.”
