Outsourcing the dispensing services of outpatients pharmacies in NHS hospitals may prove challenging but could also be advantageous for trusts, says Ron Pate.

Earlier this year, the procurement and distribution interest group of the Guild of Healthcare Pharmacists commissioned an independent report to compare models of hospital pharmacy outsourced outpatient dispensing (OPD) services. The aim was to assess the potential strategic impact on patients, other hospital pharmacy services and medicines procurement and distribution.

The review was carried out using semi-structured interviews with NHS trust chief pharmacists, other NHS pharmacy staff and key stakeholders such as third party outsourced service providers and representatives of the pharmaceutical industry.

Financial drivers

The financial pressure within the NHS has led many trusts to think how costs can be reduced while they are faced with ever increasing clinical demands. As hospital pharmacies have not been exempt from this pressure, a number of them are seeking innovative ways of dealing with the problem.

Current VAT regulations allow medicines dispensed to hospital outpatients by third party providers to be zero rated. Funding released creates the potential to improve the patient experience through changes to the outpatient pathway. Several trusts have taken advantage of this by outsourcing their OPD service. Financial and activity pressures in the NHS, plus demands to improve quality, have accelerated schemes to outsource hospital pharmacy OPD services. These pressures will not disappear and are likely to increase over time.

 Different outsourced models have been introduced in recent years and the rate at which new services are being introduced is increasing rapidly. A number of service models are evolving, including:

  • contracting OPD services to third party private providers;
  • creating a limited company (a wholly owned subsidiary) within the trust;
  • using a social enterprise scheme;
  • increased use of homecare to cover the majority of OPD service expenditure.

The impact on patient care, organisational benefits and any issues arising from each type of service model has yet to be fully assessed. The procurement and distribution interest group committee therefore decided to commission a study to get such an assessment under way. The report also aimed to examine issues from a patient and taxpayer perspective and include:

  • a description and comparison of the models examined;
  • commentary on the pros, cons and complexities of the models examined;
  • identification of benefits and issues etc;
  • potential operational and strategic implications and issues that may arise from the models.

Three models have emerged as most dominant and innovative for providing outsourced hospital pharmacy services. The most widely adopted has been to use homecare providers to deliver high cost medicines. This has been subject to a Department of Health review, Homecare Medicines: towards a vision for the future.

Of the other two, one involves using a commercial provider, for example a community pharmacy, and the other involves creating a wholly owned in-house subsidiary company of a hospital trust. While both have strengths and weaknesses, the former has an advantage in that it brings external commercial expertise to the NHS; the latter model, however, allows all “profits” to be retained within the NHS.

Working with private sector providers is one way to meet increasing patient demand and bring innovation and commercial expertise to hospital pharmacies. Community pharmacy chains and homecare providers are gaining expertise and confidence in providing aspects of some secondary care services.

Challenges and opportunities

The outsourcing of hospital pharmacy OPD services has generated much debate and raised many questions in the NHS and the pharmaceutical industry.

However, it is clear from models in operation that outsourcing these services offers a wide range of benefits. These include reduced waiting times for patients, potential added value benefits for them and cost reductions for trusts, which can then be used for inpatient service improvement. As VAT savings drive the funding model, there is widespread agreement that improving outpatient services must be the foremost objective.

Many trusts have progressed with outsourcing their OPD services at pace and currently there is much duplication of effort. This is wasteful. Most trusts appear happy to share their experience and expertise, so this opportunity should be harnessed.

Outsourcing OPD services is a complex process and takes a considerable amount of time and effort. Good leadership and project management skills will be necessary to achieve a successful outcome and there are impacts on staff that need to be managed. A good practice guide for chief pharmacists needs to be developed and some components have been identified in the report.

The NHS needs guidance on outcomes to help them assess which outsource option best meets their patient needs and trust objectives, while also taking account of national strategic issues, for example, effective supply chain management.

Medicines supply chain

Many believe the complexity of outsourced OPD services and the associated lack of transparency in an already vulnerable medicines supply chain is of major concern and warrants further examination.

Newer models represent a strategic shift in the relationship between hospital and community pharmacies and between the NHS and pharmaceutical manufacturers; as such, there is a great concern among many that the loss of commercial confidentiality of NHS contacts will threaten pricing agreements for NHS medicines which will disadvantage the NHS.

The long-term commercial implications of many of these changes - impact on hospital contracts for medicines, supply chain security, data management - do not seem to have been taken into account. Given their significance for the NHS and medicines pricing agreements, they need urgent consideration.

A national group needs to be established under the auspices of the National Pharmaceutical Supply Group to address some of the issues that emerge from the procurement and distribution interest group report.

The outputs from this could then inform guidance on outsourcing outpatient dispensing services - for example, on contracting, key performance indicators, financial and clinical governance - that is not only in the interests of patients, taxpayers and the NHS but also maintains the integrity of the medicines supply chain.

It would be a waste if these issues were not adequately addressed given that benefits to all - particularly patients - are already apparent from these service innovations.

Ron Pate is pharmaceutical adviser (secondary care) in the department of medicines management, Keele University. Martin Anderson is director of Martin Anderson Consulting.

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