Analysing the Office for National Statistics sector-specific monthly GDP estimate, Rangewell has learnt that health and social care has seen a dramatic drop in GDP since February. While some sectors saw output return close to their February levels, health and social care has flatlined 25 per cent below the February standard.
Analysing the story behind the numbers, Rangewell found that:
- Some independent healthcare providers (dentists, ppticians, pharmacists) say they were spending £10k a month to just keep their business going even whilst closed – which, on the whole, they were legally obliged to do.
- There was a rise in drug prices, with many pharmacies reaching their credit limits and even falling behind with the drug wholesalers.
- Due to the way the government has changed the way pharmacies are paid – that is the reduction of the payment they get from actually dispensing medicines to delivering services, which they are paid per-service or in a banded manner – the pandemic hindered their ability to deliver services and they
- Due to the NHS paying three months in arrears, some pharmacies struggled to balance the books.
- The Association of Independent Multiple Pharmacies forecasted in March that pharmacies needed an extra £10k per pharmacy, per month to ease the cashflow squeeze.
- One pharmacist estimated that overtime costs were £5k per week during April.
- The ongoing cost of personal protective equipment (PPE) was costing a group of 23 care homes £70k extra per month in May.
- The IHS Markit Household Finance Index in September showed that there was a reduction in household spending, savings and personal credit availability. This may have caused a knock-on effect on cosmetic or non-urgent healthcare services.
You can read the full report here.
Rangewell is calling on the government to:
- Temporarily revert the way pharmacies are paid - so they receive payment from dispensing medicines than delivering services.
- Give a tax holiday on National Insurance contributions on overtime pay for all independent dentists, opticians and pharmacists.
Nic Conner, who authored the report and is Rangewell’s head of research, said, “Our highstreet dentists, opticians and pharmacists are in crisis. There needs to be urgent action taken to save our community of healthcare providers. The further restrictions could be crippling to independent practices, many of whom, without support, will be forced to shut up shop.
“Like many businesses, the health sector saw a drastic drop in economic output when, on the whole, they were legally obliged to close. Even after restrictions lifted, the sector’s GDP had flatlined at 20 per cent below its February levels, with no sign of a v-shaped recovery on the horizon.
“Frankly speaking, the way healthcare providers have been treated since the first lockdown has not been good enough. The government has to step up its support. Healthcare businesses are the hidden backbone, ensuring the health and wellbeing of the nation – they don’t have time to be worrying about cash flow right now.
“We are calling on Matt Hancock to lead an urgent and immediate review into ways the UK and dissolved authorities can support independent healthcare businesses.”