Written by MIAB’s Specialist Business Overheads Insurance Adviser
Locum rates are a constant battle of supply versus demand, and influenced easily by the market conditions they operate in, such as increases in inflation and the rising rate in Locum fees due to contract changes in the GP market, as reported by GPOnline.
The Pharmacy market is no different, shown by C + D’s Salary Survey, which revealed that the decline in the average Locum rate across the UK has levelled off ‘after dropping for the past decade’. The statistics presented were fascinating, in that although the ‘average UK rate may have risen by just 34p-per-hour since 2015’, the previous decade showed a constant decline, which suggests changes are occurring.
Is this a sign of things to come, or simply a bump in the road?
Personally, as an expert in the area of Business Overheads, I believe this is a sign of things to come as similar increases are being noted in the General Practice market due to changes in Government policy. Though these policy changes benefit certain elements of the industry by providing additional sources of funding for areas such as Indemnity and Absence provisions, they then draw away from other key areas including the recommendation to raise Locum fees. These therefore lead to practices requiring higher levels of insurance cover through having to increase weekly benefits for each member, or requiring additional cash reserves to cope with unforeseen financial problems due to the increased locum rates charged.
What are the potential consequences for the Pharmacy industry in respect of Locum costs?
One impact could be that rising Locum costs become a feature of the industry, meaning business owners will have to find the extra finances to cover this expense. With the recent Government cuts in community Pharmacy funding this could prove to be a step too far when businesses are already stretched to breaking point to cover their overheads.
For businesses who have insurance policies in place to cover staff absence, protection is provided for a yearly premium. However those who do not have cover in place are usually left to use cash reserves. With this method there is no fixed guarantee regarding costs, which could potentially leave businesses financially exposed and vulnerable.
A similar situation has recently been seen in General Practice, in which Locum rates charged by locums booking work have risen between 2.5% and 11.3% since October 2016, depending on your location according to MedEconomics and GPOnline’s annual survey of Locums.
This situation has caused General Practice’s Locum Insurance premiums to increase through the additional cover required. If insurance was not in place, practices have had to find additional funds from their already stretched reserves, which is an unwelcome burden given the funding issues that are faced in this sector.
To ensure you are not going to have to reach into your own cash reserves to cover the costs of hiring a Locum, MIAB can provide a bespoke, tailored Business Overheads policy specifically designed to ensure you do not face uncertainty should you, or a key member of staff be absent from the business, giving you safety in the knowledge that you’re covered should you need it.
Examples of overheads range from staffing costs to bring in Locum Pharmacists or staff overtime, through to bills and notional rent that keep your business open and trading, all of which are covered in our Business Overheads Insurance.