Pharmacist locums, late cancellations and cartel behaviour

Phone rings.

“Hi Johnny how you doing?”

“Great, how are you? Always nice to hear from you.”

“Well, I’m not so good actually. I want to tell you about an on-going issue we’re having and I don’t think we’re the only ones suffering this problem.”

“Sure. Go for it.”

“I need to tell you about some behaviour that has been happening with our locums. I think you should write about it on PIP.

“Four times in the last six months we have had late cancellations of pharmacist locum bookings that were made well in advance. Here’s what happened each time. One locum phones up and makes the booking then the day before the booking date said locum phones the pharmacy to make apologies for not being able to cover the shift. This is always a stressful moment for the pharmacy team. In the next breath, the locum on the phone will mention that they have a friend who might be able to cover the shift. Initially, we think ‘great, problem solved!’

“On the occasions that this has happened to our pharmacy, we will phone the other locum and ask them if they could cover the shift. The locum always says that they can cover the shift but will charge a premium. For example two weeks ago we had a locum accept a shift at £25 per hour. When this person cancelled their suggested stand in locum said they would cover the shift but due to the last-minute nature of the request would charge £40 per hour to cover the shift.

“To be honest we are at our wit’s end. We are struggling to run profitable businesses and protect livelihoods. We are also trying our best to do the right thing for our patients. We have always paid our locums a fair wage and indeed proudly pay more than most contractors.”

On hearing this story I have to admit I was disappointed. If proven this behaviour is completely dishonest and could be argued to represent cartel type behaviour which is illegal. One of the tricky aspects here is that collusion between competitors is very difficult to prove.

I decided to try to verify this far seemingly far fetched tale. I was really hoping that this was not happening in our profession. To do this I had conversations with a significant number of other pharmacy contractors.

They verified the story and said they or contractors they knew had experienced similar.

So what might be going on here and most important for me do these pharmacists understand how serious this behaviour is?

I think this is cartel-like behaviour.

The term cartel is generally used to describe an informal association or arrangement involving two or more competitors in a  market. In a cartel, the members discuss and exchange information about their businesses or reach agreements about their future conduct, with the intention of limiting competition between them and increasing their own prices or profitability. ⁽¹⁾

The following are examples to add context to this definition.

• It can be illegal to attend a meeting, online or offline, with competitors or their representatives where the price is discussed. Certain topics should not be discussed at these meeting especially anything that involves you telling others what prices you may charge or quote in the future.
• It’s not ok to agree with competitors (i.e. other locums) not to offer your services below a minimum price to help protect your income. Agreeing with a competing locum what prices either or both of you will charge is illegal and can lead to serious penalties. This includes agreeing not to offer services below a specific price.
• It can be illegal for competing locums to divide up markets, such as geographic areas or particular types of customer, and agree not to go after the same ones.
• Price fixing is a criminal offence and can lead to imprisonment.
• In a competitive process like competing for locum work, it’s not ok to discuss what prices you intend to quote with competing locums. It is illegal for locums to discuss commercially sensitive details of their rates with each other, such as what price they will quote when responding to a tender of work.

Any of these ring a bell?

To put some of those points in context I had a look around for examples of cartel type behaviour. There are many examples but the Silent Night case caught my eye.

When competitors in a market collude to market share, rig bids and/or share commercially sensitive information this can harm customers by increasing prices, and reduce quality and choice. This is what happened in the Silent Night case. They basically colluded with competitors to disrupt fair competition in their market. Silent Night was fined £2.8 million for partaking in cartel behaviour. An aggravating factor, in this case, was the involvement of senior executives. These senior executives were seen to be in positions of trust and held significant responsibility.

And that element of trust in my view means this case should resonate with self-employed pharmacist locums. As pharmacists, we must meet the standards set out by the General Pharmaceutical Council. If you cast your eye down the list below you will agree that engaging in cartel behaviour is not only illegal but would also be a breach of a number of these standards.

1. Provide person-centred care.
2. Work in partnership with others.
3. Communicate effectively.
4. Maintain, develop and use their professional knowledge and skills.
5. Use professional judgement.
6. Behave in a professional manner.
7. Respect and maintain the person’s confidentiality and privacy.
8. Speak up when they have concerns or when things go wrong.
9. Demonstrate leadership.

There are some excellent resources available if you want to better understand this issue. The ‘Stop Cartels’ page is particularly useful to check if you fully understand what cartel behaviour is. I found the ‘Competition law quiz’ particularly useful to help my understanding of cartel behaviour. You can also raise concerns about a registered pharmacist to the GPhC.

I know there are two sides to every story and its tough out there for locums but I have highlighted this because basically I think the topic needs to be raised. It is not intended to be disparaging of the vast majority of excellent pharmacist locums operating on a daily basis across the country. This activity is clearly the responsibility of a small minority of pharmacist locums and this article is not meant to be in any way disparaging of the many thousands of honest hard working locum pharmacists out there

Ironically as I write this story the market is falling more and more in favour of the locum. Community pharmacy is experiencing a workforce crisis. The NHS senior pharmacy leadership throughout the UK have pivoted towards the use of GP pharmacists. This has driven a workforce crisis in community pharmacy. In the short term, this has led to inflated locum rates and wages but in the long term when the dust settles no-one in community pharmacy will win.

Now it’s easy for me to get up my moral high horse and start pontificating about right and wrong. Goodness knows I’m far from perfect but this behaviour is a scam and it is clearly dishonest.

Johnathan Laird is a pharmacist who tries to add balance but will likely not please everyone.

References

1. Thomson Reuters Practical Law, UK cartels and restrictive agreements: a quick guide available here. [accessed 27.11.19]