Pharmacybrands, the NZX-listed chemist chain operator, has fired a broadside over the use of public money to buy doctors' surgeries.

The group's chairman, Peter Merton, has told shareholders that while he accepted competition in terms of buying and then running general practitioners' practices, it was hard to reconcile “quasi-government agencies” doing the same.

Pharmacybrands, while primarily in the pharmacy business, has 20 medical centres operating under its Radius Medical or The Doctors brands. Its business strategy included buying more equity stakes in pharmacies and medical centres in a push to become a significant primary healthcare player, Merton said at yesterday's annual meeting in Auckland.

“On the medical side we are . . . in the process of increasing our ownership in GP practices,” he said.

It was “definitely competitive”, he said, with corporates and agencies like Primary Health Organisations in the mix too.

“It is this activity by PHOs in buying GP practices that has us a little perplexed as we cannot really understand where the mandate came for this or indeed why public health funds are being channelled into ownership of businesses,” Merton said.

“There also seems to be a large number of players clipping the ticket between the amount paid by the Government for a doctor consultation and the amount the GP receives.”

Many of those ticket clippers, he maintained, “seem to be wholly funded by the Government payments to the GPs”.

“We are not convinced that this is the best way for the health dollar to be spent and we doubt that a National Government would be comfortable with this creeping socialisation of primary healthcare.”

The company, which operates the Unichem, Amcal, Life Pharmacy, Radius and Care Chemist pharmacy franchises, had found its traditional marketing programmes had delivered flat retail sales, Merton said.

But, he added, that was better than the 4 per cent decline in sales at independent pharmacies.

"We believe that there are still inefficiencies in the management of healthcare delivery but we have been involved in the health space long enough to know that any major change is very politically charged and inevitably slow to occur," he said.

The new payment scheme for prescriptions, which took effect on July 1, offered opportunities for the industry, Merton said. Strategically, it pushed pharmacies and pharmacists further up the primary healthcare chain.

Shareholders voted to increase the total fee pool for Pharmacybrands directors by 22 per cent or $70,000 to $380,000.

Merton said there had been no increase in six years.

The funds would be used to “rebalance director payments”.

Shareholders also approved Cape Healthcare and LPL Trustee taking part in the company's dividend reinvestment plan.

- © Fairfax NZ News