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Practice profits

Practice profits

Insight: Finance
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Evidence suggests that GP net income is slowly
beginning to decline as gross earnings increases are offset
by higher expenses. In the past GPs have generally proved
themselves very capable of maximising their return from
various payment incentives such as Quality and Outcomes
Framework (QOF) or Direct Enhanced Services (DES)
schemes.

These payments have, though, in many cases now reached
their maximum and as thresholds change just maintaining
income is a success. In this the new challenging environment Evidence suggests that GP net income is slowly
beginning to decline as gross earnings increases are offset
by higher expenses. In the past GPs have generally proved
themselves very capable of maximising their return from
various payment incentives such as Quality and Outcomes
Framework (QOF) or Direct Enhanced Services (DES)
schemes.

These payments have, though, in many cases now reached
their maximum and as thresholds change just maintaining
income is a success. In this the new challenging environment
GPs can and must take action to maintain practice income
while making sure that patient care and service remains a
priority.

Practices are more professionally managed that any time in
the past. However, there is still more GPs can do to maximise
the use of support staff, eliminate unnecessary procedures or
ways of working that haven't changed in years.

Every practice can find cost reductions or income
generation opportunities if time is spent considering the way
the practice is run. A good business manager should take the
lead on this with the GP partners.

A great place to start would be the NHS Institute for
Innovation and Improvement. In recent months they have
started to pilot an approach to improve the effective running
of the practice.

This programme The productive practice follows the
successful productive ward programme, which continues
to realise savings and efficiency improvements on hospital
wards. More details can be found at www.institute.nhs.uk/
productive_general_practice

A few more suggestions to run your practice more
efficiently:

1. Notional rent – if you are due for a review there is real
merit in challenging the local valuation. I have heard of
examples of practices making significant gains in this area
and there are specialist companies who can help you.
2. Maximising the use of nurse practitioners to free up, more
expensive, GP time. When was the last time you considered
the 'staffing mix' in the practice? Have you looked at what
your neighbouring practices or colleagues in the local
consortium are doing in this area?
3. Work with neighbouring practices to improve practice
buying power.
4. Take on immigration medicals for the local area.
5. Ask the practice staff. Business evidence suggests that
asking the very people who are in effect running the business (admin, support, nurses and the GPs) for
suggestions for improvements in the way the practice runs
can reap rewards.
6. Have you compared how you rate against other practices?
Your accountant could give you anonymised data, which
would then give you a sense of how well you are doing in
terms of claims, staffing ratios etc.
7. Is your practice configured in the most optimal way to be
tax efficient – you should talk to your accountant about
different organisational forms. Some practices have found
it beneficial to move to a LLP form, for example.
8. Are you taking advantage of additional income that is
often attached to training and educational teaching
opportunities?

In the future there will be increasing choice for GP
patients. Practices should seek to improve their profile so that
patients are clear about the services offered. In this digital age
it is often surprising how basic most practice information is.

An improved practice profile could be used not only to
appeal to new patients but also to help existing patients use
the practice service more effectively. Younger patients will be
increasingly demanding of information to make their choice
of practice so the opportunity to maximise capitation income
is there to be grabbed.

The increasing shift of care into a community or home
setting and the 'Any Willing Provider' policy offers the
chance for practices to create new businesses that meet the
current and future needs of the local population.

The enhanced public health role of the local authority
may also allow more entrepreneurial practices to offer a
range of new services in the health and social care interface.

The potential to shift care from a hospital to a practice is
significant – particularly in relation to patients with chronic
disease. The practice could provide a new service to substitute
from payments made into secondary care. This might mean
employing some hospital staff within the practice on a session
basis to help provide the service, but the costs should be
significantly lower in the practice compared to the hospital.

This transfer could then provide opportunities to create new
services for the local population that would be funded by
commissioners.

GP practices should pull all this together in a business
plan that captures the actions to actually deliver these
changes. Ideas are two a penny – the secret is in executing
them successfully. Having a great business plan including
robust financial projections will be even more important in
the future.

Another key imperative is to set stretching but achievable
deadlines to make the changes. Working in 30, and 90, day
cycles – practices should be able to make significant progress.

The new commissioning reforms will be supported with an allocation of £2 per head in 2011/12 to ensure that GPs
are able to contribute to the development of the consortia
commissioning strategy. This is an opportunity to fund locum
and other 'back-fill' costs so that GPs can contribute to the
development of commissioning.

The forthcoming changes to commissioning provide an
opportunity to improve practice income by ensuring that the
practice is aligned with the local commissioning consortium
strategy.

There is a high probability that the government will
align some practice income incentives to commissioning
quality health outcomes. Latest reports suggest this could be
as high as 10% of current income. It is important that the
practice understands, and contributes to the debate of, the
commissioning intentions of their consortia. Some examples
could be:

• By ensuring that referral patterns into secondary care.
• Increased use of generic drugs.
• Management of patients with chronic disease within the
practice.
• Taking additional measures to reduce emergency
admissions.
By taking action now GPs will be in a more advantageous
position to maximise the commissioning quality incentive
payment.

Although these are undoubtedly challenging times,
there are many opportunities to maintain practice income.
The first challenge is to find time to think about these
opportunities and then to discuss them with your partners.
There's no doubt that if GPs make the time to plan and then
follow through on a number of these suggestions they will see
the benefit.

Gary Belfield
Associate Partner
KPMG
 

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