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High price of success

High price of success
12 January 2011

It remains our position that we have to have our expenses met," says Dr peter Holden, a gp in Derbyshire
and a veteran of the negotiating team of the British Medical Association's (BMA) GPs' committee (gpc). "If not, we've been singled out for adverse treatment."

It remains our position that we have to have our expenses met,” says Dr peter Holden, a gp in Derbyshire
and a veteran of the negotiating team of the British Medical Association’s (BMA) GPs’ committee (gpc). “If not, we’ve been singled out for adverse treatment.”
This has been the GPC’s stance for some years now, and it seems an entirely reasonable one. practice partners, after all, pay for their staff, their building and all their other expenses out of the funding their practices as a whole receive. Any failure to increase funding thus translates into a pay cut for hard-pressed partners – something that, even in this new age of austerity, no other group of public sector workers is currently facing.
That said, however, expenses have soared in recent years. Now, with the NHS facing a multi-billion pound black hole in its budget, the government won’t pay gps a penny more than it has to. indeed, with Health secretary Andrew Lansley planning for gps to take over most of the NHS’s commissioning function, the coalition seems more interested in giving them more work than more money. So what are the chances of getting a substantial increase in practice funding?
Recent history, it must be said, doesn’t auger well for the profession. in 2004, the GPC agreed terms with the government on a new general medical services (nGMS)
contract. Ministers thought they were agreeing a tough new deal that would reward the best practices and penalise the slackers. In the event, of course, they underestimated both the amount of work practices were already doing and the profession’s ability to up their game. As a result, ministers were left gawping as the annual income for the average GP partner shot from £82,000 to £106,000 overnight.
The professions’ jubilation, though, was heavily dented by everything that came after. for one thing, the nGMS contract sparked a whole new genre of tabloid hysteria, as jealous hacks took delight in exposing the handful of GPs earning in excess of £250,000.
More importantly, though, the 2004 settlement has been used as an excuse not to increase funding in every negotiation since. Practice expenses have continued to climb, as utilities costs soared and staff demanded more money. Nonetheless, the last government offered only derisory increases in practice funding, and last spring went as far as to reject the independent pay review body’s recommendation that practices were in need of a substantial funding increase. After several years of this, more than a few GPs began to speculate that those Daily Mail stories were deliberately planted by devious officials, determined to weaken the GPC’s negotiating position.
The upshot of all this is that, despite the perennial tales of fat cat GPs living it up on the public buck, practice profits actually peaked in 2005/6 and have been declining steadily ever since. in 2008/9, the most recent year for which figures are available, gross earnings rose by 2.6% – not bad, until you consider that expenses shot up by a whopping 5.1%. As a result, pre-tax profits for a gMs practice partner fell to £105,300. That’s a 4% fall since the 2005/06 peak of £110,000. Take inflation into account, too, and the pay cut looks more like 10%.
It’d be nice to think that a new government, free of the urge to atone for the humiliation of 2004, would mean that this year’s contract negotiations will bring an end to this pattern. Unfortunately, though, there are reasons to think that this won’t be the case. For one thing, last summer the Treasury announced a pay freeze for all public employees earning more than £21,000. GPs, officials stressed, weren’t excluded from this ruling.
What’s more, GPs are still seen as generously rewarded for the work they do. While the government remains committed to austerity and a mantra of “we’re all in this together”, it’s hard to see how ministers could justify something that would be seen – however inaccurately – as a pay rise for some of the best-paid of all public employees.
Most importantly of all, though, the cupboard is bare. The NHS may have got off lightly in the recent comprehensive spending review, winning a real-terms increase of 0.1% a year, in contrast to the cuts being felt across most of the public sector. But a combination of rising demand and ever-pricier treatments means that inflation in the health service runs way ahead in the general economy.
Indeed, shadow Health secretary John Healey argues that the NHS’s responsibility to plug a £1bn gap in the social care budget means that the settlement actually equates to a 0.5% fall in NHS funding by 2015. In this environment, it’s difficult to see more money for GPs coming top of the health secretary’s agenda.
The BMA, of course, maintains that GPs can’t be expected to pay their expenses out of their own pockets. Historically, though, that’s exactly what has happened. GP funding has moved in cycles, with big pay increases being followed by years of retrenchment, until a recruitment crisis forces the government to think again. With more medical graduates than ever pouring out of the system, and many of the existing lot still complaining of a jobs shortage, this doesn’t seem likely to happen again anytime soon.
So if ministers aren’t likely to attach any more money to GPs’ contracts, what can GPs do to boost their practice coffers?
One option is to ruthlessly cut their costs. Pay for practice staff has continued to rise despite the squeeze on practice funding, with practice managers, salaried doctors and nurses all enjoying annual increases of 2% or more. Stemming the fall in partners’ own income may mean taking a harder line in future negotiations over pay and conditions.
Alternatively, practices may argue that, without more funding, they simply can’t maintain the high levels of service they currently offer. Many of their activities come with funding attached, of course, through the Quality and outcomes framework (Qof) or enhanced service grants. But practices could consider cutting back on work – home visits, say – that doesn’t directly bring in funding.
Both strategies, though, have a rather hefty downside. Cutting pay or benefits risks alienating valued colleagues and employees. Cutting services risks alienating the public – and worse, goes against all a doctor’s instincts to care for their patients.
There is, however, one other option. Lansley, as noted, has staked everything on a radical reform plan. GPs will be required to form consortia that will commission local health services for their entire community. The official negotiating position is that GPs shouldn’t expect to profit from commissioning budgets: funding will cover management expenses, cover for lost clinical time, et al, but practices can’t simply dip their hands in the tin.
Nonetheless, the plan could help practices shore up their finances in two ways. First, the plan is intended partly to encourage services to move out of hospitals into cheaper community settings. That could include new services – minor surgery units, say – run by practices themselves.
This doesn’t mean that practices can simply redirect hospital budgets to themselves, notes Dr James Kingsland, president of the National Association of primary care and an adviser to the Department of Health: “They’ll have to prove the value of the services they’re offering.” All the same, Lansley’s reforms will allow ambitious GPs to boost their profits by expanding their practices.
That’s all still some way off: even if the reforms run to timetable, they won’t be complete until 2013. But they could help the profession out rather sooner than that. Lansley’s plan won’t work without real engagement from GPs. This gives the GPC a stronger hand to play in contract negotiations than it’s had for some time.
“The basis of the nGMS contract was that there should be no new work without new money,” says Dr Holden. “Commissioning is new work, therefore it should bring new money, too.” In other words, if Lansley won’t pay up, he risks watching his entire reform plan collapse.
What’s more, isn’t Lansley more likely to win GPs over to his plans if he takes a more favourable line on meeting practice expenses? Dr Holden won’t comment. Instead, he just smiles. “Use your common sense,” he says.

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