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Practice profits fall by 2.3% in 2005

The upward surge in profits in the first year of the new GMS contract proves to be short lived.

Practice profits have dropped back following an upward surge in 2004/5, the new GMS contract's first year.

According to figures compiled by North London medical specialist accountants Ramsay Brown & Partners from the annual accounts of client practices in South East England, profits at GMS practices with a 30 September 2005 year end were £50.19 per patient. This is a drop of 2.3 per cent compared to the £51.35 per patient earned by those with a 30 June 2005 year end.

Equivalent figures for PMS practices were £58.05 for September and £58.23 for June - a decline of 0.3 per cent.

Partner Laurence Slavin says: 'There is a mistaken impression that the increase in quality income will continue to push up GPs' profits. But with no increase in global sums, the average increase in a GMS practice's income to 30 September 2005 is 4.7 per cent.

'If practices have increased their spending on the strength of a perceived increase in income, they are likely to suffer a fall in profits. The drop for PMS practices is cushioned by the reduction in the PMS discount from 168 to 109 points.'

PROFIT AVERAGES
South East England practices: accounting years ending in 2005
31 March 30 June 30 Sept
GMS practices 2005 2005 2005
Global sum equivalent
per patient/MPIG 1 £63.00 £65.90 £65.90
Quality and outcomes
framework per patient 2 £11.70 £14.03 £15.21
Enhanced services 3 £4.50 £4.90 £4.90
Staff costs as ratio
of GMS income 35% 35% 37%
Medical staff/locum costs
as ratio of GMS income 6% 6% 6.2%
Non-staff related running
costs as ratio of GMS 8.50% 8.50% 8.70%
income
Financial/professional
costs as ratio of
GMS income 1.75% 1.75% 1.75%
Net profit per patient 4 £48.61 £51.35 £50.19
PMS practices
Baseline budget per
patient 1 £73.00 £76.30 £76.30
Quality and outcomes
framework per patient 2 £10.60 £12.71 £14.40
Enhanced services 3 £4.20 £4.50 £4.50
Staff costs as ratio
of PMS income 30% 30% 31.5%
Medical staff/locum costs
as ratio of PMS income 5% 5% 5.2%
Non-staff related running
costs as ratio of
PMS income 7.30% 7.30% 7.70%
Financial/professional
costs as ratio of
PMS income 1.50% 1.50% 1.60%
Net profit per patient 4 £56.36 £58.23 £58.05
Source: Chartered accountants Ramsay Brown & Partners,
www.ramsaybrown.co.uk.
Practices elsewhere in the UK should compare their figures with averages
produced by their own accountants.
1 Excludes GPs' superannuation and seniority pay. 2 GMS: average 920
quality points achieved; PMS average 832 quality points achieved after
deducting quality framework offset. 3 Childhood/pre-school
immunisations, QuIP, access and minor surgery. 4 After expenses.
Includes profits from non-NHS work.

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