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Maximise income from PA items

Personally administered items can generate a good profit for practices, writes Dr Jeremy Phipps.

If dispensing disappears, the only future for the majority of dispensing doctors will be personally administered (PA) drugs.

PA items are medications administered directly to patients by doctors and nursing staff.

The Pricing Prescription Division (formerly the Prescription Pricing Authority) compiles a list of these and includes items used directly in the surgery or the patient's home, mainly vaccinations and other injections. IUCDs, steroid injections, local anaesthetics and sutures all qualify as PA items.

There is no prescription fee payable by the patient.

Personally administered medications sanctioned by the Pricing Prescription Division include steroid injections, local anaesthetics and sutures

Generating profit
PA items can generate a profit that is high relative to their cost because, in addition to that cost, they also attract a dispensing fee. Because many of these are low-cost items, the dispensing fee may be equivalent to 100 per cent profit. On the other hand, higher cost items can potentially lose the practice money - as explained below.

The dispensing fees PA items attract help cover the costs of providing minor injury, contraception and surgical services within the practice. As with all dispensing, it is financially expedient to prescribe small quantities - one B12 injection at a time rather than a box of five, for example.

Appointing a clear lead in this area, with defined responsibility, is an important step towards efficient financial management of PA items. Many of these are generated by practice nurses so it may be sensible for the senior nurse to be in overall control. However, the practice manager, senior dispenser or lead dispensing partners could also take charge.

The difference between practices that are able to generate good profits from PA items and those that are not is rarely down to the choice of items administered but rather the claiming process.

It can be easy to let small items go unclaimed, losing money for the practice. When analysing your drug budget, approximately 4-5 per cent of your overall drug spend should be on PA items. If it is less, you probably aren't claiming correctly.

Losing money on PAs
Although no prescription fee is charged on PAs, most of the other rules of dispensing remain. One of these is clawback.

Injections are classed as zero-discount items with little or no discount from pharmaceutical wholesalers. However, a clawback of 10-11 per cent of the price is still applied by the NHS to doctors (although, interestingly, not to pharmacies).

This anomaly needs to be carefully monitored because it can result in income loss. If an item has no discount from your wholesaler but the government is taking 11 per cent then, with a dispensing fee of £2.25, any item more than £20 will mean more money is being taken off by the government than returned in the dispensing fee.

Non-dispensing practices have a slightly higher dispensing fee and lower clawback. However, even they will be losing on any PA drug costing more than £25. This can be the case for some hormone injections, including Implanon, which costs £81, thus losing most practices around £6.70 if issued as a PA.

Our practice was asked to prescribe a hormone injection by secondary care on a weekly basis costing £220 - as a PA item, this would have lost the practice £22 per week, or more than £1,000 in a year.

Where a practice is below the 'de minimus' level for VAT, any increase in VAT-rated costs obviously risks putting the practice above this level. Consequently, sending prescriptions to a pharmacy rather than personally administering them may prevent a significant loss in revenue.

It would be wise to take advice from your accountant on this.

Dressings
Apart from PA items, it is possible to recoup some of the other expenses incurred in treatment areas. Dressings are not PA items and so are eligible for a prescription charge. However, if the patient is exempt from prescription charges then the practice can prescribe and claim a dispensing fee.

The same would apply to other patients who do pay, but for whom the difficulty of collecting a prescription fee for a low-cost dressing precludes this and failure to collect would result in the practice paying it on the patient's behalf.

It is also possible to prescribe antiseptic cleaning agents, fluorescein eye drops, KY jelly and even silver nitrate sticks in this manner - all potentially generating a dispensing fee.

Maximising income from PA items, while ensuring there are no losses, is important for all practices. In future, it may be the only source of income from medicines for most doctors.

  • Dr Phipps is a dispensing GP in Lincolnshire

Action points

  • Know which items are personally administered (PA).
  • Be aware that PA items can generate high profit relative to cost.
  • PA items are usually 4-5 per cent of overall drug budget: if less, you may not be claiming correctly.
  • Note that PA items costing more than £20 may lose the practice money.
  • Note that PA items may affect VAT status.
  • Consider dispensing dressings and similar items to patients exempt from prescription fees.

The DDA

The DDA is the only organisation that ensures the views of dispensing practices are heard by the government and key negotiating bodies. We also provide telephone advice to members and essential updated information via our website, and email alerts. To find out more, call Jeff Lee on (01751) 430835 or visit www.dispensingdoctor.org

The DDA does not necessarily support or endorse the opinions or information contained on this page.

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