Tendering for a GP practice is a frustrating, time-consuming and stressful exercise with a reasonable expectation of failure. So why should GPs be looking to tender for other practices?
So, let's look at general practice today. GPs have not had a pay rise since the new contract was introduced in April 2004. Several PCTs are engaged in aggressive list cleaning, which ultimately reduces patients and funding.
PMS practices are working against PCTs who have an instruction to 'aggressively constrain spending on PMS contracts', while GMS GPs are about to lose the MPIG, probably worth £30,000 per GP.
At the same time, the private sector is looking to move into primary care. Aside from the obvious political and ethical implications, be aware that there are two important differences between the financial objectives of a private provider and a typical PMS/GMS provider.
First, the private provider may structure the bid low enough to win the contract in order to gain more of the GP market share, which will have a value that grows with the size of the organisation.
Second, the private provider may well have existing business that generates sufficient profits that it need only cover the costs of the practice without requiring profits for the provider.
So why bother?
Patients bring with them financial resources. Assuming no development monies, no MPIG, reasonable quality framework scores and enhanced services provision, an average patient should bring £80 of funding.
A practice with 2,000 patients should have an income stream of £160,000. Allow 30 per cent for staff costs, 8 per cent for locums and out-of-hours cover, 7 per cent for additional administration costs and this leaves £88,000, which should cover nine sessions of a salaried GP at £8,000 per session with on costs. If the costs can be reduced by using existing resources - usually possible - there is a profit for the practice winning the tender.
There is little doubt that larger practices seem to have an easier time from their PCTs. Whether it is requesting additional resources - all of which are cash limited now - or applying for 24-hour retirement and not having your contract terminated, size seems to matter.
Practices, like all business, need to develop. Without resources they are stifled. It is extremely depressing and demotivating to have to make staff redundant or withdraw services because the resources are not there.
Support for GPs
The NHS, like most centrally managed economies, suffers from poor management and violent changes and I do not need to list all the major changes in the past decade. Three years seems as far as one can look ahead before some radical change in direction takes place.
While they await the next change - one we hope will be more reasonable for GPs - practices need to make sure they survive the status quo. Expanding your practice by tendering to provide new services or to take on another practice is one way to achieve this.
GPs need not feel the tendering process is overwhelming. There is a considerable amount of help out there for GPs. Their accountants can help with the financial assessment and, once one tender has been completed, a lot of the work done can be used in further tenders. There are managements consultants who can provide assistance (for a fee, of course) and GPs may choose to form a group with other practices to tender together.
Tendering is frustrating, time-consuming and stressful, true - but it brings with it the possibility of growth, development, additional resources and for some practices survival.
You ignore the process at your peril.
- Laurence Slavin is a partner at medical specialist accountants Ramsay Brown & Partners in London www.ramsaybrown.co.uk
Pros and cons of tendering for contracts
- Brings in extra funding.
- Keeps out private sector.
- Facilitates growth in practice.
- Increased size = increased influence.
- Assistance in tendering is out there.
- Time consuming.
- No guarantee of success.
- Private sector can afford to be cheaper.