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How to ... Lower your practice's expenses

Can you generate efficiency savings this year? Simon Pointon suggests ways to cut down the bills.

Local practice managers can meet to discuss forming a buying club to obtain bulk order discounts (Photograph: Istock)
Local practice managers can meet to discuss forming a buying club to obtain bulk order discounts (Photograph: Istock)

When the DoH announced that it was cutting the Doctors' and Dentists' Review Body's recommended GP pay rise for 2010/11 to just 0.8 per cent from 1.34 per cent, it stated that another 1 per cent should be found by practices making efficiency savings.

Depending on their circumstances - for example, getting reduced funding under a PMS contract - some practices may have to cut back by rather more than 1 per cent to prevent profits falling back dramatically.

The staff payroll is generally practices' heaviest overhead cost, and although reviewing salary expenses might lead to some difficult decisions, this is the logical place to start.

Reduce salaries bill
The Agenda for Change (AfC) pay rise for staff directly employed by the NHS is 2.25 per cent.

It does not apply to staff working for contractor practices unless being paid at AfC rates is part of your employee's terms and conditions. Regardless of this, some staff may be aware of AfC's 2.25 per cent, and not matching it might lead to feelings of resentment.

However, making the team aware of the NHS funding squeeze and the GMS 0.8 per cent rise, might make them happier about accepting a token or no pay uplift.

You may be able to sweeten the pill by offering to pay bonuses if the practice's annual profit is higher than expected.

Offer perks
Practices can achieve savings by offering perks, such as childcare vouchers and extra paid holiday, rather than salary increases. Some staff may prefer more time off to a pay rise.

If you have employees within a few years of retirement who do not belong to the NHS Pension Scheme, suggest they sacrifice some salary in return for the practice paying into personal pensions for them.

A salary sacrifice scheme will cut down the practice's bill for employer's national insurance contributions.

Natural wastage
Making staff members redundant is not an option unless their jobs are no longer needed. But when staff members leave or retire, consider whether other staff can absorb their duties.

Not replacing staff might involve some re-organisation.

Cut locum costs
During the course of a year many practices will waste a significant amount on paying GP locums simply because the permanent GPs fail to stagger their holidays.

Some GPs with young families will only be able go on holiday between school terms, but if the will (and need to cut costs) is there, it is often possible to avoid taking off the same weeks as another GP.

Wherever possible, practices need to avoid holidays clashing so that cover for the GP on leave can be arranged internally.

Form a buying club
A buying club is where a number of practices or other organisations work together to put in joint orders for goods and services in order to secure discounts for buying in bulk.

The ideal size of buying group is probably no more than 10 practices. Local practice managers often meet up regularly as a group and this is a good forum to discuss setting up a club.

Practice buying clubs are used for drugs and medical supplies, staff uniforms, computer supplies, telephone systems, stationery and so on.

They are also used for booking locum GPs, contracting with cleaning services and surgery maintenance services.

Member practices should provide details of how much they are currently spending on the selected goods and services to determine how much each practice will contribute on a monthly basis.

At the end of each year, savings achieved are returned to each practices pro rata to their contribution.

Other ways to save money

Review energy costs and suppliers
Do this at least annually. With so much comparative information available on the internet, it is often easy to find cheaper providers.

Defer repairs and renewals
Establish a budget for repairs and renewals and defer any non-essential repairs.

Switch banks
After a few years, banks tend to take practices' loyalty for granted and charge accordingly. Switching the practice current account to another bank could save on overdraft interest and charges.

Scrutinise accountancy fees
Discussing with your accountant what the practice is paying them to do can bring savings. For example, can your accounting systems and procedures be improved so there is less work for the firm to do?

Change your indemnity provider
Could you pay less for medical defence cover or professional indemnity insurance? Compare what the providers charge GPs as individuals and the discounts available for group membership covering all the GPs.

Do regular stock checks
Most practices hold too much stock of supplies, including drugs and stationery. Set up a system to keep stocks to a minimum.

Cut post and phone costs
When patients visit the surgery, ask receptionists to request an email address or mobile number from them as emailing and texting are cheaper than landline calls and postage costs.

Change accounting year end
Practices without a 31 March or 5 April year end may wish to change their year end to one of these dates. In times of falling profits this may reduce individual partners' tax liabilities. This is a complex area so ask your accountant to do the calculations.

Alter loans to interest only
Changing practice loans to an interest-only basis will not produce savings but will help cash flow as you will not be paying off the capital debt. But the debt will have to be repaid in the future.

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