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Guide to practice accounts: Making the figures meaningful

The figures contained in GP practices' accounts can be converted into statistics to help them benchmark their financial performance against other practices. By Mike Gilbert.


 To set up the benchmarks, some accountants take an average of their own clients to localise the comparison, while others may rely on detailed statistics published by the NHS Information Centre.

Larger firms of specialist medical accountants may have their own statistics and firms belonging to specialist professional associations, such as the Association of Independent Specialist Medical Accountants (AISMA), may also have access to national statistics for England, Wales, Scotland and Northern Ireland.

Most useful benchmarks
The most useful benchmarking statistics are produced on a ‘per patient’ and a  ‘per partner’ basis. The latter should always relate to a full-time equivalent partner.

Benchmarked statistics should enable GPs to gauge the financial performance of their practice against others in their area and if possible, nationally. They should be able to identify where they perform well and where they may need to direct some effort into improving performance.

PMS or GMS contract
Practices will need to take into account whether they operate under a PMS or a GMS contract, geography, age of partners and, of course, list size. Given that around 25% of GPs are salaried, figures calculated per patient may well be more reliable than figures calculated per partner.

Statistical steps
The statistics can be compiled in a series of steps. First, the number of patients in the practice is established and converted into patients per full-time equivalent partner and full-time equivalent GP. This is a crucial step because under the GMS contract, money follows the patient.

The next step is to identify the income and expenses in the accounts and calculate the amount per patient.

Income can be broken down into contract income, other NHS income and other non-NHS income, while expenses can be broken down under the headings of staff costs, medical expenses, premises expenses, administration expenses and other expenses.

The next step is to calculate the same income and expenditure on the basis of a full-time equivalent partner. The final step is to produce other statistics, such as the percentage of expenses to total income and QOF points.

Compare and contrast
Once all of the statistics are calculated, they can be compared with the benchmark statistics previously set and the same statistics for the previous year. In this way, the statistics should prove a useful tool in any attempt to move your practice forward and should be the subject of much debate among the partners when they set their strategy for the years to come.

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