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Negotiating local enhanced services

Good negotiating skills and accurate costings are two key factors if your practice is to succeed in driving up income from LES contracts, says Fiona Barr

Ensure the practice will make an acceptable profit before signing the contract
Ensure the practice will make an acceptable profit before signing the contract

Some practices earn £25 per patient from enhanced services while others earn £4.

If you are surprised by this huge differential, your practice may lack the capacity to take on all enhanced services contracts, including local enhanced services (LESs) and directed enhanced services (DESs), available to GPs locally.

Or with LESs - bearing in mind that DESs have national conditions and payment  terms - the practice may have undersold its GPs' and staff  team's skills or underestimated the costs involved. If so you need some advice, perhaps from your LMC, on how to agree contract terms that help rather than hinder practice profitability.

Help from your LMC
Devon LMC is spending increasing amounts of time on negotiating and pricing local enhanced services (LESs), according to its executive chairman, Barnstable GP Dr Mark Sanford-Wood. 'It’s a real growth industry,' he says, adding that the trend in Devon has been for each individual locality within the PCT to negotiate its own versions of LESs.

Dr Sanford-Wood believes some fundamental elements lead to negotiating success. 'Building relationships with the people you are negotiating with is very important,’ he says. ‘If at all possible, it’s good to have a win-win situation. Sometimes what they need is not hugely important to you.’

He says that ensuring discussions take place with the people who have the power to make decisions is crucial, and that practices should be prepared to walk away if their income target for providing a LES is not met.

Income per patient
Jenny Stone, a partner with GP specialist accountants Ramsay Brown and Partners, says the wide differential in enhanced services earnings is clear from practices' annual accounts.

‘Looking at the results for 150 practices with 31 March accounting year ends, enhanced services income (including LESs) for practices ranges from £25 to £4 per patient. 'Smaller practices don’t have the resources to offer a range of services, but also it very much depends on the primary care organisation (PCO) and the enhanced services it offers.’

Ms Stone emphasises the importance of making enhanced services pay and says some of her clients are giving up the work as uneconomic to do.She explains that the starting point for practices is what it will cost to provide the service. 

'Some practices have seen that providing a service is adding an extra cost and they are not necessarily getting the income to pay for that,’she says.

If the price is right
Londonwide LMCs  chief executive Dr Michelle Drage points out that the key concept of enhanced services is choice for GPs. ‘If the price is right you can say yes, and if the price is not right you can say no,’ she says.

Dr Drage points out that guidance produced by the GPC  when enhanced services were first introduced in 2004 sets out pricing principles that are still valid today. It states that when calculating profit margins, GPs need to consider the complexity of the work; any  increased risks, especially litigation risks; any further training needed and financial risk management, she says.

Under an Office of Fair Trading (OFT) ruling to enforce competition law, the BMA is not permitted to suggest or publish fees for services that could be provided by any medical practitioner.

According to Morgannwg LMC secretary Dr Ian Millington, this ruling limits the the work LMCs can do on behalf of GPs. ‘It’s been made very clear that we are not in a position to negotiate on price, so for enhanced services we use the [original] national figures and might add on a bit for inflation,’ he says.

Ten cost categories to factor in

1 Additional staff hours and costs including time spent directly providing the service.
2 Time involved liaising with others and setting up the service.
3 Training costs.
4 Admin costs (writing to patients, for example).
5 Premises overheads (electricity, telephone costs, for     example)
6 Increased medical defence costs if extended indemnity is needed.
7 Reviewing the service each year.
8 PCO/CCG verification.
9 Mileage and travel costs for GPs/staff if relevant.
10 Patient information material.

Make friends with your CCG
The UK-wide drive to deliver more services closer to home should theoretically mean an increase in enhanced services opportunities for GPs.

In England clinical commissioning groups (CCGs) will take over responsibility for most enhanced services from April 2013 and Dr Sanford-Wood says that practices need to make sure now that relations with their CCGs are good.

He adds that Devon LMC is working on setting principles for pricing LESs that can be applied across a range of different services. 

Negotiating do’s and don’ts
The following advice should help ease your way:

  • Do build a good relationship with your primary care organisation/CCGs.
  • Don’t try to push your agenda for a LES contract without being prepared to give way on minor points important to the other side.
  • Do ensure the practice will make an acceptable profit or is clear about why it is taking on a loss-making service
  • Don’t make negotiating a personal issue: both sides are likely to be acting in good faith.
  • Do be prepared to walk away
  • Don’t agree LES contracts without LMC advice.

Challenge ahead
Current implementation guidelines and regulations require commissioners to consult with LMCs when drafting and pricing LESs. In England there is potential for conflicts of interest when CCGs take over next April and Dr Drage believes the involvement of LMCs in negotiating LESs is vital.

But she warns that money available for LESs is unlikely to grow in 'the hyper-managed CCG scenario' with commissioners prevented from making changes to the hospital services tariff.

So for GP practices the main challenge may be to ensure that providing current enhanced services continues to make economic sense and that any new services are subject to rigorous negotiation over content and price.

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