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Financial outlook for practices in Scotland in 2013/14

GPs in Scotland can breathe a small sigh of relief over their practice finances in 2013/14, says Faye Armstrong.

There is some good news for practices in Scotland (Image: iStock)
There is some good news for practices in Scotland (Image: iStock)

The 2013/14 Scottish GMS contract settlement is by no means a generous giveaway, but GPs from other parts of the UK will be looking on enviously.  

The contract changes are not likely to provide many practices with cash windfalls, but most should be able to maintain their income, and some may even see it increase slightly. Translating an increase in income into an increase in profits will be much more difficult.

The good news

The best piece of news is there will be an uplift to the global sum. The Scottish government is waiting for this year’s Doctors’ and Dentists’ Review Body (DDRB) report before announcing how much it will be.

The uplift will help pay for some of the increases to practice expenses, but as it will have to fit in with the Scottish government’s pay policy it is unlikely to be generous.

It needs to cover the increase in partners’ superannuation contributions, a modest rise in staff pay and general price increases in items such as power bills, consumables and medical defence for Scottish practices’ finances to stand still.

Otherwise practices still need to cut costs or increase income in other areas if GP partners are to maintain their current drawings.

This is easier said than done because many practices have already trimmed excess costs over the last few years while income has been relatively flat. 

Although all practices will receive a GMS pay increase, some will gain more than others. The QOF changes will also affect some more than others.

MPIG

 The large number of practices that still receive a minimum practice income guarantee (MPIG) correction factor will not feel the full benefit of the contract uplift, as part of it will be recycled against this payment.  

However, these recycling plans will still have a much smaller impact on GP finances than the earlier proposals to phase out the correction factor over seven years.

Note too that the threat to MPIG has not disappeared: the Scottish government has merely postponed its decision (see 'funding review' below).

QOF thresholds

 Increasing the thresholds for some QOF indicators, and bringing in new indicators with relatively high upper thresholds will mean practices have to work harder to maintain QOF income. But the thresholds are still more achievable than those proposed for England, and the exception reporting will help make it possible for practices to maintain QOF income.   

The QOF changes may require a shift in resources. Moving funding from organisational indicators (which non-clinical staff can help achieve) to clinical ones (which need GP or clinical time) tips the balance of the income generating effort even further from support staff to clinical staff. 

If GP time isn’t available, or the cost of providing it isn’t paid for by the income from the indicator, practice income will fall. 

Organisational points

 The transfer of 77 QOF organisational points into the global sum should not change overall income, but could improve cash flow very slightly. The global sum is generally received earlier than QOF income because typically 30% of total QOF is paid to the practice after the year-end, while the full global sum is received in the funding year. 

By moving 77 QOF points into global sum, practices will not have to wait until after the funding year ends to receive the final 30%. The effect will be fairly minor, because these 77 points are only worth about £2 per patient,

On the flip side, GPs who draw the QOF achievement payment as a bonus will have a slightly smaller bonus in 2014, having already received the full payment in the 2013/14 NHS financial year.

Funding review

 Although 2013/14 will be a period of relative calm for Scottish practices, the outlook appears changeable when looking further into the future. The review into variability of funding between practices (the MPIG) is still to be undertaken and acted on. 

There are promises that any policy changes resulting from it will be phased in over a period of time, but even staged, long term policy changes create uncertainty, and uncertainty doesn’t encourage practices to invest in their surgery or expand services.

So as a healthcare accountant living 10 miles from the Scotland/England border, will I be seeing a rush north?

Locums' superannuation

One possibility might be locum GPs making the move. Scotland will not be passing the bill for their 14% employer’s superannuation on to practices.

This will make a locum charging the same sessional rate 14% more expensive in England than Scotland.

If practices in England try to share the 14% cost between them and the locum, working north of the border will be much more attractive to the locum.

Overall though, the grass in Scotland certainly looks a bit greener for GPs than in England.

  • Faye Armstrong is a partner at specialist medical accountants Dodd & Co

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