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How contract changes and NHS reform are affecting GP finances

Accountant Faye Armstrong looks at how changes that came into effect on 1 April are impacting on practice income - and what GPs can do to mitigate their impact.

Cash flow forecasting and budgeting is more important than ever (Picture: iStock)
Cash flow forecasting and budgeting is more important than ever (Picture: iStock)

The end of the Easter holidays 2013 saw a flurry of activity on the GP financial front with the issue of the revised Statement of Financial Entitlements (SFE) encompassing the details of the changes to the contract.

Details of most of the changes had already been widely reported, but early warning signs are now flashing as GPs come to terms with their new contractual changes.

QOF and MPIG changes

As far as GPs accounts are concerned, it's no longer a question of looking back, now is the time to look forward. Changes to the QOF and the loss of MPIG are the two biggest worries for GPs.

The maximum QOF achievement is now 900 points rather than 1,000, which means GPs are starting from a baseline of 90% before we even talk about threshold changes.

From our own client list we estimate that approximately a third will be affected by the MPIG changes coming into place next year. GPs should be discussing these changes with their accountants at this year's accounts meetings rather than concentrating purely on historic performance.

Paying GP locums' superannuation is another issue that practices must consider and is also worth raising with your accountant to assess the impact this will have on your practice's finances.

Concerns over enhanced services

There are also some worrying instances surrounding payment for enhanced services. These seem to be the real issue in terms of many of the payment problems practices are experiencing following the abolition of PCTs and the change in structures in the NHS.

Responsibility for enhanced services are now divided between three organisations - CCGs, NHS England’s area teams and the local authorities. It is clear from the latest guidance that NHS England can delegate the management of some enhanced services back to the CCGs. All of this to-ing and fro-ing is bound to lead to confusion – and inevitably have an effect on payment streams.

We are also aware of practices receiving tendering-type documents to complete where responsibility for  payment for services has moved to local authorities, namely public health services.

While the issue of tender documents is standard procedure for procurement purposes, the clash of cultures may lead to mass confusion for both sides.

Of the tendering documents I have seen it is clear that these are ‘standard issue’ and do not necessarily take account of the specifics of general practice.

One practice manager I have spoken to had no idea where to start with her 12-page form. The document was asking for the practice's last three years audited accounts. As the accounts of a standard GP partnership are never audited, it is clear that the authority had not modified their paperwork to be of relevance to GPs.

Cash flow forecasting is essential

We are entering a period of uncertainty for GP income streams. As accountants we always advise our clients to keep a close eye on their monthly income streams, but this year it is even more of an issue.

Cash flow forecasting and budgeting will be essential. GPs should speak to their accountants for extra guidance in setting up templates to help them do this, if they haven't already done so.

The worry is that a lot of practices will look at the income coming into their bank accounts and think ‘it's the same as last month - it must be ok’ - but in fact their may be some hidden dangers around the corner.

If payment teams are unfamiliar with GP finance or have made payments purely based on 2012/13 performance, there may be some very nasty clawbacks to come later in the financial year.

Riding out the storm

Despite the gloom and doom, well informed GPs can ride out the storm. It all comes down to preparation and information.

In some cases it might not be a clawback, but an unexpected windfall. It just means that practices need to ensure that the person preparing the cashflow properly understands the ins and outs of the SFE.

The next financial year really must be a year of 'planning for the future' if GPs want to maintain their levels of income.

Unfortunately, as with any type of forward guesswork, this can be riddled with uncertainty. In particular for GPs the spectre of ‘equitable funding’ and a possible attempt by the government to even out funding between GMS and PMS contracts, looms in the longer term.

  • Faye Armstrong is head of GP services at specialist medical accountants Dodd and Co

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