Minimising the amount you spend on locum cover

Practices now paying the employer's share of locums' NHS superannuation should look hard at their locum cover needs, writes Fiona Barr.

Extra cost could be £8,000 to £10,000 more for some practices (Image: iStock)
Extra cost could be £8,000 to £10,000 more for some practices (Image: iStock)

The new responsibility for practices to pay locums’ NHS pensions employers contributions came into force on 1 April 2013 for England and Wales.

GMS practices receive an uplift in their global sum towards the cost of paying the 14% employers’ superannuation for all their locums, but the extra £1,000 or so a year on average could leave some practices out of pocket by several thousand pounds.

All PMS practices employing locums look set to shoulder the full extra cost as it seems unlikely that NHS England will agree an uplift to their funding baselines, given that one of its local area offices has indicated they will not get anything.

Review locum cover needs

It makes sense for both GMS and PMS practices to review their use of locums to ensure cover arrangements are delivering optimal value for money.

Jenny Stone, a partner with GP accountants Ramsay Brown and Partners describes the GMS uplift as 'minimal'.

'The extra cost could be £8,000 to £10,000 or more for some practices at a time when income is being squeezed everywhere.’

There are several possible strategies practices could employ to keep that bill under control, according to Fiona Dalziel, a practice management consultant with DL Practice Management Consultancy.

‘First of all consider whether there is another way of covering the need,’ she advises.

Ms Dalziel suggests approaching salaried GPs already employed by the practice to see whether they might do extra sessions at their salaried rate or seeing if the partners would be prepared to cover for each other.

This is exactly the approach taken by Dr Jeremy Phipps and his partners at their Lincolnshire practice.

‘Some years ago, when we were having problems in recruiting good locums, we decided to limit our leave both in amount [length of holiday taken at any one time] and the number of doctors who could be away at the same time so we needed to use locums only rarely,’ Dr Phipps says.

The result is that he and partners are net winners from the change in locum superannuation arrangements, and stand to receive more in uplift income than the locum superannuation they are likely to pay out.

Internal locums

An alternative to reducing the number of consecutive days' leave the partners can take or how many can go on holiday at the same time is for the partners to act as internal locums.

‘You can then agree a rate that would be paid in addition to their normal drawings,’ Ms Dalziel says, pointing out that giving partners who provide cover time off in lieu rather than money could well be counter-productive.

Locum market place

Faye Armstrong, a GP specialist partner with accountants Dodd and Co, emphasises that advanced planning is vital for all predictable cover needs, and advises practices to keep a close eye on the local locum market place.

Using locum agencies is expensive so should be a last resort, she says.

‘It’s important to build up relationships so that you know who is out there and don’t feel you need to take someone just because they are available.’

Negotiating fees

In many parts of the country locums are in a sellers’ market, but even so practices should not be afraid to discuss terms with locum GPs.

Ms Dalziel says her best tip on negotiating fees is simply to always negotiate. She adds that if the practice employs regular locums, it might be able to negotiate a slightly lower rate on the basis of guaranteed work for a block of time.

Another possible source of locum cover is newly qualified GPs who trained at the practice and who might be interested in staying on for a while doing locum sessions.

Long-term sickness

Practices are likely to be most affected by the new superannuation costs if faced with unplanned long-term sickness absence.

‘Single-handed GPs who have to employ a locum are going to be the hardest hit whereas largest practices may be able to use the partners to cover,’ Ms Stone says.

At times like this practices might consider employing a salaried GP on a short-term contract instead of a locum. Or consider renegotiating finances internally if cover is provided from within the existing team.

Ms Dalziel says that if the absence goes on for longer than a month or two and partners are providing cover, it is worth considering temporarily changing the partnership shares.

Locum insurance

 It is advisable for the partners to review their locum insurance policies to ensure that if they are off sick, they have enough cover to include the additional cost of locum superannuation.

By using a variety of strategies practices can keep costs down while ensuring that they continues to run smoothly, good relationships with locums are maintained and finances are not too adversely affected.

Paying locums' superannuation
  • From 1 April 2013 responsibility for locum’s employer pension contribution switched to GP practices in England and Wales. Practices in Scotland and Northern Ireland are unaffected.
  • For GMS practices funding towards this cost is being transferred into global sum equivalent payments. An average GMS practice with around 7,000 patients will receive an extra £1,000 a year.
  • For PMS practices any extra funding (at the discretion of NHS England) seems unlikely.
  • GMS practices can estimate how much uplift they are receiving by adding together their global sum and any correction factor payments and multiplying by 0.25%.
  • Practices will need to pay the 14% employer contribution on 90% of locums’ fees (the other 10% is considered to be expenses) if the locum is contributing to the NHS Pension Scheme.
  • Payment of the employer’s contributions is a statutory requirement and practices that do not comply can be referred to the Pensions Regulator and legal action can be taken against them.

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