How To Maximise GP Profitability

Many GP practices are having to work hard to maintain income levels, manage costs, and improve their profitability while also meeting an increase in demand for services. So, what can be done to maximise profitability?

Software

• Monitor practice finances on an ongoing basis to ensure there are no surprises when preparing the annual accounts.
• Use your accounting software to compare income and expenditure against budgets or prior year results.

Contract increases

• Be aware of contract increases and how these will impact your finances going forward, e.g. increase in global sum and enhanced services items.
• Is additional funding available? e.g. ARRS roles.
• Consider the costs of new services or requirements as a result of the changes, e.g. patients being able to submit routine, non-urgent requests online during core hours and how this will ultimately impact profitability.

Income

• Ensure list sizes are up to date, as practices are paid a certain amount per patient.
• Depending on the patient, you may be able to receive additional income by offering additional services outside of the contract.
• Before you take on new patients, consider the impact that this could have on your finances, as well as your time and resources.
• Any additional services offered should be accurately recorded in accounting systems, ensuring the information is available to claim income from the NHS.

Systems

• Keep track of monies owed to ensure that you are getting paid for all work undertaken.
• Follow up if the income is not received.
• Investigate any differences in the amounts received versus what was expected.
• Prices charged for sundry services should be reviewed to ensure they are up to date and being charged consistently.
• Review existing systems to ensure they are fit for purpose. A slight change in habits or the implementation of a new system could result in time and cost savings.

Drugs reimbursements

• Make full and accurate claims and compare the income received against drug costs incurred.
• There are organisations that can help you check that your claims are accurate and potentially lead to additional claims being made.

Premises

• Notional rent should be reviewed every three years; if this has not been done, arrears may be due.
• Consider when the next rent review is due and instruct a specialist surveyor to assist with this process.
• Review claims for rates and water and chase up any outstanding amounts.

Consider new sources of income

• Involvement in research projects.
• Training income and grants for medical students – this may also help with capacity.
• Grant funding – ensure you are aware of funding available but be aware of any conditions imposed that could lead to abatements or repayments.
• Can excess space be utilised for a new service? Be aware of any potential rent abatements.

Remember, if a new service is going to be costly to operate, it may not be profitable, and the viability of each potential opportunity needs to be reviewed in advance.

Expenditure

Staff costs

• Review the skillset of staff to check that you have the right balance and number of employees in the roles needed to deliver services.
• Organise rotas to minimise the use of locums and the need for overtime.
• Reducing staff costs may not always be the correct answer.
• Consider the work-life balance of the partner group, each practice will need to decide on its own approach.

Other costs

• review contracts when they come up for renewal, for example, light and heat, photocopying, equipment hire, insurance and subscriptions
• consider the level of cover offered on sickness and locum insurance policies and whether this is at an appropriate level given the NHS reimbursements offered

Cashflow management

• Monitoring cash flow on an ongoing basis is a good way to keep an eye on the financial performance of the practice.
• Consider preparing cash flow forecasts for a period longer than 12 months if required due to changes in profit levels and timing of tax and superannuation payments.
• Consider outstanding superannuation balances due to certificates not being processed correctly by PCSE. These certificates can be actioned at any time, and the practice needs to hold sufficient cash to cover these balances.
• Review monthly drawings to consider what level is appropriate based on any changes to practice profitability.
• Most partners would prefer to take an additional draw further down the line when profits are known rather than being asked to introduce funds into the practice if drawings have been too high.

If you wish to discuss your practice profitability, cash flow or drawings position, please contact a member of the BHP Healthcare team.