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After nearly a year of the new contract, Dr Peter Stott looks at how things have worked out for general practice ­ and how they might work out next year

Looking back at the new contract after nearly 12 months and asking how things have gone, the conclusion must I think be ­ partly good and partly bad.

Most practices are financially in good shape. The minimum practice income guarantee (MPIG) ensured a basic level of practice income, quality initiative costings were about right, and aspiration payments should have earned most GPs a bonus.

On the other hand, essential and additional services costings were way wide of the mark and the contract has also failed totally to deliver on enhanced services, though some practices may have earned a little from the latter.

Let us recap how the contract was designed to work, and how indeed it has worked.

Paying for core work

Essential and enhanced services, the very core of general practice work, are now paid for in the global sum which also includes an amount for staff salaries.

As early as March 2004, the GMSC negotiators knew the global sum calculation was insufficient and were predicting that 80 per cent of GMS practices would be reliant upon MPIG to sustain basic practice income.

The global sum was simply priced too low ­ almost exactly at the cost of providing the service.

It seems that at the last moment the Government thought the contract was too expensive overall. It panicked and reduced the national global sum allocation with the inevitable result that most GMS practices came off losers. To make matters worse, the Carr-Hill formula, which was intended to redistribute money to areas of deprivation and higher need, took even more money away from borderline practices.

But for political reasons the new contract had to succeed so MPIG was brought in at the last minute as a facesaving measure. We have been told MPIG will continue as long as it is needed but we do not know how long this will be. In political terms 'as long as it is needed' does not mean 'forever'.


We have yet to see how many practices have needed the MPIG, but this year it has provided security for the many. The quality initiative payments seem to have come out well too with several leading firms of GP accountants already suggesting that 10-20 per cent increases in practice profits will be the norm.

PMS practices should have invested in much of the basic groundwork for the quality initiative prior to April 2004. They are in a better position to restrict increases in staff costs than the GMS practices and so will be expected to be at the top end of this scale. For GMS practices, the actual increase depends upon how much has been invested in staff training and higher staff salaries during the year so as to attain the quality outcomes.

Out-of-hours work

Depending on when practices opted out of responsibility for out-of-hours work, there will be a drop in this source of income in the order of £6,000 per year per whole time equivalent. For some practices this may not yet have worked through. But the deduction needs to be taken into account.

Profit boost ­ sustainable or not?

As a result of the changes, the overall level of profit we might expect will probably fall considerably short of the 30 per cent rise that was being predicted. But at least most of us will receive pay increases and not pay cuts. But before everything is paid out, it might be prudent to reflect on what this increase represents, how much of it is sustainable and what might happen in 2005/6.

In 2005/6 there will be further negotiations on the global sum which in fairness needs to be increased by around 15 per cent. It needs to be this high to accommodate the vagaries of the Carr-Hill formula which is still very much on the agenda and which is likely to weight higher GMS global sums to the deprived marginal New Labour constituencies in the Midlands and the North rather than to the well-heeled Conservative heartlands of the south.

PMS practices still have the option of returning to GMS, but if they return they will not continue to receive their historical uplift, there will need to be negotiation over their global sum, and thus effectively there will be no MPIG. So until the contract beds down it is probably best to stay PMS and not to move back to GMS, particularly if your practice is in the south of England.

Aspiration pay ­ this year's big issue

The big increases this year in both PMS and GMS practices are likely to have come from aspiration payments, prescribing incentive schemes and (depending on tax year-end) quality payments. Most practices should attain at least 850-900 points, so at £75 per point, the average GMS practice would be in line for £65,000-£75,000.

PMS practices have had 168 points (originally 174 points) debited this year because of payments deemed to have been made previously, so their quality amount is less ­ perhaps £50,000-£60,000.

Next year PMS practices will see 109 points offset, but points will be paid at £112 so there could be a more than 50 per cent increase on 2004/5 for everyone. But if your aspiration payments were higher than merited by your end-of-year achievement, then in 2005/6 you could effectively be paying money back. I'm not sure the accountants have thought out the implications of this for incoming partners.

Enhanced services

The final part of the new contract was enhanced services which the BMA's new contract calculator suggested could have added around 10-15 percent to practice income but which for most practices never materialised. With luck things will improve in 2005/6.

Big new earner in 2005/6

The big imponderable is enhanced services ­ how much PCTs will commission, what they will need, and who they will contract with. In 2004/5 it was important to get the quality payments. But in 2005/6 enhanced services will be the big new earner.

Having got essential, additional and quality payments licked, there is no doubt that in order to improve profitability, it is on this area of activity that high-earning practices will concentrate.

Peter Stott is a GP in Tadworth, Surrey

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