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At the heart of general practice since 1960

Check your spending and earn more in these austere times

As NHS income has at best levelled off this year, there is only one realistic way to keep non-private profits up – and that is to reduce expenses.

It was very easy to lose sight of this vital rule of business during the last three years of increasing income and profits, but the looming black clouds of austerity should concentrate all of our minds wonderfully.

Ideally expenses monitoring should be a constant process, but in reality it is often something we only check when the figures appear in black and white in our accounts.

'How did we manage spend that much on books/phone calls/ etc?' is a common statement at accounts meetings. You may have had a blitz a year ago, but the fact is that rules slip, suppliers' prices become less competitive, and no one is going to take better care of spending your money than you.

Expenses eat up about 45-50 per cent of total income. Therefore even a 1 per cent improvement can represent a significant amount of money. The best way to audit expenses is to list them in the same categories and subheadings as shown in your accounts (employment, premises, administration and so on).

For efficiency the subheadings should be ranked in order of value with the highest first. Now you can check through each category, looking at the high-value items first. For each item ask the following questions.

1 Can we reduce expenditure and get the same or a better deal? (The answer is usually yes.)

2 When did we last shop around for quotes in this area? (If more than six months ago it is worth having another look.)

3 Who can deal with this area the most effectively?

•Many practices buy their own vaccines and injections for administration to patients. The most expensive of these is Zoladex. A practice had used the same supplier for three years and noticed an advertisement in a medical publication for an alternative supplier. It managed to obtain a 20 per cent reduction in price, the PPA tariff price remaining the same. Annual profit for this item alone rose by more than £3,000.

•A practice had not checked prices for buildings and contents insurance for many years. On getting quotes it saved more than £1,000 in premiums for similar cover, plus income tax investigation cover was included as a free perk for all partners.

•After a large rise in utility prices, a practice decided to shop around and, although this is not as easy for businesses as domestic users, it was able to reduce gas and electricity payments by £750 and obtain a guaranteed gas price for three years by changing supplier.

•A practice reviewed staff costs. By introducing flexible working, skill mixing and improving morale by better training and social events, it was possible to avoid replacing a receptionist who left. This funded the annual pay rise of 3.5 per cent.

You have absolutely nothing to lose by checking your expenses, and much to gain. Do it now – and do it every year.

John Couch is a GP in Ashford,

Middlesex

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