General practice as business
Over the next three years the expansion of practices through mergers or collaboration is likely to be a critical factor in maintaining good profits, says Dr Sohail Butt in the last of his series on business success in general practice
GPs have traditionally shown themselves to be astute and adaptable at running businesses and have been able to deal with whatever the Government has thrown at them.
But until last year they have never seriously considered business growth as a necessity. They felt there was no need. Many were content with their lot and there was nothing to threaten them from the outside.
Things have now changed. Increasingly there will be competition from commercial providers. Increasingly, too, resources will only be made available to practices that are expanding.
The changes planned for 2006 and 2007 in the White Paper 'Our Health, Our Care, Our Say' suggests practices will need to look at their long-term viability as small independent units. This white paper sets out Government policy on how practices will be treated in the next few years. Here are four reasons why you should consider expanding your practice,
The White Paper suggests that in order to attract funding of the expanding practice allowance, practices will need to demonstrate extended opening hours and growing list sizes. As 75 per cent of practices need funding to develop premises to meet the challenges of the new QOF, and enhanced services, this will become a critical issue.
Evening and weekend opening
Extended opening hours are being promoted as being essential for eligibility for the expanding practice allowance, and expanded practices with larger numbers of staff will make extended hours easier to achieve.
Tendering for contracts
The Government has asked the Department of Health to help 30 under-doctored PCTs to buy in services by competitive tendering, with an emphasis on bringing in new primary care providers. The White Paper sets out principles for PCTs for Fairness in Primary Care procurement, which may be the template for tendering for all PCTs in the future.
The emerging primary health care market has revealed a significant range and number of people interested in bidding for primary care contracts. Multinational corporations, companies set up by GPs with national and regional strategic experience, local entrepreneurial practices, and consortia of GP registrars have all appeared in the bidding process.
The PCT received 20 submissions for the tendering process for a vacant practice in Derbyshire. The work and skills needed for this competitive process suggests practices need to be of an appropriate size and skill base to take part when GP vacancies arise in their areas. So there is a threat for practices that decide to sit back.
More enhanced services
The cap on Government investment in the GP contract from this year means that in order to maintain profits, practices may need to look at additional enhanced services arising from service redesign.
Practice-based commissioning offers an opportunity for some practices to develop relationships and collaborate to achieve sufficient size to compete for services when the opportunity arises.
Furthermore, a larger critical mass of doctors and patients facilitates the provision of a range of in-house services previously provided in secondary care.
So how can you keep your workload manageable, your staff happy and your profits as high as possible, at the same time coping with the fast-changing NHS environment? Here are five tips that will help you when expansion is on the cards.
·Start talking with your partners and
senior managers about expanding the
practice. Brainstorm some ideas. See if there is a consensus for doing something. Even if now is not the right time, revisit the idea in six months or if an opportunity arises.
·Start talking with possible collaborators. Put out feelers to possible collaborators. These are likely to be neighbouring
practices or people in your commissioning group. A history of working together (for
example in an out-of-hours rota) is a good starting point.
·Look at the business case for possible mergers and collaboration. Possible advantages for practice mergers include:
Savings on staff costs through
Savings on premises costs by relocation to one site
Reduced costs due to greater negotiation clout when purchasing practice supplies
Savings through reduction of
These benefits need to be weighed up against costs and increases in the short-term workload. You need to bear in mind:
The costs of merger. There are likely
significant legal, accountancy, IT and premises costs.
Cash-flow issues. The costs of the merger are likely to change cash-flow in the first year, and it may take a few years to see the full organisational and financial benefit.
Human issues. Joining up practices with different personalities, cultures and ways of working often leads to issues that take time and energy to resolve.
·Make sure you have a manager capable of expanding your practice.
Practices planning to expand will need a manager capable of overseeing the operation. The new contract Blue Book has specified the competencies expected of high-performing practice managers, and it may be useful to show this to your practice manager to see if there are any areas that need to be addressed.
It may be that learning and support are required to develop some of the management, strategy and leadership skills required to help you get through the next few years.
·Make sure you have people learning the skills you need to expand.
A GP partner and/or a manager will need to learn some additional business skills such as tendering a bid for services, developing business plans and the art of negotiation. PCTs, LMCs and pharmaceutical companies are now offering training in these skills.
It is crucial that GPs rise to the latest challenge of competition. Otherwise there is a real chance that some of us will go under.
Sohail Butt is a GP and managing partner in Ashford, Middlesex