GP profits set to fall by up to 20%
Accountants this week warned the Government's latest, but out-of-date, figures on GP pay masked a profit crash looming on the horizon.
Forecasts suggested GP profits could slump by as much as 20% by the end of the 2006/7 financial year, wiping out some of the well-publicised gains from the previous two years.
Medical accountants approached by Pulse warned GPs to keep a close check on overheads, particularly staff costs, as the combined effects of the pay freezes and PCT clawbacks began to bite.
Paul Samrah, a partner at accountant Kingston Smith, said: ‘GPs are on a knife edge. Under the old contract they never had to think about what staff costs they had to bear, but now under the new contract they have to bear 100%.
‘GPs need to be extra mindful of their costs. Because of the pay freeze they need to concentrate on their expenses rather than thinking about their income levels.'
Simon Pointon, account manager at Sandison Easson, said profits would fall by a minimum of 5%, and up to 20% for some practices, this financial year. ‘Most practices have paid staff bonuses based on the QOF. Now, if they were going to continue giving bonuses at the same level as they have for the past two years, I think profits would fall by about 15%.'