This site is intended for health professionals only

At the heart of general practice since 1960

How to control your practice costs

Our expert panel of GPs, a financial advisor and a practice finance expert examine a typical practice case study and suggests innovative ways of making efficiency savings

Our expert panel of GPs, a financial advisor and a practice finance expert examine a typical practice case study and suggests innovative ways of making efficiency savings

Increase GP workload or consider redundancy
Dr Martin Whiting, GP in Manchester with an interest in practice finance

The way GP partner time is used outweighs all other considerations at most practices, so let's address that first.

In the example practice, both the profit per full-time equivalent partner and patient:doctor ratio are low, so it would want to either increase its list size or reduce doctor time to a more standard ratio of about 1,700 per FTE GP. Each partner should be having about four to six contacts per patient per year. If a practice has a low number of contacts per doctor, are the partners willing to increase their workload? If the contact rate per patient is high, why is this and can it be addressed?

If we assume a list size of 1,600 per FTE GP, the practice will need 5.2 GPs. If it is going to consider redundancy or a reduction in partners, it will need professional advice from an HR specialist. The best is from the BMA, or if none of the partners is a BMA member, the LMC will have some suggestions about who to approach.

Payroll is the NHS's biggest expense and its biggest opportunity. The example practice should review what its 1.9 FTE nurses are doing, auditing the reasons for appointments and their frequency and length. Practices should determine whether there is scope for automation or better skill mix. A healthcare assistant can perform electrocardiograms, spirometry, registration data gathering, smoking cessation and alcohol screening. A machine can check blood pressure and admin staff can do call and recall for the QOF.

GPs should also review job descriptions and activity of all staff to see if minor changes might make working practice more efficient. For example, could the practice nurses offer a travel clinic to non-registered patients?

Finally, you should review other practice expenses to make small but worthwhile changes. Review energy and telecom suppliers annually – consumer and price comparison websites such as USwitch.com and thepowerswitch.com are useful.

To make savings on stationary, printing and postage try suppliers such as Staples or Viking, or ask your supplier to match prices you have been quoted elsewhere.

Target key suppliers to cut buying costs
John Baldaro, director of GP cost reduction service PracticeProfit and member of the Chartered Institute of Purchasing & Supply

From a profitability perspective, Beadale Health Centre is operating suboptimally.

We'll assume the practice has already looked at generating income, perhaps through expanding its list size, maximising private income, enhanced services or bidding for local practices.

It can also aim to reduce costs by leveraging its buyer power, focusing on the ‘vital few' suppliers – work on the 80/20 rule. Typically, 20% of suppliers to the practice will contribute 80% of the cost – the practice should target these firms for early cost reduction initiatives. It should talk to each of its key suppliers and explore opportunities to jointly reduce costs – they will have ideas too. Most practices restrict themselves to asking for price discounts but there are greater prizes in effective purchasing, such as buying smaller packs of medicines to reduce waste. Beadale should expect cost reductions averaging 20% across all spend categories, saving about £25,000 in the first year – arguably a quicker return than chasing more income.

Its LMC may have already secured a buying-group deal, or it could approach neighbouring practices to negotiate group discounts or value-added services from accountants or insurers.

John Baldaro can be contacted by email at john@customerconnections.co.uk

Optimise use of your practice premises
Dr Mo Dewji, GP in Milton Keynes and clinical director of NHS Primary Care Contracting

A 35% margin suggests scope to improve efficiency. Maximising use of the practice's premises by running extra services is one way of becoming more cost-efficient.

Under practice-based commissioning, the practice could offer a diabetes or musculo-skeletal service, with a charge payable to the practice as the service is moved from secondary care. Savings could be used to invest in further pathway redesigns or staff training and development. GPs could also identify an existing local service that they could run better and set themselves up as competitors under the any-willing-provider mechanism. Or they could consider becoming an SPMS contractor, which has the advantage that the contract can have guaranteed numbers and may not have to charge tariff.

Finally, the practice could offer its premises just as a base for services, such as housing outpatients. The practice would need to ensure that if it charges rent, this does not affect any cost or notional rent it receives. It can receive a service fee (towards costs such as utilities) without an impact on the cost or notional rent. The practice also needs to consider an increase in skill mix. It could blur the lines between receptionists, admin and management staff, giving it greater flexibility to reduce overall staffing.

Club together to reduce locum fees
Justine Roberts, director at specialist accountant Medical & Financial

Employing a locum to cover absent GPs is a significant expense but often important to safeguard practice income and maintain capacity. In the current climate, partners should consider driving a hard bargain on fees. Expect to pay between £2,000 and £2,500 per week to provide cover for a full-time GP, although costs vary depending on the location and its balance of supply and demand. A practice should shop around for the most competitive and appropriate arrangements, being aware that costings may have changed since the last time it used a locum.

Each partner must have appropriate locum cover, but the responsibility for covering the costs lies with the practice as a whole, so it's imperative it has a clear agreement in place. It is sensible for practices to enter into a group locum scheme, which is effectively an insurance policy, under which all doctors and other key staff can be covered. This makes locum costs a practice expense paid from the practice account, which is often cheaper than GPs paying individually. It also avoids the risk that one or more doctors haven't kept their policies up to date.

Some of the larger insurance companies are offering bulk policies to buying groups at a discounted rate. So if practices are willing to group together – perhaps under

a federated model – they could benefit from economies of scale by approaching companies and negotiating a discount.

Justine Roberts can be contacted by email on justine@medicalandfinancial.com

Costs

Rate this article 

Click to rate

  • 1 star out of 5
  • 2 stars out of 5
  • 3 stars out of 5
  • 4 stars out of 5
  • 5 stars out of 5

0 out of 5 stars

Have your say