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How to maximise your profit from GMS and PMS

In the first of a new series on boosting practice profit at a time of rising costs and pay freezes, Dr Stan Shepherd looks at GMS and PMS income, the solid base on which profit is built

In the first of a new series on boosting practice profit at a time of rising costs and pay freezes, Dr Stan Shepherd looks at GMS and PMS income, the solid base on which profit is built

In this, the third year of frozen GMS/PMS income, diligent attention to profit is essential.

Remember that income does not equal profit. Only income less costs equals profit. You have to know both your income and your costs.

Profits do not just happen; they have to be generated by creating the gap between income and costs.

There are four things every practice must do:

1. Stop losing money

2. Manage costs

3. Increase income

4. Use financial information

1 Stop losing money

The fastest way to make money is to stop losing it. Income that costs more than it brings in does not need maximising!. Look at everything you do for unprofitable activities, for unprofitable use of staff or premises. Do more of the things that are profitable. Do less of, or stop, the things that are not.

2 Manage costs

Costs are a necessary precursor of profits. Keeping costs down does not, of itself, create success but not managing costs makes profits needlessly difficult to achieve.

If you do not pay attention to costs they will inescapably get worse. They never decrease spontaneously! However, even in days of static income, profits can rise if you can decrease costs.

We may and should do things that are not profitable if we feel they have value in clinical, human, or caring terms. But it is essential that we incur those costs knowingly and not through ignorance.

3 Increase income

GMS/PMS is still the base on which profits are built but income is less certain and comprises multiple components, each of which requires detailed attention. Look to see if you can increase income but not at any cost. Only increase income if it represents profit. Consider:

• List size

• QoF

• Enhanced Services

• Practice Based Commissioning

• Staff

• Premises

• New opportunities

List size

It is never easy to increase list size. Methods may include:

• Improving your service and reputation

• Expanding your practice area

• Amalgamating with other practices

• Applying for vacant lists

If you increase your list size, profitability is the key measure. List size is about the capacity of staff and premises.

To manage a larger list explore healthcare assistants versus nurses versus salaried GPs and partners. Use administrative staff at appropriate levels. Ensure you use space appropriately. If premises are limited, extending your hours is equivalent to having more space.

QoF

Most practices do well in QoF so improvement may be limited. But many easier items have been removed.

New clinical areas harder to achieve. Strive for maximum points but be discriminating and maximise the use of financial information. Know the cost of achieving each QoF target to ensure money is not lost needlessly chasing elusive, poorly rewarded targets.

Remember that IT is always crucial. Also check QoF performance very frequently. Ensure coding and templates are accurate. Monitor individuals' data entry carefully since even one staff member entering poor or incomplete codes will make a huge difference.

Enhanced Services

Review all the enhanced services available, nationally and locally. Calculate the real costs of delivering the service and go for as many as possible that are profitable.

Learn lessons if your performance this year has been poor. Practices who give up enhanced services may find it difficult to get them back.

Explore carrying out enhanced services for patients of other practices. Access DES is much harder now that payment is linked to patient survey and tight payment tiers, so patient satisfaction is much more important.

Practice Based Commissioning

There are now few boundaries to primary care, so look at anything you can do that does not need a hospital setting.

We should be able to deliver many secondary care services at 60% of the hospital cost, a figure well able to satisfy the PCT and deliver profits to the practice. Challenge the way things have been done.

Reducing emergency admissions is a highly profitable way to save PBC money. Consider early discharge planning, community echocardiograms, community ultrasound, community sports injury clinics etc.

Staff

Staff are clearly your biggest investment, asset and liability.

Staff performance may be hard to measure and you must ensure you use their time effectively. You need an adequate number of well-trained staff but ensure you devolve and delegate the work so you get everyone to operate at their highest level not at their lowest level.

You should aim to maximise staff effectiveness and minimise staff costs.

Premises

Know what it costs to use your space. Be clear what you are doing with the space. Know what use of space is profitable and what is not.

Use consulting rooms to maximise income generation. Consider doing your admin in administrative areas rather than consulting rooms.

Explore what you could do through extending hours, through renting space to, for example, alternative therapists, hosting reach out clinics for consultants, benefits claims, housing, or social services etc.

New opportunities

Explore new opportunities as much as possible. Thing of such things as occupational health medicine, schools medicine, sports medicine and working with other practices to achieve economies of scale.

Maybe you should provide the clinic in the local supermarket before someone else does. Consider mergers and acquisitions. Nothing ventured, nothing gained.

Remember the words of Edwin Louis Cole (1922-2002) "You don't drown by falling in the water, you drown by staying there".

4 Use financial information

It is absolutely essential to monitor income, costs and profits very regularly, including a rolling 12 month forecast. You only get what you measure.

Profits should be the concern of every partner. All the partners need to understand the accounts. And all need to monitor the budget at regular monthly financial meetings.

5 Check everything

PCTs get things wrong, as does everyone who owes you money. None of your debtors will check as carefully as you should! Compare and benchmark with other practices – many accountants provide such benchmarks.

In summary, take profits very seriously, get the data, know the detail and make a plan that will stop losing money, manage your costs and increase profitable income.

Look at your budget monthly – this includes having a rolling 12 month forecast.

Stan Shepherd is a GP in east London

How to maximise your profit from GMS and PMS

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