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Look after the pennies if you want to maximise profits

Accountant Bob Senior stresses the importance of good housekeeping - going that extra mile can often make the difference between profit and loss

Accountant Bob Senior stresses the importance of good housekeeping - going that extra mile can often make the difference between profit and loss

In the challenging times that practices now face, when many are looking for new ways to improve profits, it is important to remember that there are lots of small things that can be done which can have a significant cumulative effect.

As the old saying goes, "look after the pennies….".

Childhood immunisations

Childhood Immunisation targets are something that most practices go for, but not all achieve the same results.

Those practices that fail to achieve the higher targets are often caught out by having very small numbers of children, and missing just one or two can make them miss the higher target.

This may be caused by parents not wishing to have their children immunised. However in many cases it can come down to practical issues around work, school and child care.

However it is interesting to note that in any area with similar patient profiles two practices might fail to hit the higher targets while the third achieves it consistently.

The only difference being the systems in place to monitor and follow up those children that have not been immunised and the effort that is put in to chase them up. Don't confuse "the patients are objecting" with "we didn't monitor the numbers well enough".

Enhanced services

If you do take up a LES where you need to record activity data, make sure that the relevant staff are properly trained how to record the data.

This is particularly important if the data has to be recorded in something other than the practice's usual clinical system, such as on a spreadsheet. Inadequate training can easily lead to activity not being recorded – and the practice not being paid for it.

Having recorded the data then get someone with a real feel for the practice's activity levels to review it at least monthly.

Drug reimbursements

Changes to Category M tariffs, whilst retaining the PPA clawback, have seriously reduced the profits that can be generated by practices from the administration of expensive drugs such as Zoladex to the point where many urban practices are questioning whether it is better to simply give the patient a prescription and ask them to pick up the drug at a pharmacy.

If you are still purchasing such drugs it is vital that you are checking your cost prices on a monthly basis to ensure that you are getting the best possible deal available.

Make sure that the FP34 for administered items actually shows the product you used. If it shows a generic equivalent when you actually used a branded item you may well not be reimbursed enough.

Room service charges

While you may not be actually charging rent to third parties for the use of rooms within the practice you may well be making a service charge to them.

It is important that such charges are reviewed regularly, invoiced promptly and then actually collected!

Make sure therefore that you have a robust system to record when rooms are used by third parties and that an invoice is correctly raised – then make sure that someone takes responsibility for actually making sure that a cheque is received fairly soon thereafter.

Finally make sure that someone remembers when annual increases are due to be applied because the third party using the room is unlikely to remind you!.

Nursing home fees

Some residential care home operators may well be reluctant to agree any fee with a practice for providing services to their patients, trying to argue that everything comes within the terms of their NHS service.

Pointing out that you are actually going way beyond your NHS terms of service should enable you to negotiate a fee for you attending the care home.

Once negotiated make sure that you have a system in place to send the invoices out promptly and ensure that they are paid promptly.

Again, make sure you know when such a contract is due for an annual review – the care home operator is unlikely to remind you!

Private certificate fees

Avoid doctors finding themselves in an embarrassing position where they have to ask the patient in front of them for money – because too often the doctors can be swayed by a plaintive cry that the fee is too high.

To avoid doctors reacting to such a claim by reducing, or even waiving, the fee put in place a system whereby the fee is paid at the point of making the appointment.

If a patient does manage to sneak under the radar with a "while I am here doctor, could you just sign this" then train the doctors to respond "Ok, leave it with me for a few minutes and you can collect it from reception in 10 minutes" – then the reception staff can collect the fee from patient before handing the form etc back.

Set a budget – and monitor it

Historically most practices have not felt the need to prepare a serious budget, working on the basis that "next year will be much like last year plus a bit" and "everything will turn out right in the end" – not the most prudent of approaches in challenging times!

Draw up a budget taking great care with all the expected sources of income and staff costs in particular. For most practices Admin, Premises and Financial costs should be fairly simple to predict.

Having prepared a budget (and re-worked it several times when you realise that it doesn't give an acceptable result) do your best to run your practice according to the budget.

Easily said but to do it you will need to compare how you are actually doing on a monthly basis according to your accounting system with where you expected to be according to the budget.

If any of the income streams or expenses are going adrift take prompt action to bring them back into line. Alternatively if you can't bring them back into line immediately see what other things you can change to either bring more income in from other sources, or reduce costs elsewhere.

Bob Senior is vice-chair of the Association of Independent Specialist Medical Accountants and director of medical services at Tenon, the UK's third largest medical accountant

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