GP take-home pay 'to fall by 10%' despite practice funding uplift, estimate accountants
Exclusive GP partners are set for further reductions in their take-home pay, accountants have warned, as rising expenses eat into the 1.16% funding uplift from April.
Medical accountants say the practice funding uplift announced by the Government yesterday follows the pattern of the previous three years, which have seen progressive reductions in GP income.
Last year, accountants told Pulse that the 0.28% uplift in funding given to practices would result in reductions of up to 7.5% in GP partner take-home pay.
This year they are making even more grim predictions, with one saying a 10% cut is likely for some GP partners as they are forced to raise wages to retain practice staff.
Mike Ogilvie, client services director at OBC The Accountants, said his clients would definitely see sizeable pay cuts in the year to come as many were choosing to award their staff a (well-deserved) 2% wages increase after years of squeezes.
He told Pulse: ‘GPs are being very careful on their costs [but] their income is also being squeezed so they will be anticipating probably a 10% or more reduction in their take-home pay for next year, despite this 1% increase… This is something, but in the wider scheme of things it’s just noise really.
‘A lot of wages were kept down in past years. A lot of doctors didn’t increase staff pay, but they’ve had to now. As with so many other people in business, there’s only so long you can keep staff without increasing pay.’
RS Medical Accountants senior partner Rosemary Smith said the uplift would translate to a decrease in pay which could be up to 4%.
She said: ‘It… depends how much of MPIG and seniority come back in to global sum… Depending on how much of that money comes through, it could go down by about 4%.’
Keith Taylor, head of medical services at BW Medical Accountants, said the funding uplift would only result in an increase in funding of £700 per partner before tax, after expenses.
He said: ‘For an average practice in England this equates to just £5,874 per annum. With costs per patient running at approximately 60-65% of income this will potentially increase profitability by 30 pence per patient, £2,073 per annum for the average practice and just £691 before tax, national insurance and superannuation contributions per full-time-equivalent partner – hardly a significant increase.
GP funding promises: Harsh reality
Promised funding uplift: 1.5%
Actual earnings: -1.5%
Promised funding uplift: 0%
Actual earnings: -1.1%
Promised funding uplift: 0%
Actual earnings: - 0.9%
Source: DDRB, March 2015
‘Given the ever-increasing patient demand in primary care, this pay award will not enable GP surgeries to increase their capacity to meet this demand.’
This comes as a written ministerial statement from the Government revealed it has gone ahead and calculated the 1% funding uplift using a formula for calculating GP expenses and uplift that has been condemned by the GPC and abandoned by the DDRB.
This year the independent pay review body took the unusual step of not using its own formula to calculate GP expenses as it has not provided a GP pay rise ‘for a number of years’. A table in the report showed GP pay had fallen on average by £8,000 between 2005/06 and the most recent data from 2012/13.
GPC chair Dr Chaand Nagpaul told Pulse: ‘This pay award will not address, nor will it fix, the extreme pressures affecting general practice. It will not reverse the decline in recruitment and retention. We believe that there is ample evidence from previous years that GP expenses are grossly under estimated.’
He added: ‘We need to put an end to the unresourced shift of work from other sectors, we need to value and respect the work of GPs.’
Under-secretary of state for health Earl Howe wrote in the ministerial statement: ‘Subject to the views of consultees… we intend in respect of general medical practitioners, to accept the Review Body’s recommendation for an increase of 1% to general medical practitioners’ income.
‘As the Review Body only made recommendations in respect of general medical practitioners’ income net of expenses, we intend to use the methods employed by the Review Body in previous years to calculate the overall contract uplift. The staff expenses element of the formula will be the maximum possible under public sector pay policy. The (RPIX). On this basis, therefore, the uplift equates to 1.16% uplift to the overall value of general medical services contract payments for 2015-16.’