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A faulty production line

Investigation: PMS practices squeezed as funding reviews bite

One PMS practice in three has had its contract changed in the past two years and many are switching back to GMS. Does PMS have a future? Sofia Lind investigates

In the waxing and waning fortunes of PMS GPs, 2013 may come to be seen as a watershed. Over the past two years, a Pulse investigation reveals, half of such practices have had their contracts reviewed by managers, in the biggest reappraisal of their funding since the alternative GP contract was introduced.

Some report losing tens of thousands of pounds in funding, sending GP drawings plummeting and putting staff at risk of redundancy. Others have gained from the review. But most agree the overarching purpose of the PMS contract – to provide local services – has been ‘dumbed down’ by managers seeking easy ‘efficiency’ savings.

Some practices have reverted to the GMS contract, a few have closed, but many have had to come to terms with new contract terms – and the uncertainty looks set to continue as the NHS Commissioning Board begins a root-and-branch overhaul of practice funding from 2014.

Two-tier funding

Established as a pilot scheme in the 1997 Act for Primary Care, PMS was the first opportunity for GPs in England to negotiate their own contracts locally with PCTs, based on the health needs of their local population.

Over time, PMS contracts became very popular – with a third of GPs practising under one by 2002 – providing a wider range of primary care services. But the PMS revolution also drove a wedge between GPs, with fears of a ‘two-tiered’ profession developing as PMS practices commanded higher funding per head than many GMS GPs could ever have dreamt of.

Those rising earnings also caught the eye of the national media, which decried drawings of up to £150,000 a year.

The backlash began in 2006. The Government sent out a notice to all PCT chief executives in England saying they must conduct a ‘value for money’ review of all PMS contracts, ensuring they were equitable and fair in relation to GMS resulting in a series of reviews.

A further blow followed in 2010, when the DH added a clause to PMS regulations giving PCTs the right to terminate contracts ‘without grounds’. The NAPC warned that PMS GPs faced ‘unilateral’ variation to PMS contracts rather than genuine negotiations. In some cases, those fears have been realised.


Six months ago Dr Tom Frewin, a single-handed GP in Bristol, was subject to a PCT-wide review of PMS contracts that resulted in his practice losing about £67,000 a year. Dr Frewin has taken a big hit to his pay rather than reduce the services he provides, but he warns that this is not sustainable over the long term.

He says: ‘For a single hander that is a lot. It was a PCT-wide review of the outliers only. If you just looked at capitation, I might have been 5% over the average. But weighted capitation changes this. With weighted capitation it is fine if you go across a large group, but when you pick out individuals you get some bizarre results.’

He says redistributing funds is not always wrong or unfair, but says he feels he was not listened to by NHS managers.

‘There were no negotiations. They said they would negotiate and there were a lot of meetings, but what a complete waste of time that was. It is an entire hypocrisy.’

In a statement to Pulse, a spokesperson for NHS Bristol insisted it had followed an ‘extremely robust’ process in renegotiating PMS contracts.

But Dr Frewin is not alone in feeling hard done by. Dr Di Aitken’s practice in Lambeth, south London, lost £179,000 of its annual funding, leaving the partners on lower pay than their salaried GP (see case study).

In fact, Pulse can reveal that in the past two years, over half (55%) of PMS contracts have been subject to review. 

The data – obtained under the Freedom of Information Act – covers 1,278 PMS contracts held by PCTs on 1 April 2011. More than a third of practices (37%) have seen their contract terms varied as a result of review, while 4% have had their contracts terminated, resulting in practice closure, merger or – in most cases – reversion to a GMS contract. In total, 30 of the 1,278 total practices reverted to GMS.

In some areas, the changes to PMS contracts have been dramatic. NHS Derby City has retained just two of the 16 PMS contracts it held two years ago after 14 practices decided to revert to GMS. A spokesperson said the reviews were ‘an opportunity for the PCT to standardise and simplify primary care contracts’ and that practices now had ‘the additional security’ of a GMS contract.

But such changes have led to the first reduction in the number of PMS GPs since the introduction of the new contract. Figures from the NHS Information Centre show that in 2011, the most recent year for which figures are available, 44.4% of GPs worked in PMS practices – the lowest proportion since 2005.

Dumbed down

Not all reviews end in cuts, however. Dr James Kingsland, national clinical lead of the NHS Clinical Commissioning Community and a PMS GP in Wallasey, Merseyside, says his PCT has just topped up his practice funding by £4,000 for carrying out additional vaccinations. But, while he says his contract has been managed well, he has heard from colleagues that not all PCTs have been as understanding.

‘My practice was one of the first-wave PMS sites in the country. We were pioneers, very enthusiastic, but over time [PMS] has been dumbed down, without the real flexibility it had when we first started. It is a shame. There are PCTs that just don’t understand the nature of PMS contracts and just look at basic information like costs-per-patient baseline and say: “There is a difference and therefore we want our money back” – which is an incredibly rudimentary process.’

NAPC chair Dr Charles Alessi also says many of the reviews have started with a ‘misconception’ that PMS is better remunerated: ‘Of course we all have to change what we are doing. We are all in the same situation at the moment, in terms of the fiscal environment. But what is important is that we do [this] in a way that is ordered well, and that we are not just making assumptions and proceeding on those assumptions.’

GPC deputy chair Dr Richard Vautrey says that reviews of contracts by PCTs over recent years have been destabilising for PMS practices, particularly when done for financial reasons.

He says: ‘There have been a lot of reviews, and quite vigorous reviews taking place, some inappropriate.’

An uncertain future

Pressure on PMS funding is not likely to ease any time soon, although practices may see a more consistent application of the reviews from April.

Starting next year, PMS-funded practices are facing a contract overhaul that will last for seven years. The Government claims this will result in a ‘more equitable’ funding structure for GPs that bases GMS and PMS funding around the same principles. The NAPC has said a further round of changes is causing ‘increasing anxiety’ among GPs, but Dr Alessi says he has been encouraged by recent discussions with the NHS Commissioning Board.

He says: ‘As of April, renegotiations are going to be conducted with rigour. There is going to be a single process and that is encouraging, because that is what we have been asking for. We will also be intimately involved in the detail of that process.’

The GPC has also cautiously welcomed the move. Dr Vautrey says: ‘I think moving to one arrangement, one process, led by the board should be helpful as long as it is done in a measured and understanding way.

‘[PCT] reviews are very variable, approached in different ways. Practices want stability. They want to be treated fairly.’


Readers' comments (2)

  • Happy to have pMS reduction on basis that NHS pays the redundancy bill. I wa senticed into PMS to provide a 5 star service and hence employed more staff and drs.

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  • I retired at the end of April. It would appear the decision looks better and better with every passing week!!

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