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Restructure practice finances to survive falling income, GPs warned

By Nigel Praities

Partners have been warned they will have to fundamentally restructure practice finances or see a steady downward plunge in income, after the latest figures on earnings were revealed.

The advice from accountants came as GPC negotiators admitted the best the profession could hope for was to try to keep up with inflation in next year's pay award.

Statistics from the NHS Information Centre showed GP partners suffered a decrease in income of 1.5% in 2007/08, with the average partner on a GMS contract earning £100,324.

A 1.9% increase in gross earnings in 2007/08 was more than accounted for by a 4.5% increase in expenses.

The figures also show the gap between salaried GPs and partners is closing, with the average income before tax for salaried GPs up to £55,790 in 2007/08 (including full and part time GPs), an increase of 3.4% since 2006/07.

The drop in GP partner pay is less than 2006/07 – which saw a 2.1% decrease in pay compared with the previous year – but shows that the cost of running a practice is steadily rising.

The expenses-to-earnings ratio rose 1.4 percentage points to 57.9% in 2007/08, compared with 56.5% in 2006/07.

Mike Gilbert, partner at RMT chartered accountants and business advisers and a member of the Association of Independent Specialist Medical Accountants, said: ‘It's not merely a matter of cutting costs anymore, it is a matter of how GPs use their time and looking at the whole practice as a business. It will require structural change.'

‘Those who don't start working on this now will keep on going down, but those who start early will be able to ride out subsequent decreases in income. It is not going to be easy,' he said.

GP negotiator Dr Peter Holden said the GPC was currently preparing their submission for the 2010/11 pay negotiations but expected a tough time.

‘GPs should not expect to do much better than hang on with inflation. That doesn't mean there is any lack of enthusiasm by the negotiating team to secure the best deal, but they have to understand that public sector finances have fallen through a sodding big hole.

‘The only way you can improve your income is to do more work, but you have to ensure that you are not a busy fool. When PCTs come and ask you to do extra work you must cost it fully and don't take anything for marginal costs - make them pay full whack,' he said.

However, last week Pulse revealed PCTs are slamming the brakes on enhanced services funding, with more than half of trusts set to freeze or reduce LES payments.

Dr Peter Holden: 'GPs should not expect to do much better than hang on with inflation' Dr Peter Holden: 'GPs should not expect to do much better than hang on with inflation'

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