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What makes a profitable practice?

Practice profits can be affected in ways that partners often fail to consider, says accountant Bob Senior

Practice profits can be affected in ways that partners often fail to consider, says accountant Bob Senior

Although most GPs are interested in how much they earn, they often fail to appreciate how their profits are affected by the way they work.

When asked how they think they can improve their profits, GPs normally come up with the following answers:

• maximise income earned from the QOF
• take on cost-effective enhanced services
• maximise private income
• keep costs down.

Although all these points are valid, they do not address fully why partners in seemingly similar practices can earn levels of profit that differ wildly.

One factor that is generally recognised is that a practice with fewer partners and more salaried doctors or nurse practitioners usually turns in higher profits for the remaining partners.

There are all sorts of arguments and counter-arguments about whether such a process is good for the long-term health of the profession. But there is no doubt that in the short term it can improve profits for the remaining partners.

Doctor time

Another key factor in profitability is the ratio of doctors to patients and staff to patients.

The funding of practices under GMS in particular is based on an assumed level of work done for patients, recognising that the level of work increases as patients get older. That funding will not increase if a doctor sees a patient more frequently than might be expected given the patient's age.

Although the needs of a particular patient might be very different from the norm, when a patient list is considered overall, workload usually evens out. But this won't happen if a doctor consistently sees patients more frequently than necessary.

It also won't happen if the doctor is looking after a smaller list than might be expected, given the age and social circumstances of the list.

Doctors therefore need to ask themselves two or three questions every time they see a frequently attending patient:

• Is there a clinical need for this patient to see me so frequently?
• If there is, does it have to be me they see?
• If there is no clinical need, how can I manage the patient so that over time they attend less frequently?

Financially, it makes sense for practices to have as much work as possible done by staff. Doctors should only deal with things they are uniquely qualified for.

What makes no financial sense is for doctors to be carrying smaller lists than might be expected and still having higher staff costs per patient than average. If this occurs, the GPs should ask the accountant for feedback on these ratios to see if there is scope for changing working practices.

The working ethos between partners can also affect profits in surprisingly subtle ways. For example, practices with complex profit-sharing arrangements (in particular those that weight different surgery sessions, such as a Monday morning counting for more than a Thursday afternoon) often have lower profits per partner than practices with straightforward arrangements.

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

What makes a profitable practice?

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