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There is no new money for staff pay rises this year, yet the cost of living is rising all the time and good staff need to be retained, their morale kept high. The only logical solution is increased practice efficiency to release funds, says Dr Jim Sherifi

The key to a profitable business can be explained with a simplicity that would appeal to Mr Micawber: income must exceed expenditure, and the greater the gap in favour of income, the greater the profit. This applies as much to the business of general practice as it does to any FT100 corporation.

Yet the cost of living is rising all the time and hard-working staff are entitled to expect a rise. A pay freeze would affect morale and would jeopardise performance at a time when this can least be afforded. So what is to be done?

The answer also has a Micawberesque simplicity: any staff rise must be met by greater practice efficiency, unless the partners are prepared to take a drop in salary.

Let us start by looking at practice income.

The majority of income derived by a general practice comes from one source ­ the Department of Health via PCTs. Since 2004 all practices have been assigned a global sum, based on the practice population, for providing set services for their patients with some extra services such as maternity attracting income through national enhanced services and others, such as minor surgery, through local enhanced services.

As with any company, over-reliance on one customer or supplier can leave the business vulnerable to the vagaries of the marketplace.

The global sum for the financial year 2006/7 has been frozen at the level of the previous year. There will be no uplift of any kind. The level of QOF point payments has also been frozen, with payment for new clinical quality indicators coming from existing budgets. Hurdles have been raised and the overall achievable points reduced from 1,050 to 1,000 with the savings channelled to part-funding directed enhanced services for the forthcoming year.

Yet practice expenditure will undoubtedly increase even if it does so by only the 2.5 per cent cost of living salary increase for employees. In hard cash that translates to £2,500 per £100,000 net salaries. That money needs to be found from somewhere, either from income generation or expenditure contraction.

Income streams

Income streams can be broadly divided into those arising from the public or the private sector.

· Directed enhanced services ­ worth more than £5,000 per 1,000 patients in 2006/7.

· Local enhanced services ­ unlikely with increasingly cash-strapped PCTs.

· GP training ­ for practices approved as training centres.

· Medical student training ­ demand is increasing as undergraduate courses focus more on community/holistic medicine.

· GP appraisals ­ but PCTs are looking to reduce funding for these.

· GPSI/associate specialists ­ again shrinking in numbers as PCTs look to make savings.

· Medical examinations for local authorities, such as boarding out medicals for vulnerable children.

· NHS Direct ­ either as a medical adviser or trainer.

· Out of hours ­ works on several levels. GPs can individually choose to undertake sessions for pay significantly greater than it was when out-of-hours commitments were relinquished in 2004. Practices can choose to opt back into out-of-hours care for their patients, saving £6,000 per annum per principal. GP co-operatives can be re-established to bid for all out-of-hours care in their area.

· Occupational health. There is increasing demand by companies for medical input as EU and HSE regulations multiply.

· Clinical trials. Can be lucrative but require great organisation and discipline.

·Insurance medical exams.

·Miscellaneous medical exams, eg taxi, HGV.


Most practices like to believe they are running their businesses as efficiently as possible. But how many, in truth, can claim to be as ruthless as Sir Alan Sugar?

Expenditure can be pruned in three areas: services, facilities and staff. Unfortunately it is the last that tends to provide the most significant savings and it could be very short-sighted at a time when all hands are needed on deck for new QOF, enhanced services and access.

Let us start with reduction in services. This is only of use if it leads to a reduction in facilities or staff. Otherwise both practice and patients are worse off.

The good news is that there is now considerable scope for greater sharing of services, particularly with new thinking arising from the compulsory move towards practice-based commissioning.

Examples include sharing back office functions such as payroll, data input and even those of a practice manager, with other practices.

Clinical areas such as practice nurses with specialties in respiratory care can work not only across practices but also further savings can be made on equipment, such as spirometers.

In essence, practices can sub-contract certain functions to each other.

Such action, if it is presented sympathetically and with sufficient consultation with the staff involved, may be both welcome and reinvigorating for a career becoming stale through repetition. Staff often welcome new challenges.

Reduction in facilities is harder to achieve and conflicts with the need to expand and renovate in order to improve patient services. Areas that may be considered include practice premises.

If you are in owner-occupier buildings, has the time come to realise capital gains and move into rented accommodation provided through PFI-type/private sector means? Can branch surgeries be pruned?

Can individual surgery times be changed in order to facilitate room sharing? Should practices amalgamate? Such moves have more long-term, strategic implications but will need to be considered if the NHS is indeed moving into years of austerity.

If staff cannot be redeployed, then they may need to be made redundant ­ which would, of course, release cash for staff members remaining. This option can never be easily taken in a small business whose ethos is the care of others and which sees itself as fostering a family atmosphere at work.

Individual jobs need to be assessed. Are modern, faster scanners reducing data input time? Can digital voice recorders cut secretarial time?

In areas where traditional functions such as managing leg ulcers or minor surgery have been tendered for and lost to third-party providers, can practice nursing hours be cut?

General practice has been slow in taking on the benefits provided by new technologies and in adapting to changes in working practice arising from the Agenda for Change policy. Is it cheaper to bring in hypertensive patients for regular BP checks or to provide them with BP monitors, pencil and paper?

Greater, more immediate savings can be brought about by a reduction in the number of doctors within a practice. To some degree, partnership profits have benefited not only from recent increases in NHS income but also through a switch away from equity partnerships towards the employment of salaried doctors.

With the removal of out-of-hours responsibilities, doctors may have more time and energy for increasing their weekday commitments.

Increased individual productivity reduces the need for numbers. If a salaried doctor leaves, does he need replacing? One fewer full-time salaried doctor equates to a minimum of £70,000 in savings. The arithmetic is compelling.

In summary, if partnership profitability is to be maintained, hard decisions need to be made. The profession has always had a realistic, some might say, cynical relationship with the Department of Health.

Many GPs who have gone through previous boom-and-bust cycles are grateful that nGMS did originally improve both income and work/life balance and accept that now it is payback time.

Others may be willing to make uncomfortable decisions in order to prevent any erosion of those improvements. Hard times like these tend to divide the profession into those who went into it to make money and those who saw medicine as a vocation.

But one thing is clear. A pay rise for staff has to be earned by the practice.

Jim Sherifi is a GP in Sudbury, Suffolk

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