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Why it always pays to invest in your practice

After many and varied changes, things have gone quiet in general practice – but the wise GP will now plan ahead and invest for the future, says Dr John Couch

After many and varied changes, things have gone quiet in general practice – but the wise GP will now plan ahead and invest for the future, says Dr John Couch

As any business knows, it must expand or die. After three years of frenetic change and growth in general practice, 2007/8 looks like a quieter year. With the BMA and NHS employers sulking in their respective corners and no extra NHS money on the horizon, many of us would prefer to consolidate. Unfortunately this is a luxury we cannot afford.

This is a time to consider investment in your practice. PBC is gaining momentum and bids for services will be required sooner rather than later. The GP retirement bulge has started and more practices will be marketed by PCTs. Many practices are merging to strengthen their position in the mixed primary care market. Private companies are more advanced in their planning and investment than we realise. We need to be fit, competitive and ready for action sooner rather than later.

GPs have always invested time and effort in being successful. Many have invested money in their practice premises. Not so many have invested money in work expansion, something that is second nature to private companies. If we wish to increase profit in future we will have to invest our money as well as our time in expanding. So how can we maximise the chances of success?

Opportunities

First, identify investment opportunities carrying the best profit/risk potential. A low-risk low-profit project is probably not worth the effort. A high-risk high-profit opportunity may give you sleepless nights and lose money. A low-risk high-profit venture is ideal. Although in the real world such opportunities can be difficult to spot, the effort is obviously worthwhile. There may be opportunities outside the NHS in your area. Keep an open mind as you research.

Calculate the likely investment and profit. Include items such as space required, staff costs, training, GP time, materials, telephone utilities, extra insurance, accountancy and legal costs. Set these against planned return and assume first-year returns will be lower until your service is up and running.

Now calculate the profit margin. If you are bidding for services and your bid is not realistic you will be unsuccessful. It is worth involving your accountant. Make your business plan as professional as possible. Consider how you and your partners will fund the start up and running costs of any venture. Do you have money to spare in your practice account? Will you take out a bank loan? (If you do, the interest will attract tax relief). Is a negotiated overdraft in order or do you need to reduce drawings temporarily? All of these options are painful but should focus your business decisions.

Consult your accountant and solicitor before making bids or signing agreements. Ensure you have a get-out clause. Record and agree all partnership decisions,Monitoring your investment is also vital. Do not wait 12 months to discover that you have made a loss. Have a comprehensive spreadsheet for monthly checks and make any adjustments to management, administration and staff quickly.

If you choose your investments carefully, and execute them professionally, your success in the future primary care marketplace is something you can be confident about.

Dr John Couch is a GP in Ashford, Middlesex

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