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Why PMS earns more than GMS

New figures reveal PMS GPs earned £13,000 more than their GMS colleagues last year – Sarah Gregory explains why

The Dodd and Co 'General Practitioners Profits Report 2003' published earlier this year included separate statistics for the first time for the PMS clients. These highlighted the fact that on average PMS practices' net profits per partner are £12,680 more per annum than their GMS counterparts.

What are the reasons behind this?

PMS practices generally have two characteristics in common:

lMedium to large list sizes

lProactive attitude to services they provide.

These two features combine to create a potential for high earnings for those practices that made the transition to PMS. At the outset there was a great deal of political will involved in assisting practices to make the decision to go PMS. However, the PCOs had little knowledge of producing budgets for this particular type of contract. It is now apparent that some of the earlier PMS waves have been funded at an inflated level.

The profits report showed that, on average, PMS practices generated £6,422 of income per partner more than in GMS practices. The larger list sizes enabled some PMS practices to qualify for growth monies. Generally this was used to employ nursing staff and salaried GPs. This in turn enabled the partners of PMS practices scope to extend their service in the community. Activities and resources could be shifted from secondary care to primary care. Henceforth income has been generated from these extra services, further increasing the earning power of PMS practices.

Growth monies, made available to PMS practices meeting the set criteria, have also enabled practices to address the issues and problems surrounding recruitment of GPs. Many doctors may want to work in general practice but do not want the responsibility of being part of the partnership, especially where there are issues relating to property. A salaried GP position is the ideal solution not only for the GP but for the existing partners of the practice. A fixed salary with annual inflationary increases means any extra profits are earned by the partners and not the salaried GP.

However, it is the control of costs within PMS practices that has ensured PMS practices beat the GMS practices in the earning stakes. Although PMS practices are earning more, they are spending on average £6,258 less per partner. PMS contracts are negotiated locally except for elements of the core contract.

The partners are able to apply their local knowledge when deciding on the services to provide so they can ensure the associated costs will not outweigh the benefits.

Reduced incentives

There have been reduced incentives recently for practices to change to PMS. PCOs have become more aware that some practices see funding for the PMS contracts as a financial gain exercise rather than being a motivation to move to a contract where local needs could be met.

Looking forward to the future, we will probably find the earnings gap between PMS and GMS practices will reduce. Already there are indications that PCOs are actively looking to achieve this. For example:

lSome PCOs are refusing to fund enhanced services in PMS practices, taking the view that they should be funded from baseline and growth monies.

l174 points, worth £75 per point adjusted for list size for 2004/5 (109 points worth £120 for 2005/6), have been deducted from PMS practices' aspiration targets for the new contract.

Why PMS practices have done so well

lThey generally have medium to large list sizes

lThey generally provide a wide range of services

lSome of them have been funded at an inflated level

lThey have been in receipt of growth money

lBetter able to attract key staff and salaried partners

lThey have been better able to control costs

Sarah Gregory is a specialist medical accountant with Dodd and Co, Penrith

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