Seven habits of high-earning practices
Accountant Sue Beaton looks at what steps GPs can take to maximise profitability
With so many GPs feeling the strain, there has never been a better time to ask whether your practice is operating as best as it can. In theory all GPs have the potential to earn well, but inevitably there are occasions when, for example, personality clashes among partners will sometimes lead to fall-outs that dent financial performance. There will be practices too where there simply isn’t as much profit to be made, perhaps because of local budget constraints, patient demographics or high staff costs due to geographical location.
Having worked as an accountant to GP partners for 23 years, I can point to certain characteristics that mark out my more financially successful clients. The seven habits I have noticed can either be addressed immediately, such as improving financial reporting and day-to-day financial management. Others will take time to evolve, depending on the motivation and mindset of the individual partners. Whatever your situation, I would encourage all GP partners to meet in early April to plan the year ahead.
1 Actively seek new income streams
High achieving practices tend to be hungry for results and have a genuine interest in finance, or have at least one partner with these attributes who can drive the business along. They are proactive and always on the look-out for opportunities. These can be either NHS or non-NHS opportunities but successful practices are those that seek to diversify beyond the relative ‘knowns’ of the GMS/PMS core contracts.
Opportunities might include CCG roles, mergers or collaborative working, nursing home work, trainers, those with special interests and skills such as vasectomy work, minor surgery or diabetes, many of which can be undertaken by part-time partners. These practices are good at monitoring what they do and evaluating the profitability of such ventures; they are not afraid to drop them if they do not prove profitable enough.
All too often, profits can fall when there is in-fighting or a distinct split in partner opinion. This is perhaps more common when profits are less easy to come by and partners are feeling under pressure. It is therefore vital to meet regularly and have a clear plan as to what the practice wants to achieve. It should be measurable and regularly monitored.
2 Be honest and address your conflicts
Perhaps the most obvious feature of a high-earning practice is one where the partners work hard and put the hours in. At the outset this has to be an honest review and undertaken with a genuine desire by all, both full time and part-time GP partners, to be high-earning and efficient.
Do you really work to the maximum of your ability? Are you ready and willing to fully embrace the huge challenges being thrown at you? Many GPs are tired of the changes, are often demoralised and find it difficult to rise to the constant challenges. For some, this could impact on productivity and therefore earnings. GPs with the highest earnings tend to be those where the practice is stable, there is a low turnover of partners and everyone works together as a team.
3 Get the same commitment to the business from part-time partners as full-time
All too often, less well-performing practices tend to be those made up of many part-time GPs. These partners either have outside jobs that take them away from the daily hands-on management of the practice and the desire and need to maximise the results. Others may have personal commitments that mean they cannot work full-time. It is apparent, rightly or wrongly, that in these partnerships, part-timers are sometimes considered by their full-time colleagues to be less effective in their contribution and commitment to the progression of the partnership. By the same token, occasionally part-time partners can feel undervalued and become demotivated, thereby fuelling the ‘two tier’ perception.
It is key, therefore, to make everyone feel an effective part of the team, each with a valuable role to play. Some practices go further and assign certain roles such as HR partner, QOF lead or CQC lead. Practices with strong teams and a good skills mix stand to do best. A review of all roles and tasks, including those of the partner group, should be undertaken from time to time.
It is essential that part-time partners attend and take part in all regular finance and management meetings. With all partners fully involved in the active management of the practice, there is less chance of part-timers taking a back seat (perceived or otherwise).
All partners, regardless of the number of sessions they work, should be 100% accountable and committed to each other by being fully informed of practice issues and developments. It is common for finance to take second place when time is tight and patients are queuing up for the next surgery. But it is fundamentally important to make finance a regular and prominent part of partner meetings.
4 Increase control over orders, invoices and cash collection
Practices with timely reports on financial performance and with GP partners who digest the information and act upon it, will do far better than those who wait for the accountants to tell them how they have performed after the end of the year.
It is vital to check that everything due to the practice has been invoiced and chased up. So often practices responsible for raising their own invoices for reports, teaching, school and nursing home retainers, rent of rooms and facilities and even registrar reimbursements can find themselves short of cash if these areas are not adequately checked and efficiently managed. The appointed finance partner should ensure systems are adequate and review regularly.
5 Use the best reporting systems you can get, and create a ‘house style’
The highest earners I work with have good data and financial reporting systems. For example, practices performing a QOF review late in the NHS year often face a mountain to climb to get all data up to scratch.
Practices that monitor performance regularly and act on anomalies immediately perform better than those who leave it late. Again, this can only be achieved if reporting is accurate and frequent and all partners, whether full or part time, are involved.
Similarly, partners who follow a common methodology and protocols find far fewer gaps in reporting than those who each do their own thing. All too often it is apparent that different partners have different ways of recording patient data, and this can make a significant difference to the associated income streams. A clear, precise, unified system of recording clinical data is essential for all to follow, regardless of whether they are full or part time, in order to maximise performance and turn points to prizes.
6 Reduce your locum costs
Now is the time to review locum costs and how and why they arise. Does the practice have a holiday rota? If cover is shared out as far as possible between the partner group, it could be possible to make significant reductions in locum costs.
Given that regular locums at a practice could be required to be remunerated through the payroll, with Employer’s National Insurance and Employer’s superannuation contributions kicking in after six months, such costs could have a serious impact on profitability unless they are closely monitored and only incurred as a necessity. Practices with the highest profits often have the lowest locum costs.
7 Pool your income
A financially successful practice is one where all the partners trust each other and have common goals. Practices often display this by pooling income (with the common exception of seniority), recognising that everyone’s contribution to the practice (whether part-time or full-time) carries importance and value. Precious time can be wasted arguing over individual pieces of work performed by certain partners. However, unless work is carried out by partners in their own time, allocating many different individual income streams can be time-consuming and sometimes divisive, undermining the ethos of everyone pulling together for a common goal.
Sue Beaton is a director at Coveney Nicholls, a member of the Association of Independent Specialist Medical Accountants (AISMA).