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GP profits drop 5% as PCTs squeeze enhanced services

Exclusive: ‘Aggressive' reviews of LES funding have contributed to a further slide in GP profits, with medical accountants estimating an average fall of up to 5% in the 2011/12 financial year.

The 2011-12 contract agreement saw a net freeze in GP pay and only a 0.5% increase in the value of the GMS contract to cover expenses, alongside 4% efficiency savings in primary care.

Accountants told Pulse this week that preliminary figures suggested GPs had again born the brunt of the pay squeeze, offering practice staff pay uplifts while dealing with LES cutbacks.

Ian Tongue, partner at Sandison Easson accountants, said: ‘Overall you are looking at a 5% reduction in profits.'

‘Income streams are largely static and the overheads, staff and the like, are rising, so practices get squeezed in the middle. Some practices have been able to react to that by doing more services if they weren't doing as many, but some have been at capacity for a long time so can't do more.'

Bob Senior, chair of the Association of Independent Specialist Medical Accountants and director of medical services at RSM Tenon, said profits were ‘broadly down in the band of 3% to 5%'.

‘Where they are in that band predominantly depends on how the PCT is looking at enhanced services, because some have been a lot more aggressive with review LES than others,' he added.

Paul Samrah, a partner at Kingston Smith, said: ‘Generally, we are seeing less profits from local enhanced services. There has been less money around and PCTs are in a state of flux with the changes that are happening.'

‘The clustering has not made it any easier to deal with organisations to make sure of the funding, and the communication hassle has increased.'

Rosemary Smith, senior partner at RS Medical Accountacy, also cited pressures in LES funding as a factor and said profits were ‘definitely down'.

‘I would be surprised if it is any lower than a 5% drop in profits,' she said, adding that it was difficult to provide a final figure because payments from March were still coming through.

‘Traditionally, PCTs release funds for local enhanced services in March from money they have held back through the year for emergencies. But that does not seem to have happened this year.'