Rural GP practices need ‘separate’ funding mechanism, say accountants

The GP funding formula review currently being carried out by the Government should result in a ‘separate funding mechanism’ for rural and atypical practices, medical accountants have recommended.

According to the Association of Independent Specialist Medical Accountants (AISMA), the review should also be backed by a ‘robust analysis’ on the causes of deprivation.

The Government has asked the National Institute for Health and Care Research (NIHR) to produce an ‘overall recommendation’ on replacing the Carr-Hill formula, which could include a departure from the existing approach.

Now experts have said that for the review to be ‘a success for general practice’, it should result in:

• additional investment in the global sum;
• a data-led analysis of the problems deprivation causes in primary care;
• recognition that a separate funding mechanism is needed for rural and atypical practices.

They also called for any new formula to be ‘tested rigorously’ to ensure it does not recreate ‘unintended financial consequences’ for practices that could lead to GP partners leaving the profession, and said that any new formula should be introduced on a planned, phased basis.

Pulse exclusively revealed that GP leaders have already been told the review may have to be ‘cost neutral’.

But AISMA chair Lizzy Lloyd, a partner at east of England accountancy firm Larking Gowen, said that simply redistributing existing money ‘won’t work’.

She said: ‘It’s essential the new formula for the global sum delivers enough money for all practices. If the output of the review is to simply redistribute existing money this won’t work.

‘Each population group has changed so much since the introduction of the Carr-Hill formula. Practice funding must reflect more accurately the support needed for children’s mental health and mental health services more generally and other areas such as menopause.’

The accountants also said a separate funding mechanism is needed for atypical practices, including rural practices with patient populations spread across large geographical areas.

AISMA adviser Andy Pow said: ‘These practices have higher operational costs, for example by needing to operate branch surgeries in rural areas.

‘A universal funding formula will never work for practices that fall outside the norm, including many rural practices, those with a high percentage of patients who do not speak English as a first language, and practices with big student populations.’

The Carr-Hill formula currently considers six elements:

• rurality (measured using tax information on GP expenses);
• patient’s age and sex;
• additional patient needs (for instance, associated with morbidity and mortality);
• list turnover (new patients have more consultations, so more funds are needed);
• number of residential and nursing home patients;
• and staff market forces (differing staff costs depending on location).

But experts and GP leaders have argued for years that lacks a real measure of socioeconomic deprivation.

AISMA board member Pete Farrier, director of Hampshire firm Morris Crocker Chartered Accountants, said that a data-led model is needed to analyse the problems deprivation is causing in primary care, rather than just say ‘deprived areas suffer more’.

He said: ‘What are the root causes? Which primary healthcare services can help solve these issues? The NHS should not be expected to sort out problems caused by poor housing and the lack of social care for elderly and disabled people.

‘The new formula must dispel the myth that GP practices with younger populations carry out less work and therefore require less funding. Likewise having an older list size does not necessarily equate to higher demand.’

AISMA also suggested that the review presents the opportunity to move away from a mainly capitation-based payment approach.

Board member Kieran Hancock, a healthcare director at Forvis Mazars in Manchester, said: ‘If the Government wants a GP workforce who can deliver appointments and keep patients out of hospital, perhaps now is the time to start paying practices for what they do, rather than by the number of patients on their list.

‘This could mean practices being reimbursed for the number of appointments they deliver, the mix of staff used to deliver the appointments and the complexity of each case.’

Other considerations for those carrying out the Carr-Hill review suggested by AISMA accountants include implementing a more frequent review cycle to account for evolving health challenges.

They also said there should be a focus on the income practices receive for temporary residents which is based on historical data prior to 2004 and ‘may not reflect today’s demand’.

The six-month review was announced by the Government last month. Pulse later revealed that the NIHR was tasked to produce an ‘overall recommendation’ on replacing the formula.

And the leader of English GPs recently said the Government ‘ignored’ the BMA’s request to be involved in the reform.

However, earlier this year health secretary Wes Streeting promised to ‘work with’ GPs to avoid ‘unintended consequences’ of the formula review.