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Ten ways to trim the fat on practice finance

For most of us, our income levels are being directly threatened – whether it be through core funding, enhanced services, QOF or additional sources of income. We must look to maximise our income from these various funding streams, but it is also now more vital than ever that we apply ourselves to looking at each individual item of our costs to see where we might be able to save money.

If you take the latest set of accounts, the likelihood is that almost every line of expenditure in the profit and loss account has the potential to be reduced. It is certainly worth trawling through the books to understand exactly what the expenditure is that is being incurred, whether it is necessary at all or whether it could be sourced in a more cost-effective way.

For some items, the cost savings will only be in hundreds of pounds but for others they will be measured in thousands, and when these savings are all added together, you may be pleasantly surprised at the overall outcome. Here are 10 tips for ways to get started in cutting the fat from your practice.

1 Make optimum use of buying groups

Be they local or national, buying groups offer you the clout that you don't have as a stand-alone customer.

An obvious and developing example here is the LMC buying group, where savings can be made across a range of providers. In our practice, we have just used this to save £200 on our insurance renewal despite increasing our level of cover.

Savings from this source can also be made in areas such as stationery and flu vaccinations. On a local level, we have also recently clubbed together as practices to purchase medical equipment and the bulk buying has brought greater discounts than would otherwise have been the case individually – saving our practice over £300.

2 Assess locum policy and needs

We all recognise the value and importance of locums, but do we always use them in the most appropriate manner for our practices?

If a GP is away, you may not automatically need to find a locum if

you could still provide an adequate service for your patients without doing so – if you have the flexibility to reorganise existing GP resources in the practice to cover any gaps. If annual locum costs are consistently high, it could be more beneficial to look to employ a salaried GP, or even take on another partner.

We are a practice with 12,600 patients and eight GPs, and our saving on locum costs through applying these principles runs into five figures.

3 Consolidate staff roles

By far the largest single cost to most practices is staff, so this can give the greatest potential for benefit. When a member of staff leaves it could be the perfect opportunity to review job structures, as there may be the capacity to allocate some aspects of the job to existing staff so that fewer replacement hours need to be recruited.

Recently, we have applied this in our practice with the result that three part-time roles did not need to be replaced. We chose not to replace a reception supervisor who had been underperforming, and found there was little slack to take up from that vacancy. Likewise, we chose not to replace a part-time admin role and found that we had the capacity to absorb her work. Lastly, the practice manager and the IT manager took on the duties of an assistant manager, which added to a total staffing saving of £20,000 with no extra hours recruitment.

4 Use IT to save on staff costs

Are you making best use of technology available in the marketplace, and keeping abreast of emerging new products? Most practices now use some form of document management system, and while it requires some initial capital investment and ongoing maintenance contracts, the cost is quickly recouped through staff time saved. In our practice, we used a solution by Docman and have recovered the initial capital investment of around £6,000 and now enjoy a net saving of over a £1,000 a year in staff time.

Another example of where investment in technology has the potential to save money is with voice recognition software. This is where the user, such as a GP, dictates directly onto the computer screen without the need for any secretarial involvement. There are products available that are specifically aimed at the medical profession, so even medical terminology is not a problem.

Again, there is the initial capital investment – but if managed correctly there is the opportunity to recoup this through a saving in secretarial hours within about two years. We now save £5,000 a year (around two hours' work a week) after updating the IT system used on our reception desk.

5 Review additional services being offered for cost-effectiveness

No doubt your practice provides services beyond those contractually required. Review them to discover if it might be more advantageous to drop an unprofitable offering, and either save the costs and resources, or deploy them more profitably. In the past, one of our practice nurses spent five hours a week running a weight management clinic, which, while it had some health benefits, was not directly funded. When she left, we chose not to continue the clinic.

6 Look to fill admin gaps more cost-effectively than using temps

As with GP locum costs, covering other staff with temps can be expensive, given that you are not only paying a salary but also the agency margin and VAT. This cost could be avoided by, for example, offering existing staff some additional hours. Alternatively, your staff may know of friends or family who might be willing to train in a role such as reception with a view to covering when absences crop up.

The hourly rate in such a situation can be less than half that paid to an agency, so you probably have the potential to save thousands. At one point, our bill for agency admin staff was running at about £6,000 a year – but we have been able to maintain the service at half the cost.

7 Challenge suppliers to be more competitive

Vaccines are a good example of a product that practices may be paying over the odds for.

How frequently do you review your deals with vaccine suppliers? It is a competitive marketplace and all suppliers are keen to obtain your business and will do all that they can to keep – or get – you on board. What discounts do your current suppliers offer? Can you obtain better terms elsewhere?

While cost may not be the sole factor, it should be a major consideration and you should not be afraid to challenge your existing supplier to match or better a competitor's quote if they wish to retain your business. When we last did this, we managed to save £300.

The same principle can be applied to stationery and medical supplies.

8 Use adequate compatible, rather than branded, computer products

Significant cost savings can be made in computer consumables. Items such as toner cartridges are not cheap, but is it necessary to stick to the manufacturer's recommended brand?

Subject to satisfactory performance, could alternative compatible items be sourced elsewhere? This is our approach, with perfectly adequate compatible products saving us £900 a year on toner cartridges alone.

At the lower end of the scale, another simple example is with an ink cartridge for a franking machine, where the manufacturer's recommended item costs over £40 whereas a perfectly adequate compatible product can be sourced for less than half this.

9 Investigate the benefits of franked mail against normal postage

On the subject of franking machines, do you use one for your postage? At present, a second-class stamp costs 36p while second-class franked mail costs 28p.

There is also a differential for other postal rates. It is a relatively simple exercise to assess your postal use and work out the cost saving to be gained through having a franking machine, where the monthly rental cost from one of the major suppliers is just under £17. As a relatively large practice, we can save almost £1,000 a year in this way.

10 Consider the benefits of an external mailing company for bulk mail

If sending letters out in bulk – for example, as part of the flu vaccination campaign – it can quickly become cost-effective to use an outside agency to print and post these on your behalf, rather than going through Royal Mail. There are organisations accredited to do this on behalf of practices and the savings can run into hundreds of pounds when the cost is compared with staff time, stationery and postage. The Department of Health has approved a service called Docmail, which mails out at a cost of 28p per letter plus VAT.

Dr Simon Atkins is a GP partner, and Paul Williams a practice manager, at Fishponds Family Practice in Bristol


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