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GPs must develop commercial skills to survive the NHS funding squeeze

The decline in local enhanced service (LES) funding is a weather vane for the decline in all traditional sources of funding for general practice. Figures from the NHS Information Centre released last month show that total investment in general practice grew by only 0.3% and 0.5% in the past two years, a figure significantly below inflation.1

The future for overall NHS funding does not look rosy either.

Former health secretary Andrew Lansley promised above-inflation increases in health spending until the end of the current comprehensive spending review round.

But, following continued poor growth in the UK’s GDP, his successor Jeremy Hunt has already started hinting that the NHS may not be protected from spending cuts after 2015.

At the same time, the commercial environment for general practice is changing rapidly.

There will certainly be increasing investment in out-of-hospital services as CCGs and the NHS Commissioning Board seek to improve the quality of patient services while reducing infrastructure costs. Only a few years ago, this would have meant increased investment in general practice through enhanced services and GPSIs – but the falling investment in LESs is partly an indication that simply passing work and funding to general practice is no longer seen as viable.

At the heart of the matter are the NHS’s new duties to promote choice and competition.

The NHS Cooperation and Competition Panel publishes rules for commissioners, including obligations to ensure transparent procurement (which means they must be open to competition) and to use providers who are best placed to meet the needs of their populations.

The net result is that much of the investment going into out-of-hospital services is funnelled through open procurement processes rather than enhanced services or uncontested contracts. There are examples of GP-led companies succeeding in this environment. These successes are often in the core business of general practice, such as out-of-hours services or GP-led health centres. Much of the coming investment will be in more integrated services.

GPs as businesspeople

Despite the successes of these GP-led companies, the reality is most practices have never bid for work in this new commercial environment. I often wonder why this is, given that many GPs describe themselves as businesspeople as well as front-line clinicians.

We can see our ‘core business’ and the associated funding gradually slipping away from us as the needs of patients and the pressures on the health service change, but most practices seem strangely inert.

Our CCG recently commissioned some research to see what sort of approach practices might want to undertake to meet these challenges.

Unsurprisingly, there were a wide variety of clinical priorities but the study revealed an underlying lack of understanding of the current commercial environment. Given the crisis of funding in general practice I suspect many people would find this surprising.

However, I think there are some simple explanations for this. Although general practice does indeed have a small business model, it does not operate in the competitive environment in which most businesses find themselves. GPs’ focus as ‘businessmen’ falls on service delivery and internal cost control, with relatively little need to attract new customers by developing innovative service models.

Current medical and postgraduate education also does little to equip the average GP with skills to survive in a competitive business environment, and many practice managers have little or no commercial experience.

As a commissioner, I find this difficult to deal with. I know that when push comes to shove, many GPs have great adaptability to adversity and the ability to deliver high-quality services come rain or shine.

But we are no longer able to spend precious NHS resources on the basis of ‘trust me, I’m a doctor’. Most practices will need significant skills development to thrive in this new, challenging environment.

CCGs and the NHS Commissioning Board have a significant role to play in encouraging the development of these skills, but the onus is on the profession to adapt to survive.

Dr Shane Gordon is the chief officer of North East Essex CCG and a GP in Colchester


1 NHS Information Centre. Investment in general practice 2007/08 to 2011/12 England, Wales, Northern Ireland and Scotland, 2012