Funding: 2013/14 GMS contract cuts leave GP practices in crisis

Practices in England face a 3.8% drop in profits in 2013/14 alone unless they cut staff as GP contract changes take effect, accountants have warned.

Senior GPs said losses are inevitable because a 1.32% funding uplift – imposed by the DH across GMS and PMS contracts in 2013/14 – is well below inflation and will not meet rising staff costs.

For many GMS practices, the losses will be compounded by further six-figure cuts to core pay under plans to axe MPIG over seven years from 2014.

The losses will put severe pressure on practices, with official NHS data showing GP profits were falling as far back as 2010/11, a trend the GPC believes has continued since then.

GP contract changes
  • 1.32% uplift in 2013/14 for GMS and PMS practices.
  • Practices to pay locum superannuation from 2013/14 – funding for this added to global sums, taking rise to 1.47%.
  • MPIG to be axed over seven years from 2014 for GMS practices.
  • Reinvestment of MPIG correction factor cash to boost global sums 6.3% by 2021.
  • Practices with high correction factor face six-figure losses.

Practices in Scotland, Wales and Northern Ireland face starting the 2013/14 financial year without confirmation of their uplifts.

In England, scrapping MPIG and redistributing £120m in correction factor funding via the global sum formula will increase GMS practices’ global sums by about 6.3% by 2021.

The 40% of GMS practices that do not rely on MPIG top-ups to core pay will receive this uplift in full.
But the BMA’s chief economist told GP that the vast majority of GMS practices that do rely on MPIG top-ups would lose out overall. The worst-hit will see six-figure sums wiped from annual income by 2021.

Accountants said even practices that benefit from the redistribution of correction factor cash are likely to see the rise wiped out by inflation and continued government caps on public sector pay.

The DH has admitted that about 100 practices with unusual populations could need extra financial support to survive once MPIG is removed, but many more will be severely affected by falling income.

Jon Ford, head of the BMA health policy and economic research unit, said practices would be hit hard by the DH decision to ignore advice from the Doctors’ and Dentists’ Review Body for a 2.29% GMS rise in 2013/14.

‘Putting it crudely, if staff costs carry on at their historic rate, 1.32% won’t be enough to generate any increase in net income. GPs will have another year of potential cuts in pay unless they can cut costs,’ he said.

Mr Ford said it was ‘highly unlikely’ GPs could limit staff costs enough to eke out the 1% pay rise the DH agreed for other public sector staff.

Specialist medical accountants Ramsay Brown & Partners said that practices faced a 3.8% cut in profits due to a mix of rising superannuation costs, rising staff pay and the cost of meeting new QOF targets.

Laurence Slavin, a partner at the firm, said one practice he represented stood to lose 8% of its profit from changes to QOF in 2013/14 and more than 15% from the removal of MPIG (see expert view). At another practice, which receives 20% of its core pay from its correction factor, axeing MPIG would trigger losses of more than £20,000 per partner by 2021.

He said urban practices that had seen Red Book deprivation payments maintained by MPIG top-ups would struggle to find new sources of income to counter the losses, particularly against a backdrop of rising workload.

GPC chairman Dr Laurence Buckman said the contract changes were ‘unacceptable’ and would put patients at risk. ‘Ministers have completely failed to take on board the concerns of thousands of GPs about the cumulative impact of these proposals,’ he said.

Health secretary Jeremy Hunt said: ‘Improving care for patients has always been my priority. The GP contract needs to change to make sure the excellent care enjoyed by some patients is more consistent across the country.’

Expert view The specialist medical accountant

‘GPs are making adjustments to workload to maintain their profits – so just looking at profits is not the full picture.

‘The government is not looking at how much GPs are earning for a 40-hour week, it is just looking crudely at profits. It is very common these days for me to speak to practices which say they are exhausted and can’t carry on like this.

‘One thing that goes hand-in-hand with this is that I am having more conversations with practices which are looking at taking on extra partners because workload is rising.

‘Salaried GPs do their bit, but often no more than that.

‘In turn, salaried GPs are reassessing whether they want to be a partner – they say they will earn a bit more, but for a lot of
extra work.

‘But in the next year or so ,there will be a whole pool of salaried GPs – when practices start losing MPIG and funding drops, they will look to cut salaried GP and locum costs.

‘Significant drops in income when they start cutting MPIG will be destabilising.’

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