The warning has raised questions over how GP funding is assessed and triggered fears that primary care could be caught in a downward spiral of falling income.
GPs and accountants have urged the DH to top up this year’s low funding award with the near 1% it slashed from the 2.29% uplift recommended for 2013/14 by the Doctors and Dentists Review Body (DDRB).
GPonline.com has reported that practice profits are likely to have fallen around 25% since the 2004 contract reforms by the end of the current financial year.
Practices have worked hard to tackle the impact of a decline in funding, with some freezing pay or letting staff go – among other measures – to cut costs.
But specialist medical accountant Russell Finn of Sandison Easson & Co told GP the low award for 2014/15 was ‘the net result of practices’ previous successes at adapting to change within the NHS’.
‘Adapting to reduced funding and increasing workloads,’ he said, ‘practices have had to make major changes to the make-up of the staff they employ, by a mix of not replacing staff like-with-like when they leave and by doing more work themselves.
‘Any failure to make these savings would have resulted in a major decrease in partners’ take-home pay.’
However, these efforts to reduce costs were reflected in this year’s Annual Survey of Hours and Earnings (ASHE) – the results of which strongly influence DDRB pay advice.
The survey showed the total amount spent on practice staff fell 1.4% (see table below), prompting the DDRB to recommend a below-inflation 0.28% overall rise for GPs in 2014/15.
The government accepted this year’s DDRB advice in full, despite rejecting it last year when the body suggested a 2.29% funding increase for practices.
Mr Finn said the government should add the 0.97% it slashed from last year’s DDRB recommendation to bring a 1.27% rise in 2014/15 – almost in line with the 1.32% uplift for 2013/14.
Wessex LMCs chief executive Dr Nigel Watson said the fact that GPs’ efforts to cut costs in the face of cuts to funding had triggered a lower award this year was ‘perverse’.
He said services to patients would suffer as practices struggled to cope with the impact of the 0.28% uplift.
‘Because of what has happened with the DDRB before, some practices have not given pay rises to their staff - in some cases for several years, he said. ‘Profits are falling year on year.’
Dr Watson said the 0.28% rise would not cover rising expenses and the amount of funding left for practices to put towards staff costs would fall further still. ‘We are finding increasingly practices are in crisis and this is another nail in the coffin. A number of GPs in the latter part of their careers – we’ve had a number come in and say this is just not going to get better, enough’s enough – we’re going to go now.’
Free GMS financial forecast 2014/21
GPonline.com's sister website Medeconomics has teamed up with specialist medical accountants Ramsay Brown & Partners to provide all subscribers in England with a forecast of their practice's financial performance as the MPIG is phased out over the next seven years.