Many GP practices 'face fall in profits' despite 2020 rise in core pay

Many GP practices could face a fall in profits in 2020/21 despite a rise in global sum payments through the GMS contract, accountants have warned.

GP contract funding (Photo: RosemaryCalvert/Getty Images)
GP contract funding (Photo: RosemaryCalvert/Getty Images)

Under the 2020/21 GP contract deal backed last week by the BMA's GP committee, practices' core funding is set to rise - with global sum payments per weighted patient rising by £3.58 to £93.46.

This 4% increase is well above the the 1% increase in global sum payments per patient in England in the first year of the five-year GP contract agreement that began in April 2019.

But accountants warned that with payments under the minimum income practice guarantee (MPIG) mechanism and seniority payments both being phased out at the end of 2019/20, many practices may face a 'profit reduction year-on-year'.

GP funding

Global sum payments are set to rise faster in the second year of the five-year GP contract deal because overall investment in the core practice contract - which excludes the £1.8bn network DES set up to develop primary care networks (PCNs) - has been loaded towards the final four years of the deal.

Practice contract funding rose 1.4% to £8.1bn in 2019/20, but will rise 2.3% in 2020/21 - with rises of 2.5% or more scheduled for each of the final three years of the five-year deal.

However, Andrew Pow, a partner at Mazars UK and spokesman for the Association of Independent Specialist Medical Accountants (Aisma) said: 'Many practices are now beginning to feel the impact of the increases in the minimum wage flowing through all staff levels.

'A rise in the global sum to £93.46 – an increase of £3.58 on the face of it – looks positive. However, practices will have lost all MPIG and seniority funding from April 2020 and have staff pay increases and new employment conditions to absorb. In many cases this may deliver a profit reduction year-on-year.'

GMS contract

The phasing out of MPIG comes at the end of a seven-year transition that began in 2014. GP practices have received 'correction factor' payments to top up core funding since the 2004 GP contract took effect - because when the deal was put in place the level of funding delivered through the Carr-Hill formula meant nine out of 10 practices were worse off financially than under the previous 'Red Book' deal.

Seniority pay, meanwhile, is coming to an end after a six-year phasing out period, meaning that GPs are no longer able to claim up to five-figure sums per year in recognition of their years of service. 

Reacting to wider changes set out in the contract deal for 2020, Mr Pow welcomed the decision to scrap the requirement for practices to pay 30% of the salaries of many new staff due to be recruited by PCNs.

He added: 'There is now a clear active agenda to encourage resources to flow into primary care, although concerns remain around the availability of staff to take up new roles, particularly in areas that have struggled to recruit.'

Plans to offer £20,000 golden hello payments to first-time GP partners were also welcome, he said - although he warned that the contract deal 'does not address the current retention issue'.

BMA GP committee chair Dr Richard Vautrey said last week that the 2020 contract agreement had been secured after 'months of challenging and tough negotiations'.

He added: 'These changes won’t fix the crisis gripping general practice overnight and we recognise there is much more work to do to address the real concerns that GPs and LMCs have expressed in recent weeks. However, they are a significant step in the right direction.'

Full coverage of the new GP contract

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