Practice funding: Why all practices are not equal under the new GP contract

Medical accountants Laurence Slavin and Katie Collin examine the impact the new GP contract could have on the finances of two different practices in 2019/20.

(Photo: iStock.com/alfexe)
(Photo: iStock.com/alfexe)

Last week NHS England announced details of the global sum and other GP contract payments for 2019/20. From April 2019:

  • The value of a QOF point increases from £179.26 to £187.74.
  • The global sum increases from £88.96 to £89.88 per weighted patient.
  • The out-of-hours adjustment reduces from 4.87% to 4.82%.
  • Practices that sign up to the new network contract DES will receive just over £1.76 per weighted patient from July (the actual payment per patient is £1.761).

Impact on practice income

We have analysed the effect on two practices, a suburban practice in the leafy Home Counties and an inner city practice with a correction factor.

The suburban practice has a registered list size of 10,093 and a weighted patient list of just over 9,386. The inner city practice has a registered list of 9,881 and a weighted list of just over 10,409.

For the calculations below we have assumed that the practices sign up to the network contract DES. We also assume that practices retain the funding they currently receive for the extended hours access DES. This moves into the network contract DES from July, but the expectation is that networks will hand this money back to practices so they can continue to do the work.

We have also assumed that both practices are high QOF achievers and that they score the same number of points in 2019/20 as in previous years.

So, how will the contract affect core funding at our practices?

Suburban practice
2018/19  
2019/20  
Global sum £835,003   £843,638  
Correction factor   0 0
Out-of-hours opt out -£39,379 -£38,974
QOF £135,652 £142,069
Enhanced services £170,069 £186,559
Total £1,101,345 £1,133,292
Increase £31,947
% increase 2.9%
Inner city practice
2018/19  
2019/20  
Global sum £926,003  £935,579 
Correction factor   £59,781 £39,853
Out-of-hours opt out -£45,559 -£45,091
QOF £90,012 £94,270
Enhanced services £376,315 £394,904
Total £1,406,552 £1,419,515
Increase £12,963
% increase 0.92%

The practice in the Home Counties sees its gross income increase by 2.9%, while the inner city practice sees the increase reduce to just 0.92% as it loses some of its correction factor due to the phasing out of MPIG.

Impact of staff pay rises

The GPC and NHS England have said that the new deal will allow practices to increase staff pay by 2% in 2019/20.

For the suburban practice, a 2% increase in staff costs would cost £7,017 reducing the overall increase from 2.9% to just 2%.

For the inner city practice, a 2% increase in staff costs would cost £7,395 reducing the overall increase from 0.92% to 0.4%.

Indemnity

Of course these calculations do not take account of the impact the introduction of state-backed indemnity will have. GP partners will be paying less for their own, and their staff’s, indemnity, which will save practices money and likely mean a bigger overall increase in profits - but how much this increase will be remains to be seen.

In summary

It is good to see that the commitment to the independent contractor status is being preserved and that resources are being allocated into funding general practice. However, long-standing issues such as the Carr-Hill formula and a proper successor to the correction factor/MPIG are still a problem for practice finances.

Looking at these two practices, a 2% increase in staff costs removes virtually all the additional funding from the inner city practice. Obviously it remains to be seen what impact the state indemnity deal will have, but from what we know so far these numbers are unlikely to make a significant difference to overall practice funding in this coming year.

This year’s contract deal only planned to deliver a 1.4% rise in core funding given the one-off adjustment to cover the introduction of state-backed indemnity. There are bigger rises for core funding planned in the next four years of the contract – a 2.3% rise in 2020/21; 2.8% in 2021/22; 2.5% in 2022/23; and 2.7% in 2023/24 – so there could be better news for practice's finances in the years to come.

  • This article was written by Laurence Slavin and Katie Collin of Ramsay Brown, who can be contacted at laurence@ramsaybrown.co.uk and 020 8370 7710.

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