Many practices are under pressure financially following COVID-19. Specialist medical accountant Sally Sidaway offers ten tips on how to maintain profits in challenging times.
1 – Drug profit levels
Even for non-dispensing practices, having good internal controls and a solid buying policy for drugs are essential. Make sure everything used is claimed for and that all staff administering drugs understand the claims policy. Profit margins are being squeezed, so consider joining a buying group and don’t overstock or you run the risk of drugs going out of date. Discuss expected margins with your accountant who should be able to share benchmarking data with you.
2 – Staff costs
Staff costs are by far the major outgoing for any practice. Budget and plan for these carefully throughout the year as things change. Refer back to the budget regularly to guard against costs spiralling out of control. Consider offering time off in lieu (TOIL) to staff rather than overtime and control the use of TOIL for maximum efficiency. Remember that the cost of a staff member is gross salary plus employer’s NIC plus employer’s superannuation. Recruitment costs can be high so pay staff at the correct rates for their roles. Remember that good teams are your lifeline so support them well.
3 – Locum costs
Minimise the use of external locums and claim for locum reimbursements where possible. Partner and salaried GP holiday rotas should be carefully managed to help keep locum costs to a minimum. Partners must all accept the locum budget and when and why locums will be used. Remember that locums are expensive doctors for the work they carry out, so if the budget seems too high, consider changing working practices to take maximum advantage of the use of other non-GP clinicians. This may mean a slight change to thought processes, but it may be well worth that leap of faith.
4 – Premises income
Challenge rent reviews made by District Valuer Services and ‘sweat the asset’ by maximising the use of the building. Rental or room hire income may be the best use of any spare space, but if your patient list is growing and space becomes tight, you might be better off pushing the list up as far as possible and using more space for NHS core activities. Remember to keep your primary care commissioner aware of how space is used in case an increase in rent becomes due.
5 – Capital building expenditure
Tax capital allowances are available on a proportion of capital expenditure carried out on the building and in relation to the original build cost. If you own the premises and have never had a capital allowances review undertaken, discuss this with your accountant. There may be hidden allowances that have never been claimed and now can be. Consider what grant funding, such as the Estate and Technology Transformation Fund (ETTF), may be available on any building costs but take advice on all of the consequences so that the tax position is clear, and any notional rent abatement is understood.
6 – QOF
Accurate disease prevalence recording will maximise your QOF income. It may be worth paying a specialist QOF advisor who can help with both advice and software solutions for a fairly modest fee. This expenditure may well be outweighed by an increase in QOF income. Don’t chase every last QOF point if it’s not profitable. Monitor areas where patient care must come first and the other areas where a cost benefit analysis should be carried out.
7 – Enhanced services
Think through the income levels from an enhanced service and how it can be offered in the most cost-effective way. The use of non-GP clinicians at the right level should always be carefully considered. Don’t automatically sign up for a new enhanced service without ensuring that you can deliver it profitably. Ensure that all enhanced services are claimed for promptly and monitor the receipt of claims.
8 – Non-core income
Do you have any skills in the practice that can bring in a new source of non-core NHS income? Is it possible for the practice to enter into a contract in a specialised area such as cardiology or ENT? When looking for new doctors to join the practice, can they bring in any new skills? Consider how you can best free up doctor time to bring in new sources of income. Make sure patients pay upfront before the service is given to remove the chance of not getting paid – for example, for travel vaccinations and medicals.
9 – COVID-19 specific
Claim for all COVID-specific costs without delay and chase payment if it doesn’t materialise. Pause and consider if all early claims were made, such as statutory sick pay for any staff members who took time off sick. Income levels this year in some areas may be understandably reduced but consider which are the best areas to focus effort on as procedural income starts flowing. Make sure you’re absolutely clear, at commissioner level, what income levels are guaranteed and what are you receiving cash for now that could be clawed back after performance results are considered. We’re all working differently during the pandemic so take stock of the changes that are actually of benefit and can be taken forward into the longer-term future.
10 – Patient list
This is your major asset. Increase the list size wherever possible within the constraints of available clinical time and space. Look carefully at how you use non-GP clinical staff, particularly in England where clinicians are now working in additional roles through PCNs. This will enable the practice to work in the most efficient way possible in terms of the ratio of GPs to patient numbers. Talk to your accountant about the optimum list size that could work for your practice and how you can get to this point. Work hard, as always, on those patients who frequently attend the practice to develop care plans that meet clinical needs while minimising any wasted GP time. English practices should work closely at PCN level to make sure services are being offered to patients in the most efficient way across the PCN population. Be innovative in your approach and don’t be afraid of change.
But most importantly…
Prepare a budget and cashflow forecast at the beginning of each financial year and keep monitoring your progress throughout the year, and make updates when they’re needed. Times are uncertain and keeping a close eye on financial progress throughout the year will be essential to keep the practice on track in the months ahead.
For further guidance and more profit-boosting tips, contact your local AISMA accountant.