Using the accounts to benchmark financial performance

Information from the practice accounts can be used for financial benchmarking, which helps practices see how profitable they are compared with their neighbouring practices, or more widely across their local area and nationally.

Benchmarking can also help the GP partners assess their investments in the practice and their taxable and pensionable profits. Importantly financial benchmarking can help practices to plan ahead.

Practices in England might find it helpful to benchmark their financial performance with other members of their Primary Care Network, if practices are willing to share.

Where to find the information

An important benchmark is to look at overall profit per full-time equivalent partner so you can judge how you compare with other practices. Accountancy firms that are members of the Association of Independent Specialist Medical Accountants have access to the association’s national annual earnings survey. Check to see if your practice accountant is an AISMA member since they will make the survey results available to your practice.

NHS Digital produces earnings and expenses figures taken from HMRC records which practices may find useful. The most recent data is from the 2017/18 contract year and was published in August 2019.[1] NHS Digital also publishes funding data for each GP practice in the country.[2] 

What data to look out for

There are some key statistics that will highlight how the practice is performing. Profitability per session, per full-time equivalent partner is one important figure to look out for.

Data on income per patient is useful and can be broken down into key areas of the accounts. For example quality and outcomes framework (QoF) income, and income from national enhanced services.

Expenses data per patient in areas including staff costs, premises costs and locums can also give an indicator of a practice’s performance. So too can reimbursements – how good is your practice compared with others at claiming for rent, rates and drugs?

Understanding the statistics

Be careful in how you interpret the data because statistics always need to be understood in the round. For example, high wage costs is not always a bad thing. It might just mean there are fewer GP partners. Ask your accountant to help you interpret the data – this can be a useful point to explore at the annual accounts meeting which is the topic for the next article.

If you have missed any of the previous parts, you can find them here: Part one, Part two, Part three, Part four and Part five

Written by the Association of Independent Specialist Medical Accountants (AISMA)

[1] https://digital.nhs.uk/data-and-information/publications/statistical/gp-earnings-and-expenses-estimates/2017-18

[2] https://digital.nhs.uk/data-and-information/publications/statistical/nhs-payments-to-general-practice/england-2018-19