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How will your practice profits
be affected by the new contract
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GPs will by now have been inundated with information
about the new contract, will have had their indicative budgets
sent to them by their PCTs, and are no doubt perplexed by the
changed to the basis of their superannuation scheme. What does
it all mean in practice?
We have been analysing the effects on the
practices profits under the new contract and as usual with general
practice the results are surprising. Based on the evidence of
100 practices, we are expecting practice profits to increase by
an average of 18.85% from 2003/04 to 2004/05 and 33.19 from 2004/05
to 2005/06. Within that range there are substantial variations.
For 2004/05, the bottom five practices expect their profits to
actually fall by an average of 4.6% while the top five practices
expect their profits to increase by 41.2%. For the following year,
2005/06, the bottom five practices expect their profits to rise
by an average of 3% while the top five practices expect their
profits to increase by 69.4%. This does assume that expenses will
increase with inflation.
Why is this? There are a number of factors
involved: Practices have been able to access funds from local
development schemes and investing in primary care schemes prior
to the new contract and will lose those funds and have them replaced
with new sources such as the quality and outcomes framework. For
those practices who were accessing substantial sums may not have
those replaced with funds from the quality points, while those
practices who had not really taken advantage of the earlier schemes
and who are bidding for most of the quality points will reap substantial
increases in profits.
For 2005/06 the further increases are explained
by the increase in quality points from £75 per point to
£120 per point (per average practice). The discount that
PMS practices have to apply to their points also reduces in this
year.
The real question is whether this increase
is affordable and sustainable. Certainly, we rarely see a practice
claiming less than 800 points, and frequently see practices claiming
more than 1000 points. The estimate of increases in profits is
more than has been anticipated by the Department of Health and
the Treasury, and there is a history of cutting back funding on
the basis of higher than expected achievement when you look at
the old style health promotion clinics. It is hard to believe
that GPs will be permitted to earn these sorts of increased profits
which will be coupled with the increased superannuation contributions,
but as they say, three years is a long time in NHS planning..
March 2004
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