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From general practice to general provider – how to do it

1 May 2007

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Peter Godbehere


General Practitioner
Director, Wisbech Health

Peter is a full-time GP principal, and also works for the Improvement Foundation. He loves the variety and opportunities primary care brings, but likes to approach things from a business angle to make sure his practice offers gold-standard, sustainable and cost-effective care to the greater benefit of patients

I am a GP in a large semirural practice within a well-defined market town in north Cambridgeshire. Within the town are two other practices, as well as a more rural village practice. Together, these practices make up a nice-sized cluster, serving just under 45,000 patients. Our own practice has 17,500 patients – a list size that is growing rapidly.

The practice has eight partners, including myself, and two salaried assistants. We started out as a first-wave fundholding practice, and are very much committed to training, having students and doctors of all grades.

Forming a joint business
About a year ago, myself and GPs from the three neighbouring practices took the view that the best way to move our businesses forward was together, as a unit. We held this view for the following reasons:

  • Pooling back-office resources meant the business could operate at just a small additional cost.
  • Pooling building space and equipment presented obvious advantages over going alone.
  • We could combine our joint expertise to consider the “quick wins” when providing new services.
  • Financial clout. Many services require upfront costs. We don’t believe that a cap-in-hand attitude to the primary care trust (PCT) – “can we have the cash to do this?” – is realistic. To operate as, in essence, a private provider, you need to bring the PCT the answers and to make it as risk-free as possible. This isn’t invest to save – this is “use us, we carry the risk and you get the benefit”.

Provider payoffs
Yet all this still doesn’t answer the question: why become a provider in the first place? Well, as GPs, fundamentally we already are providers. We all provide a different array of enhanced services, all of which are easily at risk if a man in a van should turn up next week.

Additionally, our consortium feels that there are increasing pressures to reduce the costs of primary care. In our view, general practice offers fantastic value for money compared with the rest of the NHS, but we have become a victim of our financial success and the future can only bring downward pressure on incomes.

To counter this, we feel we need to move away from merely providing traditional “core” general practice services, and move towards providing more subspecialised services (eg, ophthalmology), and even nonspecialised services that currently are not being carried out in primary care – for instance, utilising community psychiatric nurses (CPNs) in the provision of cognitive behavioural therapy (CBT) for use in tackling obesity, seeing intensive case patients, dealing with unexplained symptom cases and inhouse management of depression.

Such services offer potential cash savings while improving patient care in a new, novel way, and reflect the freedom of opportunity that practice-based commissioning (PbC) has now made available.

Our business unit is currently due to start our first contracts imminently. We will provide cataract surgery, and we have provisional go-ahead (subject to clinical governance) to provide an entire primary care-based ophthalmology service. We also have provisional support for a practice-based palpitation investigation service, and have support to run a clinical pharmacist and polypharmacy service. Beyond this, we have several other business cases in various stages of development.

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Getting started
The key is to all share the same view. We were lucky in that the practices in our consortium had already worked together successfully in our old out-of-hours co-operative. This meant we already had prior experience of working together. Furthermore, past experiences with fundholding meant that the GPs leant more towards being at the forefront of change rather than being carried along later with a subsequent lessening of opportunities.

To begin with, we simply had a meeting, and very quickly knew we were speaking from the same page. The difficult bit was what I call the “hard yards” – namely, how to sort the money.

The “how to” discussion took plenty of time but we settled on the following formula. A new private limited company was set up to act as the vehicle for the business. Shares are allotted per practice, according to a snapshot of list size on a set date. From this moment on, all cash investments are covered on a proportional basis; profits are paid out on the same basis. The shares are held by one nominated partner from each practice, and each practice has an addition to the deed, allocating these shares as they see fit.

We felt this would make things clearer from a new GP’s point of view. It also means that issues on part-timers, etc, are purely an internal issue for the practices and are not a logistical headache for the business.

Because the business is owned entirely by NHS-employed staff (ie, GPs), we circumvent some of the regulations around how we can offer our services (for instance, it avoids issues of applying for accreditation). Essentially we are still a primary care body.

The next agreements were for a set level of remuneration for anyone working for the provider. Not enough to get a profit but enough to back cover. The profit comes from the margins on top. Finally, we agreed a basic set of costs, which we apply to all calculations for business cases.

Hidden dangers
Many people, I believe, when looking to set up not-for-profit, social enterprise, spend-to-save and other schemes, forget the “hidden costs” of running a GP surgery, business or pathway. We have to pay for rent, rates, gas, electricity, water, staff, managerial time, stamps, envelopes, telephones – the list is endless. If you don’t know what these cost, and don’t apply them to any scheme, you are doomed to operate at a loss.

Too many people currently leave these out when submitting a spend-to-save scheme. I have seen this locally. All you are doing is committing your surgery to doing more work at a loss in real terms.

Everything you submit for must have, at the very least, a small margin attached. If it isn’t there, I can guarantee you will lose money and, ultimately, if we don’t make even modest amounts on what we do, we stifle our ability to expand further and develop in the future. We agreed what the hidden costs were, in a way that can be easily applied to multiple pathways, and use them to reimburse individual practices that house various compartments of the schemes. Again, these payments aren’t for profit, they are merely reimbursement on expenses.

Management board
Once this was agreed, a management board was set up, with one GP, one manager and one patient group representative from each practice. I can’t push strongly enough the importance of having patients on the board. They stop us making any silly mistakes and make sure that our services offer a gold standard of care as far as our patients are concerned.

I fundamentally believe that in the long run this will protect our business more than anything else. You will live or die according to your service and patient satis­faction, so you might as well get it right from the start. Beyond this, when negotiating with the PCT, having the patients’ seal of approval carries real weight.

Preparing your services
Once here, I feel you are in a position to start and redesign pathways. My tips are simple. Start where you know you have a resource or where a current service really doesn’t cut the mustard. Using the tariff, work out what that service currently costs. Design your new gold standard pathway, and work out what it costs to deliver. You then add a reasonable margin, depending upon risk, and consider what financial saving you wish to offer the PCT.

You are now ready to offer your services to the PCT and begin the negotiations. That, quite frankly, is a topic in its own right. Every PCT, I suspect, will be different. But however you get it right, patients, primary care and PCTs will all be winners, so best of luck.