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Revealed: Why your practice is earning less than your neighbours

by Jaimie Kaffash, Nicola Merrifield
3 October 2019

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To mark the launch of Pulse Intelligence, Jaimie Kaffash and Nicola Merrifield look at the biggest factors affecting your practice funding

All practice managers have their suspicions around practice funding: ‘commissioners will favour larger practices’; ‘that area is getting a disproportionate amount of funding’; ‘APMS practices are paid far more than GMS and PMS colleagues’…. you can insert your own misgivings here.

To mark the launch of Pulse Intelligence, our new service for practices in England, our sister title Pulse is looking into the factors that actually do influence general practice funding.

And some results, such as those around practice size and location, may be surprising. Others are less so, for example, concerning APMS and rural practices.

Yet the unavoidable conclusion is that your practice profile has huge influence over funding. There are reforms afoot that may change this, however, with cash likely to be funnelled through primary care networks.

Practice funding data for 2018/19 were released last month by NHS Digital. They showed that, overall, practices received an average of £127.25 per patient, when premises, dispensing fees and drugs and locum reimbursements were excluded.

The main takeaway, however, is that general practice offers good value for money. BMA GP Committee chair Dr Richard Vautrey says this funding provides ‘virtually unlimited care’. He adds: ‘Not only is this astonishing value for money for the Government, but it also demonstrates how hard GPs are working to care for their patients, many of whom have a series of complex conditions, with inadequate investment in return.’

Few GPs would disagree. But our sister title Pulse’s analysis of funding – which stripped out the confounding factors of premises costs, locum and drug reimbursements, and dispensing fees – suggests there are a number of elements that affect individual practices’ funding.

Smaller practices receive more money per patient than their larger counterparts, despite commissioners’ drive towards upscaled general practice (although the more cynical might argue this extra cost is a driver towards favouring larger scale. This is true, taking into account all factors, including rurality, contract type and even weighted patients.

It is mainly driven by a higher level of global sum, calculated by the Carr-Hill formula. This takes into account factors such as patient demographics – including age and sex – rurality, the number of new patients registered and deprivation.

Dr Vautrey suggests smaller practices receive more funding on average because they are more likely to serve an older population. He says: ‘Smaller practices tend to have longstanding histories in local communities. Because of continuity of care, some may have retained a greater proportion of older patients, which would affect their funding levels.’

Meanwhile, there is major variation between regions, with Cheshire and Merseyside practices receiving £143 per patient compared with £119 in Hampshire, Isle of Wight and Thames Valley. Again, this is driven partly by global sum funding (£93.79 compared with £83.84).

Dr Farzana Hussain, a GP in London, the area with the second-lowest funding per patient, suggests London practices miss out on funds due to inadequacies with the Carr-Hill funding formula.

‘London has young patients compared with the rest of the country, so age may have been factored in.’

She adds: ‘I have a difficulty with Carr-Hill because [in London] we still have so much illness at a younger age. And with such poverty in parts of London, it just shows the deprivation payments are a fairytale.’

NHS England has said it has halted a long-running review into the formula.

Dr Vautrey says: ‘They concluded a change would lead to significant winners and losers. The BMA accepted that. We do recognise if you’re in an area or a practice that receives proportionately less funding than others that will continue to be a source of concern.’

He believes some of the differences across England are down to decisions by local commissioners.

‘Different CCGs have different levels of investment and local incentive schemes available. We’ve seen an increased proportion of funding going into general practice coming from CCGs in recent years, so it’s quite likely some of that difference is down to that.’ Indeed, Cheshire and Merseyside paid out £17.44 per patient in local schemes, compared with £5.28 in Hampshire.

The advent of networks may change all this. More local funding is set to be funnelled via networks – which are nominally a voluntary part of the new contract, but offer significant financial benefits to practices that join them. NHS Newham CCG, in east London, has already set out plans for all local enhanced service funding to go to networks within five years.

However, Dr Hussain warns that even if they join PCNs, smaller surgeries in deprived areas – where it is hard to recruit – may lose out: ‘I am concerned that if a network doesn’t use its reimbursement money for new roles [pharmacists, physiotherapists, etc] it might go to another network. In an area where it is difficult to recruit – will that money go somewhere else next year?’

In addition, the funding received for joining PCNs will not cover the extra workload created for smaller practices.

Dr Hussain adds: ‘In a five-partner practice, one person will attend a network meeting but four others do the rest of the work. A singlehanded GP has to attend the meeting without others to help – and the money is still per patient.’

The drive to funnel more money to networks may also achieve the impossible – to make funding even more complex. Hampshire GP and chief executive of Wessex LMCs Dr Nigel Watson says: ‘The risk as we go forward and invest more in primary care networks and deliver more services out of hospital and in the community is that these figures might be more difficult to unpick in order to see what’s happening.’

If the move towards networks continues apace, it might not be long before all that funding is channelled through networks. Everybody really does need good neighbours.

How Pulse arrived at the figures

The raw data were from the NHS Digital publication Payments to General Practice 2018/19.

To provide meaningful comparisons, we removed all practices with ‘atypical characteristics’, defined by NHS Digital, which included: those with large increases in list sizes, those that have closed and those for which there were only partial data available.

We removed practices with fewer than 1,000 patients, as they tended to be specialist practices, such as those with a high number of homeless patients.

We removed funding for premises, dispensing costs, and reimbursement of drugs and locum fees. Premises fees distort the data, as some practices receive rent reimbursements, service charges, etc. Dispensing and reimbursement of drugs funding disproportionately affects dispensing practices. And locum reimbursement is refunding cash practices have paid out.

For the calculations in our tables and map (other than the contract type), we removed APMS practices as this was by far the biggest confounding factor.

All calculations were done on a per-patient, not weighted-patient, basis.

For more in-depth analysis on how your practice is financially performing against your peers, visits Management in Practice’s new service where you can uncover 50+ funding streams, and how to access them, read step-by-step guides all related to improving your practice and maximising profit and discover solutions to ease your staffing issues.