Financial professional Alex Hamshere shares how GPs can work with their PCNs to ensure that they are receiving maximum financial support
Accounting for the level of funding flowing through PCNs has led to another layer of complexity when considering GP practice finances in recent years. Below are some pointers to help individual member practices ensure they are receiving maximum financial support from their PCN.
ARRS roles
The Additional Roles Reimbursement Scheme (ARRS) is the largest area of funding, though it doesn’t flow into GP practices directly. However, with the expansion of roles eligible for funding, it is imperative that any practice decisions regarding either the replacement of outgoing staff members or further investment in staff levels take into consideration what is available and practicable from the PCN. It is in this area where increases to the primary care budget since 2019 have largely manifested.
It has become increasingly commonplace in recent years for staff members to attract reimbursement from the PCN so long as they satisfy the job specification. This is especially true for the GP assistant and clinical care coordinator roles. The use of role allocation within the practice team alongside specific in-house training can therefore help control the net staff cost for a GP practice. But, it is important to note that these need to be for new members of staff, and neither for existing staff members or those replacing an outgoing member of staff.
The Government has recently announced that newly qualified GPs can be employed at PCN level. Originally this was planned to be from October until March, but it has since been confirmed that this arrangement will now continue past 31 March 2025. The level of funding available for this new role is £92,462 WTE salary (£95,233 with London Weighting) including employer on-cost, which equates to approximately £8,200 per clinical session p.a. (£8,450 inside London). This is considerably below average annual sessional rates for salaried GPs so careful consideration should be given on the basis of affordability. In addition, the provisions for this new role are as follows:
- They are within their two year anniversary of qualification as a GP
- They have yet to be substantively employed within primary care; and
- They are not being employed on a temporary i.e. locum basis.
Enhanced services
Up until April 2023, the investment and impact fund (IIF) was the principal enhanced service operating at PCN level. Since then, domains were reduced from 36 to five – and now two from April 2024, with the additional funding moving to the capacity and access DES, of which 70% was paid up front in 2023/24. This amounted to £2.77 per patient, and has been increased in 2024/25 to approximately £3.25 per patient. In many PCNs the funding flows directly to GP practices, however some PCNs have utilised the funding to run additional sessions instead. There is a reward element of 30% as well which is for achievement of various provisions PCN-wide at approximately £1.39 per patient for 2024/25.
The enhanced access scheme has been operated at PCN level since October 2022. Managing it successfully could generate a profit, or surplus, as current funding levels allow for this eventuality.
We are also starting to see in some localities the prevailing local enhanced service moving to PCN level; where local collaboration, setting of reasonable targets, and sensible budgets can perhaps protect this area of funding that may come under threat, as they are not covered by the Statement of Financial Entitlements.
General advice for GP practices
Practices need to actively engage with their PCNs, with a partner responsible for liaising with them to ensure that there are no missed opportunities and your practice receives a ‘fair deal’. Resources and funding should be allocated fairly and be commensurate with individual practices’ list size, patient needs and services provided on behalf of the PCN.
It is also important to adhere to appropriate financial transparency and good governance, with annual PCN accounts being distributed among member practices. There should also be a conversation with regards to funds being retained at PCN level, either for working capital purposes or for the funding of any future projects being operated by the PCN.
Linked to this is cash flow – specifically the flow of funds via the PCN to member practices. This is especially important if there are local enhanced services that are being delivered by member practices but the funding is distributed at PCN level. With a high inflationary period in the recent past, and national budget increases over that period struggling to meet spiralling costs GP practices have had to face, it is essential that funding that is ultimately destined for individual GP practices does not get unduly held up at PCN level for administrative reasons.
Accounting issues and potential pitfalls
All members should be aware of the potential VAT issue related to the supply of staff (as opposed to the provision of medical services for which there is an exemption). Members should ensure that their PCN collectively have taken advice in this area.
Setting up a limited company is one potential course of action that can be taken. As PCNs continue to grow in size there is an increasing argument for them to be a separate legal entity at some point. Where this hasn’t taken place, any potential liability, for instance with employment issues, is unlimited and would fall upon the member practices.
There are many ways that a PCN can create a surplus. The ARRS is the main feature of any PCN and there should not be a surplus created here as funding should match expenses. But a surplus can accrue whether it is via: the enhanced access scheme; other enhanced services (national or local); or simply revenue that should have previously been distributed that for one reason or another hasn’t.
A set of PCN accounts will identify any surplus and allocate them amongst member practices as a tax liability with HMRC has arisen as a result of trading activities. Provided the PCN has not fully subcontracted its activities to a limited company, which is paying corporation tax, then individual surplus amounts should be reflected in the member GP practice’s accounts. It is then a discussion at PCN board level as to what extent these surplus funds flow from the PCN to member practices, subject to the PCNs own working capital requirements.
As a final word of warning, the increase to the ARRS was initially 2% for 2024/25, while the Agenda for Change pay award is 5.5%. So, the potential for a surplus generated by the PCN could be restricted as a result of this disparity. While the maximum reimbursable amount for each role has recently increased in line with the Agenda for Change, overall PCN funding per network has not kept apace, with NHS England confirming that networks ensure that the overall cost for ARRS from 1 October remains within their available 2024/25 contract funding.
In addition, the increase in employers National Insurance from April 2025 (both the rate increase to 15%, and the reduction in the Secondary Threshold) is expected to result in an increase in overall staff costs of approximately 2% for 2025/26 onwards, before cost of living increases are considered. It is unclear at this stage whether there will be increase in central funding specifically to cover this increase.
Alex Hamshere is an associate client director in the Forvis Mazars healthcare team ([email protected])
This article was first published by our sister title Pulse
