Maximising profits in a GP practice

If you're a practice manager or responsible for the finances of a GP practice, you may have more levers to pull than you imagine when it comes to profit margin. Our medical accountant Kellyanne Burch explains more.

As a significant proportion of a GP practice's income derives from its core NHS contract, which is based on patient list size, it might seem hard to imagine ways of increasing profits. There are, however, potential income sources to exploit and ways of managing costs more effectively.

QOF achievement

The Quality and Outcomes Framework (QOF) is an annual reward programme for practices aimed at rewarding good practice and resourcing. Practices are awarded points against achievement measures in different clinical and quality domains. The aim is to deliver high quality across these domains to achieve higher points, of which hold different financial reward values. The final reward payment due to practices is adjusted to factor in demographics and chronic condition prevalence.

To get the most out of QOF, practices should consider the most efficient way of achieving targets. The use of technology is advantageous, as text messaging and triage platforms can assist in conducting patient questionnaires. I have found that GP practices achieving the highest level of points have spent time educating all staff in how best to capture relevant data from patients.

Drug profits

Practices are permitted to personally administer a number of items including various vaccines, injections and contraception, all of which are listed in the NHS Electronic Drug Tariff. A claim can be made to the NHS for reimbursement of the cost of these items at a set price per the tariff, which is updated each month. A dispensing fee will also be paid for each item administered. Profits made on these drug purchases will therefore be largely dependent on the cost of these items. A typical non- dispensing GP practice would expect a drug profit of around 25-30%, while dispensing practices can aim for 30-35%.

To maximise profits here, practices should ensure they shop around between different suppliers, taking advantage of any discounts, ensuring they have both the best item for the patient and the most cost-effective item for the practice. Care should be taken with ordering, as purchased drugs will only be reimbursed if they are personally administered on site. A good internal control system is required. If a practice over-orders, the drugs may go out of date and subsequently go to waste. A loss would then be made on that item. As the drug tariff is updated monthly, practices could also lose out when bulk buying, as prices can change significantly and reimbursements received may not actually cover purchase costs.

Several practices we work for have struggled with wastage of flu vaccines over the past couple of years. Drug suppliers require orders months in advance, ahead of their flu campaign season. Many GP practices will base these order levels on activity the previous year. The availability of flu vaccinations at local pharmacies – and , in recent times, available alongside COVID vaccinations – will have an effect on the demand at GP practices. Some drug suppliers will accept the return of unused flu vaccines and refund the practice, but if the vaccination is out of date, you will make a loss on that item.

General practice expenditure

As with drug purchases, practices can also look to maximise profits by having good internal control of their consumables and stationery purchases. Regularly changing suppliers and looking for better deals can significantly reduce your annual costs. No reimbursement claims can be made for these items, so whatever cost is incurred will wholly affect the profit of the practice.

Nationally we are all seeing large increases in our heat and light costs. This is also an area you can research, moving suppliers regularly to take advantage of the best rates available to you.

I have seen many practices taking advantage of technology in relation to their communication with patients and printing costs. Use of text messaging and emails rather than sending letters in the post, which incur printing and postage costs. are seen not only as cost effective, but also more efficient for patients. When printing documents and letters is required, sending to a photocopier rather than a printer connected to a computer can save a lot in toner costs.

Page Kirk are proud members of the Association of Independent Specialist Medical Accountants (AISMA), so if you want expert advice on your practice finances, please call 0115 955 5500 or email enquiries@pagekirk.co.uk.

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