Healthcare Services Partner, Moore and Smalley LLP
Deborah is currently head of Moore and Smalley's Healthcare Services Department, providing financial advisory services to a wide range of owner-managed businesses operating within that sector. She is also Vice Chairman of the Association of Independent Specialist Medical Accountants (AISMA), with responsibility for the technical update training and peer reviews of the member firms
With Personal Medical Services (PMS) contracts under attack, phasing out of the correction factor on the General Medical Services (GMS) contract and enhanced services income reducing, many practices are fighting to prevent a serious drop in profits. So now, more than ever, is the time for practice managers to explore new income streams and review overheads to enable profitability to be improved or at least maintained, while not compromising quality of care.
Opportunities arising from clinical commissioning
The draft Health and Social Care Bill proposed the introduction of clinical commissioning groups (CCGs), which by 2013 would hold the majority of the NHS budget. Clinical commissioning will create opportunities and advantages for practices as GP-led consortia will commission the majority of health services not already delivered via the core contract.
To ensure commissioning can work there is a need for clinical leadership, greater partnership working and efficient workload planning. Patients will have a greater choice of care, services and providers. Central control will be significantly reduced. All practices will have to be party to a CCG.
Getting involved early should mean you have the chance to influence change directly. Where commissioners identify changes to service delivery to improve quality, generate patient choice or save money those services will be recommisioned. It is at this point that practices need to consider whether they are in a position to provide those services through Any Qualified Provider (AQP) contracts.
Such contracts are starting to emerge across a range of services including: community health services, maternity services, cardiology, palliative medicine, ear, nose and throat (ENT), dermatology, older people's health services, diabetes rehabilitation services, healthcare service for mental health conditions and continuing healthcare.
Opportunities arising under the AQP model
AQP contracts provide an approach to service provision under which any provider who is able to provide a specific service and meets the required minimum standards can be listed as a possible provider. Patients choose which provider on the AQP list they wish to see. No provider is guaranteed any volume or exclusivity. AQP reflects the change in emphasis on providers meeting the required quality standards.
What should you do now?
Get involved with your CCG and find out what its priorities are and where your practice could fit in and offer services. Look at entering service contracts such as the AQP model. Take time to think about patient power and how they can help achieve the efficiency changes needed. Money follows patients and patients have a widening choice available to them. Practices need patients to choose them to ensure the income generated by those patients flows into the practice.
Communication is key: staff, partners, CCGs, external organisations and patients need to communicate their views, plans and objectives. All parties need to be aware of each other's views in order for each party to achieve what they are setting out to do.
If you decide to offer services via the AQP model it may be beneficial to consider offering those services through a separate 'limited company' rather than as an additional general practice service. This can be beneficial for a number of reasons, including risk management, tax mitigation and pension planning. It is essential to seek specialist advice early to get the right structure in place.
Improve operating efficiency
Audit everything. Implement budgets. Monitor performance. Take time to prepare an accurate budget and utilise it.
Benchmarking is a key aid to monitoring performance against external averages. Monitoring your practice's results against averages and what is expected should be part of the annual information you receive from your accountant. This information will normally be given on a 'per patient' or 'per FTE' (fulltime equivalent) partner basis and will enable you to assess where the practice is missing out on income and where it
Tips for improving profitability through cost savings
Tips for improving profitability through increased income streams
There is no magic wand to improve practice profitability or to find new income streams to replace lost ones. However, ignoring the problem and not taking action is definitely not the answer. Instead review where you are now, what you want to achieve and make some small steps along the lines outlined above to help keep you moving in the right direction.