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Wednesday 26 October 2016
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Wage slip: how would a cap on GPs’ income affect practices?

Legal & Finance

Media reports that the Department of Health (DH) plans to cap GPs' income are making many practice managers look nervously over their shoulders.

They fear that funds allocated for modernising services and rewarding performance may no longer be available to invest in patient care or developing their staff.

There is no doubt that GPs have done well out of the new deal. Government statistics show that family doctors earned an average of £106,000 during 2004–05 in the first year of delivering the new contract, with their earnings rising by 30%
after expenses.(1)

The Doctors' and Dentists' Review Body (DDRB) also commented in its 2007 report on how much GPs have profited in the last couple of years.(2) It pointed to figures showing that GPs' expenses to gross earnings ratio has shifted from 62:38 in 1998–99 to 56:44 in 2004–05. Average profits rose from £51,455 in 1998–99 to £95,880 in 2004–05. This was one of the reasons the DDRB recommended a 0% pay award for GPs this year.

Damage limitation?
In January, health secretary Patricia Hewitt admitted that the government had not anticipated how much extra work doctors would do, and reportedly told BBC News that, with hindsight, she wished GPs' earnings had been capped.

But the DH claims her comments were widely misreported and that she had not meant that she intended to cap GPs' pay. A spokesman explained: "We have been very clear that GP income should be tied more closely to patient experiences, as our recent announcement of the GP Patient Survey, giving rewards for GPs offering better access, shows … Our extra investment in GP services is intended to reward these GPs who provide better and more convenient services for patients. It is not intended to reward those who have not moved to make improvements."

Barbara Hakin, lead negotiator for NHS Employers, says this is something they will be looking at. "GPs have seen significant increases in their individual income and we are disappointed that more of this money hasn't been invested by practices in patient care. We have not considered a cap on GP pay, but we are agreed that we need to address the ratio of profits to expenses," she told Management in Practice.

Joe Farrington-Douglas, senior research fellow at the Institute for Public Policy Research, says the government is under pressure to improve productivity in the public services and is effectively capping GPs' pay by giving them a zero pay award. He argues that the jury is still out on whether the new contract represents good value for the taxpayer, and it is now down to GPs to show otherwise.

"GPs should be well paid; they are highly qualified, they are small businessmen and need to be able to make a profit that is comparable to what they might earn elsewhere in the economy," he says. But the increased investment has to reflect improvements in services on the ground – which GPs have not yet demonstrated. GPs, for example, have been relatively slow to take up opportunities for using practice-based commissioning (PbC).

"Although GPs might have been doing a lot of innovative work behind the scenes, it is the public-facing services that are visible to their local communities, such as whether they are open in the evening or on Saturday mornings – they need to be showing that the investment in general practice is worth it. The government cannot afford to carry on increasing costs and not outcomes," argues Mr Farrington-Douglas.

The British Medical Association (BMA) interprets the zero pay award as a pay cut. It complains that for the second year running, not only will GPs get nothing to keep up with the cost of living, they will still have to meet the annual increases of running their surgeries, including paying their staff.

"It makes a mockery of the praise and fine words the prime minister has been uttering recently. Does he really think family doctors will want to deliver the government's 'care closer to home' agenda when they are treated like this?", storms Dr Hamish Meldrum, chairman of the BMA's General Practice Committee (GPC).

He warns that a substantial shortage of family doctors is already predicted for the years ahead, and the 2007 pay award could make this worse. Some GPs, he believes, might leave the NHS altogether.

Medical reaction
Nine in 10 doctors (90%) who responded to a recent survey on the healthcare website agreed that a government-imposed cap on their income would prevent them from improving patient services.

In another survey, 75% of doctors thought that the government would try to impose a cap on pay in the next year, and 40% thought that this would be done by capping income from new contract targets, such as the Quality and Outcomes Framework (QOF). A third of GPs thought that tougher clinical targets would be imposed.

Dr Luke Koupparis, medical editor of, says: "Capping pay of GPs will remove the incentive for quality practices to innovate and develop further services, rather than actually freeing up more funds for patients. There will be little motivation for practices to take on more services in the community, as the government would like to see happen via PbC."

There is no doubt that the 0% pay award has made GPs very angry, but it appears that few are likely to cut back any services that would affect patient care. Last month, the GPC voted against taking any national action on the 0% award. A motion to boycott Choose and Book was narrowly defeated, with a near 50/50 split between GPC members.

Instead, the committee voted to send letters to practices suggesting ways of maximising their efficiency within
available resources. The letter includes a list of policies, including Choose and Book, which could be dropped if there are insufficient funds to implement them.

GPC vice chairman Dr Laurence Buckman says doctors are already investing heavily in their practices and their staff. "Practices will look for ways of saving money and cutting back on what they do. Mrs Hewitt will be sorry she suggested she wanted to cut practice income – she will find that GPs are not going to be doing the things they used to do," he says.

"We won't hit patients, who are our biggest asset – alienating patients would be a big mistake – but when the government denigrates us so continuously, people are going to start thinking about those aspects of care and all the other things we do for nothing. In my practice, my staff work very hard, they could not work any harder, and we are getting to the point where we think: 'why should we be doing anything for this
government whatsoever?'

"If GPs' costs keep going up and their income doesn't, only an idiot will not think at some point: 'we can't go on doing this'. Who subsidises the NHS out of their own pocket?"

Impact upon practice services
Sarah Kennedy, practice manager of the Millfield Medical Centre, Peterborough, says it is a myth that GPs go home with their pockets stuffed full of money.

"GPs work hard," she says. "The issue on their minds is not how much they are paid. What the QOF has shown up is that GPs have always done far more than the government expected them to do."

She says her GPs invest their profits in things like audits to improve services, additional nurse time and extra surgeries. Her practice caters for significant numbers of asylum seekers. "The GPs do this because they feel it is the right thing to do," she says.

She continues: "The government does not understand the nature of the culture they are destroying. I can remember the days when GPs worked at two in the morning, and on bank holidays and the New Year for nothing – they were motivated by a vocation for their work, their professionalism and the desire to care for their patients."

Jeanette Garforth, practice manager of the Jenner Practice in Forest Hill, South London – a practice with a philosophy of improving and maintaining services for patients and the local community – is also concerned about the future.

Her practice has invested profits in staff – an extra healthcare assistant, an additional practice nurse and two salaried GPs – to provide a greater range of appointment times throughout the day, which has increased patient choice and provided a more efficient service for patients. They are keen to plan for the future, and would have liked to take on more staff as some GPs and nurses are due to retire in the next seven years. However, they are now thinking that they may have to shelve that plan.

"On our away day this year, we will be discussing whether we can actually afford to keep working like this," says Mrs Garforth. "We will be looking at the impact of having less money in the years ahead or working longer hours. We are already thinking about what this will mean for the future in terms of work–life balance and patient services.

"At the moment, rather than cutting back on staff, our first option is to try and look at working more efficiently – for example, employing fewer locums." However, this will have an impact on patient services.

Morale decline
Mrs Garforth says the QOF profits have enabled them to improve the service provided to patients with chronic conditions, pay bonuses to staff to maintain high morale, and provide more accessible appointments. They are also involved with four clusters in PbC schemes.

"We have been doing everything the government asked us to do, but now people are feeling demoralised when they hear that their pay may be capped." She says her neighbouring practices are all saying the same thing.

Dr Ruth McDonald, research fellow at the National Primary Care Research and Development Centre (NPCRDC) at Manchester University, who has been studying the impact of the GP contract, believes that if GPs' profits were capped it would prevent them from investing in additional resources, such as new staff, in their practices.

"When we first interviewed people in general practice, they were very happy with the new contract – they were working harder and were rewarded. But now the stance the government has taken is losing a lot of goodwill."

Future development uncertain
Dr McDonald says a pay freeze may not deter some GPs from continuing to improve their services. She cites a 2001 study, conducted by the NPCRDC, of practices piloting a precursor of the new contract in which many GPs became so enthusiastic about improving patient care that many spent more on improving services than they received back in income.(3)

The financial incentive was found to be important in motivating GPs, but much of the additional money they received was spent on staff or equipment. The GPs, enthusiastic about the work, also invested substantial amounts of their own time in the project. Factors that motivated GPs to take part in the project included: a desire to improve patient care; financial incentives; maintenance of professional autonomy in how to reach the targets; maintenance of professional pride; and peer pressure.

Dr McDonald says the reality is that nobody can yet say with any authority how capping GPs' incomes would affect the care they provide. She is on the point of launching a three-year study,* which will look at the impact of government targets on patient care.

"The problem we have is that we don't understand what might be lost by reducing income in real terms, and we need to do the research to understand that," she says. "Our study is going to look behind the targets to get a better picture of what's happening.

"A GP I spoke to recently told me he didn't lie awake worrying about meeting targets, but what concerned him was the more intangible threat that things are likely to get worse. There is no doubt that taking money away from GPs in real terms is affecting morale."


1. The Information Centre for health and social care. GP Earnings and Expenses 2004/05. London: the Information Centre; 2006. Available from:
2. Review Body on Doctors' and Dentists' Remuneration. Thirty-sixth report 2007. London: The Stationery Office; 2007. p.28. Available from:
3. Spooner A, Chapple A, Roland M. What makes British general practitioners take part in a quality improvement scheme?
UK Journal of Health Services Research
and Policy 2001;6(3):145-50.