Analysis: how GP practice income is changing

Changes in GP contractual payments are having a big impact on the average GP practice’s income, an analysis of 2019/20 income data reveals.

Losses from income streams including MPIG, PMS and seniority payments slightly more than offset increased funding in other areas last year, a Pulse and Pulse Intelligence analysis of NHS Digital showed. While the new state indemnity scheme indirectly made up for the losses, the change in average income demonstrates a downwards shift in the core NHS income that practices receive.

The analysis of official NHS Digital data showed that the average practice actually earned slightly less per patient in 2019/20 than it did in 2018/19. The average funding per patient fell from £127.25 to £127.14, between the two years.

There are a number of caveats – the analysis excluded funding from NHS sources such as premises payments, reimbursement of locum fees and drugs, as well as APMS practices. In addition, it did not take into account the introduction of the state indemnity scheme last year, which has indirectly benefited practices, and the introduction of payments at PCN level.

But the analysis demonstrates that the removal of MPIG, PMS payments and seniority pay is having a large effect. There are also reductions in the NHS Digital category of ‘other payments’ – an all-encompassing term, but mainly involving training payments – and in GP Forward View payments.

As above, this doesn’t include funding given directly to PCNs as part of the 2019/20 contract – but it does include the ‘PCN participation’ funding practices received.

Including funding for PCNs, more money is being put into primary care overall. But, if you’re in an average practice – especially one relying on MPIG, seniority pay or PMS funding – then you may be seeing your core NHS income go down.

Commenting on the analysis, Andrew Pow, partner at Mazars LLP, noted that while the state indemnity scheme  was essentially funded out of the global sum, practices have made up any lost income ‘as medical defence costs were slashed’.

As a result, Pow said, ‘net funding will still have gone up marginally overall – albeit with some winners and losers’.

Medical accountants have warned that 2020/21 is looking like it will prove a tough financial year for practices, however. This could be compounded by the additional costs of managing the Covid pandemic and loss of private income.

Pow explained that, with seniority payments and MPIG ending, and wage costs rising 2-2.8% in an average practice, the increase in the global sum could be wiped out.

Furthermore, he said: ‘PCN funding on staff has increased but that has to be spent – and spending is being delayed due to recruitment and Covid issues, so resource in terms of people is not flowing through as quickly as they may have thought.

‘If the demands under the PCN DES result in increased workloads then the extra staff may not make a difference at the core practice level.’

Pow added that the effects of Covid will also be felt: ‘I think we will also see Covid impacts on income – practices have lost funding on medical students, appraisal income, research and difficulties in restarting activities like minor surgery.  Some of this may have been offset by reduced locum costs in the first wave, but the second may be a whole different issue.’