GP practice financial resilience post Covid-19

Medical finance expert Rob Glentworth offers tips on how to make your practice more financially resilient to deal with uncertain times ahead

Any crisis can present an opportunity as well as a threat. In this case the opportunities revolve around general practice being able to modernise and digitalise in order to enhance and improve the experience for both staff and patients alike. There has been a lot of talk about remote triage and ‘virtual by default’ when it comes to clinicians seeing patients, but there are a number of financial and business learnings to come from this crisis.

The past two to three months have provided an opportunity for well-run practices, with up to date financial information, to adapt and react to the changing landscape.

Implement proper budgeting

Budgeting is something that is still done remarkably infrequently within general practice which is surprising considering how much of the income base of a surgery is fixed. In reality, this should make budgeting simpler than in other commercial industries, where core turnover depends on many external factors and fluctuating demand.

Using cloud based software with a well set up chart of accounts, we encourage clients to enter budgets for the upcoming accounts year based on specially prepared projections of income and drawings. This enables practice finance and management staff to run ‘actuals versus budget’ reports at various stages throughout the year, and present this information to the partners.

This can be particularly important when unforeseen circumstances such as the Covid-19 pandemic occur, as budgets can be flexed accordingly to assess the impact of the crisis in real time. The additional advantage of operating in this way is that if a practice is under or over performing when compared to the budget, then drawings and tax payments can be adjusted if necessary, to avoid problems with capital account balances at the year end.

Management accounting

Taking things a stage further, as well as setting budgets and comparing with actual figures at various stages through the year, a practice can have actual quarterly management figures drawn up.

It is vital to have management information readily available to partners in GP practices just as in other business sectors. However, we still find some partners are still unable to say what they spent on staff and drug purchases in the last quarter, despite this being a key metric when assessing performance.

A number of our clients have now switched to having quarterly management accounts prepared as these figures can enhance partner meetings and give a more commercial viewpoint to assist business decision making during the year.

Future resilience benefits from business focus

General practice is changing. Over the last decade we have seen a move towards more ‘at scale’ service provision, and recently, with the introduction of the network DES, more of a focus on building a multidisciplinary team.

With this we have seen more business focused practice managers coming into the profession (sometimes from other sectors) as well as an increase in the amount of business minded GPs. As the size and turnover of GP practices and networks continue to increase the structure and business resilience needs to change with it.

Rob Glentworth FCCA is a medical accountant and associate director of Moore Scarrott Healthcare, nationwide specialist medical accountants