How practice finances have been hit by Covid-19

Published 28 July 2021

GP practices were assured at the start of the pandemic that funding would be protected but, as Karl Tomusk discovers, a Pulse Intelligence survey reveals many have taken a financial hit

The pandemic has posed enormous challenges for general practice, including the need to pay for extra staffing cover and new equipment. Meanwhile, much of the additional work they rely on to bring in adequate funding such as local enhanced service work was suspended last year, in order to focus on the Covid effort.

NHS England promised GP practices the financial support they needed to navigate the crisis, including extra Covid support funds, income protection for suspended work and reimbursements for supplies.

But these assurances failed to help large numbers of practices, which have struggled with a loss of income and ballooning expenses, according to a Pulse Intelligence specialist survey of 190 GP partners and practice managers with access to their financial accounts for 2020/21.

Nearly half of these practices expect their profits to have fallen in 2020/21 due to a combination of lost income and pandemic-related costs that have not been reimbursed.

The survey also reveals that many practices effectively participated in the Covid vaccine programme for free, with over 40% of those who took part in the programme reporting either only breaking even or making a loss.

‘The fact that the Covid vaccination programme is yielding little profit to practices – and even sometimes a loss – is further testament to the enormous sacrifice GPs and their teams are making in leading this national programme,’ Dr Matt Mayer, chief executive of Berkshire, Buckinghamshire and Oxfordshire LMCs, told Pulse Intelligence.

Not all GPs took a financial hit last year. Almost a third reported that their income stayed the same, while 20% saw their income rise. Successful Covid vaccination programmes and Covid monies were the most common reasons cited, highlighting some stark variation in how the pandemic response has affected GPs’ finances.

Profits down for almost half of practices

Some 45% of respondents said they expect profits to have fallen – anywhere between 3-20% – in the previous financial year. Additional Covid-related expenses, many of which were not reimbursed, played a small but significant role: roughly a fifth (21%) of those that reported a projected decrease in profits did so despite their income either staying the same or even rising last year.

Profits fell on average by £40,000 among those that reported a decrease and were able to share figures. This included several larger practices (all but one with patient lists of more than 10,000) that lost £100,000 and, in one case, as much as £150,000.

Most respondents blamed the loss either partially or entirely on the pandemic. One common reason was a decrease in QOF, with one GP partner saying: ‘Impossible targets to achieve for QOF will decimate profits. We can’t achieve this with current levels of staff and increased acute workload/backlog.’

A fifth of respondents expected profits to have risen last year – by up to £100,000 in several cases. Of those that gave a reason, just over a third singled out their participation in the Covid vaccination programme, while several others had benefited from increases to their patient list size, or additional care home or other, specific enhanced service activity.

One GP partner said their practice’s increase in profits came as a result of not taking annual leave and, therefore, not needing to pay for locum cover. Andrew Leal, partner at MHA Macintyre Hudson accountants, said other practices had similar experiences: ‘We have seen some practices that [usually] have high levels of locum cover see very large profits increases.

‘In the early stages of the pandemic, as face-to-face appointments reduced dramatically, they reduced the locums they were using with very substantial cost savings.’ But, he added, those savings will not be sustainable.

Income protection schemes no guarantee

Income fell for 40% of respondents, and while the average reported decrease – about £36,000 – was not as sharp as the fall in profits, one practice reported earning £200,000 less than in the previous year. Among those that listed a percentage fall in income, losses ranged from 2% to 20%.

Conversely, the biggest reported increase in income was 15%, which the respondent – a business manager – said was because of Covid vaccination services.

Despite assurances from NHS England that funding for enhanced services and QOF work would be protected through the pandemic, the survey found each NHS income stream had a substantial minority of respondents report a decline in earnings. In respondents’ comments, QOF was singled out as a source of income loss more than any other specific factor, and more than a quarter (26%) reported a decline.

Outside of QOF, minor surgery disruption was a significant source of income loss, with 48% of GP partners and practice managers reporting a decline in income. Local enhanced services (LESs) also took a hit, despite the promise of income guarantees where services were paused, although practices more often reported a decline in local authority LES (33%) than CCG commissioned LES (27%) income.

Meanwhile, among services that continued in full, income from childhood immunisation targets decreased for 21% of practices, despite this being an area of focused efforts following repeated demands from NHS England to boost uptake, including advice to set up catch-up campaigns.

Looking at QOF in more depth, the income protection arrangement for 2020/21 had directly led to a loss in income for some practices. While practices resumed some QOF activity, with a particular focus on catching up on flu vaccination and cervical screening targets, the bulk of indicators continued to be subject to income protection. However, this was largely based on 2018/19 achievement data, potentially leaving some practices out of pocket where their subsequent 2019/20 QOF work and performance was worth more.

A full fifth of respondents in the survey reported they lost income because higher achievement in 2019/20 had been discounted, or in the words of one GP partner, they got ‘scored higher, paid less’. One practice manager commented: ‘We achieved all of QOF but were paid at the pre-agreed protected rate.’

There was some variation in the actively reported areas of QOF, however. For 31%, income from flu vaccination indicators actually rose (17% decreased). The value of these indicators doubled last year, but GPs also saw ‘better compliance due to patient concerns’, according to one GP partner. One practice manager caveated this, however, saying in their case it also led to additional outgoings from longer clinics and from social distancing measures.

Cervical screening QOF income either stayed static or fell for the majority (86%), despite these indicators also being worth double their usual points (31% saw a decrease). This was put down to fewer people attending screenings early in lockdown, while 22% saw a decrease in disease register indicators. One business manager whose practice had an increase in cervical screenings said it had carried out ‘more targeted work’ to maintain those levels.

Covid vaccination programme effectively run for free

While much work from existing additional services was suspended, practices took on the huge task of delivering the new Covid vaccination enhanced service in the middle of the financial year. Payment was based purely on activity at £12.58 per dose administered, with a supplementary fee for those jabs given in other settings such as care homes. But variation in how practices groupings were able to deliver the service and delays and disruptions to vaccine supply appear to have affected how well remunerated this work was.

The majority (80%) of respondents reported taking part in the first phase of the Covid vaccination programme, but among these over 40% said they expect to have recovered costs at best, with 32% saying they expect to break even and10% expecting to have made a loss.

Of a handful of respondents able to estimate figures, two said they were around £5,000 out of pocket while one had lost £20,000 and another more than £100,000.

Among the 44% who expected to make a net gain, profits of between £1,000 and £10,000 were typically reported though one practice had made £42,000 and two reported profits of £50,000.

One partner explained their service ‘financially broke even’, but that due to ‘practice work and staffing’, they had lost out.  

By contrast, a partner expecting a profit of around £10,000 commented: ‘We used volunteers for administrative [work] and vaccinations, saving us staffing costs.’

Private income plummets

A large majority experienced a loss of private income from medical reports, with 75% of respondents reporting a decrease. Among these, the median loss was £5,000, although one GP partner reported a loss of £30,000-40,000 and one business manager a loss of £72,000. In percentage terms, practices lost anywhere between 10% and 80% of their medical reports income.

Those surveyed gave several reasons: fewer Private Medical Attendant reports, the suspension of all non-urgent work and a lack of face-to-face and occupational health checks. 

Alongside these losses, 33% of practices also reported an income loss from room rental and 17% from other sources, including research. In each of these categories, just 3% of practices saw an increase in income.

Extra PPE and other costs compound income losses

Practices incurred considerable costs throughout the pandemic from supplies, locum fees, IT equipment and other expenses. This was exacerbated by early confusion about what was reimbursable along with heightened competition for scarce supplies.

Two-fifths of respondents said that at least some PPE costs were not reimbursed, echoing the BMA’s concern that practices would be left out of pocket from equipment purchased before reimbursement criteria were published. Practices lost anywhere from £200 to – in the case of one practice with more than 10,000 patients – £30,000 from non-reimbursed PPE.

Andrew Pow, board member of the Association of Independent Specialist Medical Accountants, says: ‘There was significant confusion in the first wave, with no clear guidance from NHS England and NHS Improvement on what was reimbursable. Some practices who incurred costs based on what they thought was reimbursable subsequently found they were not able to claim.

‘To compound this, costs were high at the time with many practices having to compete for supplies amid widespread shortages of PPE early on in 2020.’

Meanwhile, despite the provision of an initial £150m Covid ‘General Practice Support Fund’ to cover back-costs from March to June 2020, and a further £150m Covid funding set up later in the year, some 30% of practices said they had to cover at least some locum fees, with several respondents paying 50-80% of additional expenses they incurred. Some lost £10,000 or more, and although half of these were large practices with more than 10,000 patients, one had a list size of no more than 3,000.

Other one-off costs to make practices compliant piled up for practices, including one practice spending £26,000 on flooring and the removal of soft furnishing that was not fully reimbursed.

One GP partner explained: ‘We had costs in covering furloughed staff and have to enhance infection prevention measures such as new flooring, of which only a fraction was eventually covered via NHS England reimbursement.’

NHS England said the £150m ‘Covid Capacity Expansion Fund’ launched in November 2020 would support practices with additional work alongside the Covid vaccination programme, until the end of March 2021, but just half of respondents reported receiving an allocation from the fund. Of these, 39% said the funds did not cover their additional Covid-related costs.

Practices forced to make cuts

Amid these extraordinary expenses, 30% of practices reported having to make savings as a result of the pandemic. This led to two-thirds of these practices reducing locum cover, a quarter cutting salaried GP sessions and more than half dipping into reserve funds. Meanwhile almost one-fifth had to make other savings, which included partners taking pay cuts.

Where salaried GP sessions were cut, one partner explained this related to having to release staff to man Covid hubs.

Another partner explained they had cut locum costs ‘through better rota management, in part through the capacity telephone appointments brought’.

However, the partner added that the practice only coped with this through having a particularly stable practice team ‘as we have invested heavily in team development’, noting that ‘activity is now >135% of pre-pandemic levels’.

Extra support critical for future stability

The result is a primary care system that is, as Pow argues, possibly under more strain than at the start of the pandemic. Financial pressures have grown for many – though not all – practices, and measures to ease those pressures have not reached all those that need them. Where savings have been made, they are likely to be temporary and could lead to strain in other areas, he said.

‘If [NHS England] does not provide further support for practices to deal with increasing workloads they will struggle in 2021/22,’ Pow says, calling for both financial and other support, such as easing regulatory requirements like CQC and appraisal.

‘By far the biggest risk to general practice now is that practices are overwhelmed and returning to a normal service is impossible for many.’

NHS England was approached for comment by Pulse Intelligence about the survey findings but did not respond. It has committed an additional £120m funding to support practices with the ongoing pandemic situation, from April to September 2021. But even if practices can really begin to return to more ‘normal’ routine and non-essential work beyond this summer, questions remain about their long-term stability.

Londonwide LMCs chair Dr Michelle Drage says under-resourcing prior to the pandemic had contributed to the financial instability: ‘Years of systematic under-funding prior to Covid has left practice finances precarious. Resilience needs to be built over years, it cannot be done with last minute measures in the midst of a crisis.’

Full details on how we conducted the survey see here.

Guide URL:
https://pulse-intelligence.co.uk/guide/how-practice-finances-have-been-hit-by-covid-19/
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