The goal is not to maximise profits at any cost. The goal is to build a strong sustainable business. Long-term profits will automatically flow from this. Simply looking at income to chase and expenditure to cut misses the point. You need to work out how to increase your capacity to provide care within your resources. Try to stick to things which are in line with your practice purpose and you enjoy doing. There may be money to be made in selling diet pills or injecting collagen but do you really want to spend your irreplaceable time doing them? Always choose long-term recurrent benefits over short term gains.
At the bottom of this article there are some illustrations of the relative contributions different items make to practice income and expenditure. They are made up but are based on real life data. You can see that the Global Sum is a large percentage of practice income and QOF (which we spend much of our time chasing) is relatively small. Staff Salaries account for most of your costs and spending on Locums can be considerable too.
You need to keep a careful eye on staff spending because it is such a large proportion of your costs but your staff are the people that do the work you get paid for. You need to pay them fairly and look after them while also making sure you do not hire people you can’t afford.
Losing an experienced member of staff needlessly is a catastrophe. Replacing staff costs you treble: you have to pay them, you have to pay someone to train them and you have to pay someone to do their job while you are training them. It can take a new member of staff up to 2 years to become fully proficient in all areas. It is like setting fire to bundles of fifty-pound notes!
Staff are rarely lazy or incompetent – and if they are, then you really need to fix your recruitment process. Staff can improve their performance though, and you need to make it a priority to enable them to do their best work. I thoroughly recommend “The Culture Code – The secrets of highly successful groups” by Daniel Coyle as a starting point.
Locums to cover holidays can seem like a good idea since you only use them when you need them and so they should be cheaper than a permanent member of the team. I used to think this but have been proved wrong. The problem is that even the best locums cannot follow up the patients they see or deal with the results of the tests which come back after they have gone. So you actually wind up doing more work (sometimes a lot more work) than if your partner had seen the patient. Also, they cannot contribute to the culture of the practice – they will not get to know the reception team or spend time supporting your nurses or learn how your secretaries do things – and it is those many small things which enable your practice team to perform well. You may have no choice but to use locums at the moment but you will benefit in the long run if you look at what you need to do to recruit more regular staff.
Add extra capacity to manage risks and take advantage of opportunities
Sometimes it can seem clever to run a super lean team where everyone is working at full capacity and not a second is wasted. The problem is that if there is increased demand or staff sickness you wind up having to hire in expensive locums or putting excessive stress on the remaining team members. While this may be unavoidable occasionally, it is more expensive in the long term in locum fees and staff turnover and can be a false economy. Recruiting an extra person so that you would be overstaffed if no-one is on holiday can actually save you money because it is very rare that no-one is sick or on holiday. Also, if your team are not already overstretched you will have the capacity to take advantage of extra work (like the recent COVID vaccination clinics) to boost your income.
You can’t change your global sum except by registering more patients so on the face of it this seems fixed. But you can look at how you work to see if you can provide the same or better care with less staff time. Consider consultation rates as a cost and see how you can reduce them while looking after patients well. Make sure you include partner time which is sometimes considered free because the practice is not charged for it. Do triage systems really save more doctor time than they use? Do nurse practitioners really reduce the demand compared to the equivalent spend on GP appointments? Are Online consultations really more efficient than face to face? We all have our cognitive biases and when we know and like the staff member or were involved with setting up the new system it can be hard to be objective. However, if you get this right you will improve your income-to-work ratio which, ultimately, is our own personal “bottom line”.
The obvious stuff
Go through each item of income and expenditure to see if you can make improvements. Look at enhanced services to see which ones have dropped and which could be increased. Make sure you hit your QOF targets. Negotiate fees with accountants / telecoms etc. Look at alternatives to printing / letters etc. Consider changing insurers / cleaners etc.
Non core income
Often it is possible to add to practice profits by earning income not directly from your core practice purpose. Examples include property ownership, dispensary or pharmacy business, private medical services to companies and research. Beware becoming too dependent on these income streams as they may dry up or the income-to-work ratio may go down.
|Practice 1||Practice 2||Practice 3||Practice 4|
|Drugs / Consumables||3%||2%||3%||3%|
|Repairs / Maintenance||2%||2%||2%||2%|
Dispensing profit is considered to fall within Non-Medical income and the purchase and sale of drugs are not shown separately.