Practices need to double check they are receiving the income they are due from their PCNs as part of measures they can take to improve cash flow, medical accountants have warned.
Experts from the Association of Independent Specialist Medical Accountants (AISMA) have said an average practice can earn income of £150k to £200k a year from its network.
However at the Management in Practice event in Birmingham last month, they said all too often practices can be ‘totally unaware – and unsupported’ on their network’s financial position and not be paid in a consistent or timely way. This can make budgeting and forecasting difficult at a time of tight funding, the session heard.
Jim Duggan, board member at AISMA and a partner at Albert Goodman warned that where practices are not receiving money owed it will ‘have a huge effect on their cashflow’.
He said: ‘What we hear all too often is that it’s the network’s money. Or there have never been any network accounts.
‘But PCNs are not separate entitles. PCN money is your money so practices need to understand how much is being held by them and how much you are due.’
He advised that practices engage with their PCN to check money is being distributed to them regularly and that they are providing regular financial reports.
‘It is vital that proper, timely accounts are prepared showing income and allocations,’ Mr Duggan said.
‘I have seen situations where nothing has been paid by PCNs and practices are clamouring for money.’
The keynote session went into more detail about what practices could do to keep profits thriving at a time of challenging economic times and underinvestment in general practice.
James Gransby, vice chair at AISMA and partner at Azets outlined that in real terms the 2024/25 global sum per weighted patient (£107.57) is worth less now than in 2019/20, when it stood at £89.88 per patient.
Azets has calculated that based on 2019 prices and taking into account CPI inflation, the current global sum is now worth only £86.76 per patient and has been on a downward trajectory since 2021/22.
This is compounded by the fact the national living wage has seen a 39% increase since 2019/20.
And as another example of income not keeping up, he highlighted that the £10.06 item of service fee for vaccinations and immunisation, if adjusted for CPI inflation, should now be £12.47.
‘We are in challenging times,’ Mr Duggan said, adding ‘but we believe it is possible general practice can be profitable by taking control.’
Measures he recommended that practices can take to improve cashflow include:
- Checking core GMS/PMS payments since mistakes do occur
- Ensuring that claims for enhanced services are complete and payments received
- Monitoring QOF achievement regularly (don’t just leaving it until the end of the year) and checking and that payments are correct
- Looking to see if notional rent is correct or if there are ways it can be enhanced
- Monitoring expenses such as wages, pension deductions, and reviewing utility costs and health centre charges
- Looking for better deals with suppliers
- Investigating if there is scope for refinancing of old loans that have high interest rates.
Mr Duggan said other ways to ‘be creative’ and bring in more income included taking on research activity; looking at wholesale dispensing; becoming a training practice, or offering occupational health medicals.
He also stressed the importance of preparing a practice budget and accounts, and reviewing accounts quarterly so they can be tracked against the budget to check profitability.
‘Use these models to inform financial decisions,’ Mr Duggan advised. ‘And check in with your accountants regularly too. You don’t have to wait until the end of the year to know where you are financially.’
Last week, funding was announced for a new community pharmacy PCN engagement lead role to support the implementation of the access recovery plan.
A version of this article was first published by Pulse’s sister title Management in Practice
We are seeing alot of real terms cuyts in GMS funding. Anything new we can do to compensate is from PCNs. Much in the PCD DES now seems non discretionary passed down to GPs by opaque central diktat. So much for innovation or engagement with the grass roots.