The GP business model – a delicate balance

The GP business model – a delicate balance

Posted on Thursday, May 26, 2011 at northerndoctor.com

I can remember Andrew Lansley making the case at the last RCGP conference that one of the reasons that GPs are ideally placed to be intimately linked to commissioning was because of their independent status within the NHS.

The GP business model is frequently misunderstood. Most GPs are independent contractors who work in their own self-contained partnerships, employing staff and often owning their own premises. GPs have a great deal of independence in how they run their business but many wouldn’t be viable if they weren’t shackled to the NHS. They are not true free-marketeers by any stretch of the imagination. Most GPs have never really been involved in competition and they have enjoyed the privileged position of being in a business that is, collectively, too big to fail. A recent opinion article in Pulse written by Dr Paul Charlson (a Tory) pushes the case for opening up competition and claims that GPs ‘conveniently ignore they are private practices’. He, like many others advocating competition, conveniently ignores the current limitations on the GP business model.

Another article in Pulse suggesting ways GPs might seek to increase their practice list size also highlights the problem. One of the biggest factors in a practice’s income is the size of its list of patients. Therefore, getting more patients may seem like a great idea. Of course, it takes about two seconds to work out that this a zero-sum game. There are no extra people to register and no spares just sitting around waiting to be swept up by a diligent GP. The bottom line is that if one practice takes more patients then it does so entirely at the expense of a neighbouring practice that will lose the income.

The RCGP has been opposed to a relaxation of the rules on practice boundaries. A lot of patients find this irksome – particular commuting types who are rarely in their home areas within working hours. Many GPs will oppose practice boundary abolition out of naked self-interest as maintaining the practice boundary system retains their position of provider privilege. However, the restrictions around practice boundaries have provided a financial safety net for general practice and is one of the factors that helps to ensure a universal service.

The private practice status of the typical GP business is an awkward tension held together by the need to provide that universal service while allowing local flexibility. It isn’t a true blue, devil-take-the-hindmost competitive world and there are good reasons for that. Practices do make a profit but in most cases it is a modest one that pays GPs and their staff a reasonable salary. Most practices can’t make a significant profit above this but the quid pro quo is that they are unlikely to go bust. Don’t be persuaded by the straw man argument that GPs are already private providers and the NHS reforms are a natural development.

We only need to pull a few small threads to unravel the whole fabric of our primary care.

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