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Maximising Profits

Maximising Profits. Paul Ellis Partner 26 March 2009. Background information. Profitability decreasing No/minimal contract increases Static or declining private income Continuing cost increases Increasing commercial pressure Increase in private organisations entering the market

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Maximising Profits

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  1. Maximising Profits Paul Ellis Partner 26 March 2009

  2. Background information • Profitability decreasing • No/minimal contract increases • Static or declining private income • Continuing cost increases • Increasing commercial pressure • Increase in private organisations entering the market • Private companies with bigger profits and resources • Can buy in necessary skills • Can fund property/equipment • Opportunities through APMS tenders • Switch in focus from secondary to primary care

  3. Background information cont… • Consequences of not adapting • Taken over by another organisation • Loss of patients leading to loss of profit • Inability to attract/retain quality staff • Worse case scenario – forced into merger • Remember things rarely stand still • Risk of inactivity

  4. Growing pains • Methods of growing • Organic growth • Collaboration • Merger

  5. Meeting the challenges – making it & keeping it • Maximising profitability • Assessing financial viability • Service delivery • Keeping it

  6. Maximising profitability – additional services • Extended hours • may cost to provide BUT • consider potential to offer additional services when opening surgery for extended hours • Enhanced services • consider all opportunities • prioritise the most profitable services • monitor achievement on target based services • Appointment income • Training practice • Nursing home retainers • Social developments • Practice website

  7. Maximising profitability – additional services • Little growth in private work but opportunities may arise • Potential to provide additional services to the NHS PBC - commissioner/provider conflict? - slow roll out to date APMS - tender opportunities are arising • New pharmaceutical needs assessments • May need to work with others to take advantage of some opportunities: • practice joint ventures/group working • formation of a separate entity to co-ordinate and provide additional services from a group of practices • practice mergers to form a larger business entity • working with the private sector.

  8. Minimising costs - Drugs • Ongoing monitoring essential to ensure: • over ordering and wastage does not occur • purchases are made at the best price • scripts are issued in all cases • monitoring of script receipts v scripts issued • Dispensing practices • ensure full VAT claims made • better discounts if order electronically • spread scripts over prescribing doctors • join a buying group • investigate reducing costs of bags, bottles, boxes

  9. Minimising costs - staffing • Main area of practice expense • Staff flexibility and skill mix • Recruitment and redundancies • Staff subscriptions and training • work load efficiencies • process reviews

  10. Minimising costs - Locums • Cover • internal locum cover • skill mix • Insurance • many practices moving to group policies • annual review • group discounts can make the cost cheaper • may not be immediately advantageous for all partners • reviewing your needs

  11. Minimising costs – service contracts • It is still possible to find cheaper contracts for services such as: • insurance • power • Telephone • Review contracts/costs • changing providers • altering terms/products purchased • Use of buying groups or the NHS

  12. Assessing financial viability • Financial viability • Profitability • Cashflow • Working capital requirements • Discipline of partner’s funds • Appropriate payments on account: • Tax • Superannuation • Forecasting peaks and troughs • QOF achievement • Enhanced services • Tax bills

  13. Assessing financial viability (continued) • Are you a QOF winner or loser? Changes are being made to the prevalence calculations from 1 April 2009 which will either increase or decrease your practice’s QOF income. • To find out if you are a QOF winner or loser – go to:- www.pulsetoday.co.uk/story.asp?storycode=4121914 • To calculate the amount your practice is likely to gain or lose use the online calculator at:- www.bma.org.uk/ and search for QOF prevalence calculator

  14. Assessing financial viability – budgeting and monitoring • Practices with better monitoring systems tend to be the more profitable • Consider: • Setting financial budgets and targets • Regular review of financial performance • Assignment of monitoring responsibilities • Ensure sufficient time allowed for corrective action if required • Cashflow and appropriate action

  15. Service delivery • Mix of work loads • Development of partner interests • Use of external consultants • PCT liaison • Business plan • Finding the best partner to move forwards

  16. Keeping it! • Maximising profit per partner • Minimising tax and other personal outgoings • Don’t miss out on fees you’ve earned • Look for tax savings

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