Tory plan could give GPs interest bonanza

Posted on October 22, 2009. Filed under: Journals | Tags: |

Health Service Journal | BY SALLY GAINSBURYSTEVE FORD | 22 October 2009

GP practices could earn thousands of pounds a year in interest payments under Conservative plans to turn practice based commissioning budgets into “hard cash”.

At present, primary care trusts spend on average £1,600 per head of population. Under Conservative plans to extend the scope of practice based commissioning, the average GP practice with 6,000 patients could be handed a cash budget of around £7m if practices were given responsibility for 70 per cent of the budget.

HSJ has calculated that if just half of that budget was stored for six months of the year in a deposit bank account paying 3 per cent interest, a typical practice could earn an extra £105,000 a year – a sum equivalent to an entire year’s pay for an average GP.

Most practices are expected to group together into consortia, covering populations of around 100,000, or 17 average size practices. That could translate into annual interest earnings of around £840,000.

A Conservative spokesman confirmed the party planned to transfer hard cash budgets into consortia bank accounts, but said interest earned could not be taken as profit. He said: “Any interest earned would have to be used to invest in patient care, not for their own profit.”

He said the party had yet to decide precisely how and when in the financial year cash budgets would be transferred toGPs.

Public finance experts have questioned how workable the plans are. For example they could involve the Treasury laying out up to 70 per cent of the NHS budget on “day one” of the financial year, as opposed to the current system where PCTs “draw down” funds when they are needed.

That would have implications for Treasury borrowing needs and, after the collapse of the Icelandic banks, there will be concerns about GPs’ ability to make wise choices about where to store money.

Jeff Finney, chair of the Institute of Chartered Accountants in England and Wales and director of a GP accountancy service, told HSJ practice consortia would need to set themselves up as not-for-profit entities in order to ensure interest earnings were not taken as profit.

The questions over GPs holding their own budgets follow national primary care director David Colin-Thomé’s admission last week, revealed by HSJ, that efforts to reinvigorate practice based commissioning have so far failed. He described the policy as a “corpse not for resuscitation”.

Social Market Foundation head of strategic development David Furness said it was time to stop ploughing money into expanding GP commissioning.

Mr Furness said at least £100m had been spent on trying to reinvigorate practice based commissioning through entitlements, and it was time to “turn off this tap”.

“Let it work where it is working,” he said. “But let’s stop trying to drive it from the centre.”

He said it was wrong in the current financial climate to place the “onus” for commissioning on those whose primary role was clinical practice, and the role of PCT commissioners should be strengthened instead.

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