What the PMS funding changes mean for your practice

Oct 7, 2015
Scott is the partner responsible for looking after the firm’s healthcare and medical sector clients. Scott also specialises in advising small businesses.
GPs Accountants

What the PMS funding changes mean for your practice

The PMS funding changes – part of the national drive for equitable funding – may see a large number of redundancies, reduced service offerings and even practice closures over the next few years. Reviews in one CCG area indicate that as many as half of practices fear they will be at risk of closure following the loss of PMS premium funding. The looming ‘collapse’ has led to practices being warned by the CCG to make sure they prepare for GMS level earnings as PMS spending is brought in line their GMS counterparts.

Reaction from GPs at a PMS practice

GPs at a Sheffield PMS practice have said, following the funding cuts, it could be forced to close as it will lose £260,000 of funding per year – more than a fifth of its current annual budget – in an interview with the Sheffield Star.

Dr Kate Bellingham said: “We are facing massive financial challenges at the moment and don’t know how we are going to remain viable…If we lose the full 21% I can’t see how we can continue to operate.”

It is not yet clear what impact the loss of substantial PMS premium funding – for roughly 40% of all practices, covering nearly 20 million patients – will have on PMS practice viability and sustainability over the next few years. There will undoubtedly be some practices who are hit harder than others and estimates suggest that some PMS practices could lose up to as much as £300,000 or £400,000 worth of funding.

In this article we look at some of the FAQ surrounding PMS funding and provide advice on how you can start preparing your practice for GMS level earnings.

What is happening to PMS practice funding?

NHS England is currently reviewing PMS contracts as part of its drive for equitable funding. The reviews of PMS funding are set to withdraw as much as £260m worth of funding. Those funds are then likely to be given to area teams, who will use the money to achieve local outcomes in line with local area plans. Given the current recruitment crisis and increased regulation facing GPs it is essential that all funds freed up from these PMS reviews are reinvested back into local, struggling practices.

How will the PMS funding changes impact practices?

Many practices across England fear closure following the loss of significant PMS funding, but the true impact will vary from practice to practice. It looks like PMS practices are set to lose, on average, between £50,000 and £150,000 worth of additional funding. There will also be circumstances where practices could lose up to as much as £400,000. Those practices in particular may have to make significant operational and/or strategic changes to ensure their financial viability.

Is this the end of the PMS contract?

NHS England has suggested that it wants to keep all of the different contractual models, but this seems unlikely in practice. If you are being funded on GMS level earnings – with tens (if not hundreds) of thousands of pounds less in funding per year – then you may have to bring your service back in line with your GMS counterparts. In fact, more than 600 PMS practices (roughly 1 in 5) have already agreed to return to a GMS contract.

How can practices prepare for GMS level earnings?

Those 2,400 or so PMS practices that have not yet returned to GMS contracts will have to make operational and strategic preparations before doing so, such as:

  • Monitor risks to financial sustainability, including a review of fixed costs vs. variable costs.
  • Review staffing rotas to ensure operating at a cost-effective manner whilst still offering a quality service to patients.
  • Carryout a cost review for general practice expenses such as utilities, insurances etc.

For more information or advice following the PMS funding changes please contact your local office specialist.

More from our GP practice experts

You can find all of our latest GP practice sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

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Scott Sanderson

Scott Sanderson, Partner

Scott Sanderson began his career with Hawsons and trained as a Chartered Accountant, becoming a partner in 2015, specialising in the healthcare sector and small businesses. For more details and advice, please contact Scott on ss@hawsons.co.uk or 0114 266 7141.[/author_info]