Are we prepared for the £1-million GP?

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There has been much debate over GPs potentially making a profit out of health care budgets as result of GP commissioning. A study for The Guardian estimated that GPs could earn more than double their average income – perhaps up to as much as £300,000 per year – if they were able to share in the profits of any 'savings'.

However, it is highly unlikely that the average general practice will profit in this way. GP practices cannot receive a profit-share on savings as commissioners, and even as members of a consortium, the quality premium payment (for achieving targets as part of a re-worked contract) will represent no more than 10 per cent of a practice's overall income. And while some GPs might gain income for taking up a management position in a GP consortium, the money they receive is unlikely to do much more than 'backfill' the time spent away from surgeries.

The big money doesn't lie in commissioning, however, but in a new type of service provider that takes on a risk-sharing contract for delivering care, with the commissioner. For example, this may involve the creation of an integrated care organisation (ICO) made up of a consortium of general practitioners working together with a private company, as was recently reported on the Channel 4 News.

Innovations such as ICOs look like an attractive option: it makes sense for commissioners to enter into risk-sharing arrangements with providers to take forward clinical and financial responsibilities; set quality standards; promote innovative practice; deliver a comprehensive and integrated package of care to patients, and be held accountable in the process. It is an approach The King's Fund and The Nuffield Trust recommended in a co-written paper last year.

However, if these new provider organisations are allowed to profit from savings on the budgets they receive, then the potential income to the entrepreneurial GPs who might run them could be very lucrative. Let me illustrate with the following hypothetical scenario:

1. A GP practice partner develops a new ICO, in association with a private-sector company, to manage primary and community care for a population of one million patients. The GP partner holds a 40 per cent stake in the business.

2. The ICO receives a health care budget of £100million in a risk-sharing arrangement with the local GP commissioner to provide and improve the management of certain patients with chronic illness. Strict criteria and standards are written into the contract, but it is agreed that 50 per cent of any savings can be taken by the ICO as profit (over and above the management fee they receive). This is seen as fair given the financial risks being taken.

3. All local GPs who are members of the ICO agree to an enhanced local contract with the private company. This provides bonuses for achieving quality standards set in the contract – potentially worth an additional £20,000 to each GP practice. However, practices do not take a profit-share arrangement as this would undermine their clinical autonomy; undermine the doctor-patient relationship with patients; be too much risk to take and be seen as a direct conflict of interest by the consortium. As a result, all of the financial risk in the management of the budget is taken by the owners of the ICO business.

4. At the end of the first year, the ICO excels on its quality targets and generates a surplus of 5 per cent (£5 million), a result it puts down to better integration of care, reduced levels of unscheduled hospital admissions, and better business processes. The GP commissioner pays out the quality premium attached to the contract to those GPs who performed well. So the GPs are happy, while their patients report high satisfaction. Of the surplus, 50 per cent is returned to the commissioner for re-investment in patient care. The remaining £2.5 million belongs to the ICO business and the GP partner’s share for the year is therefore £1 million (over and above his practice income and the bonuses made by his practice in meeting the ICO's quality targets).

This story is not as far-fetched as it may seem. The question is, are we ready to allow profits to be made on savings from health care budgets in return for better and more cost-effective services? If so, are we also ready to accept the £1-million GP?

This blog also appeared on the Health Service Journal website.

Comments

peasant

Comment date
25 May 2012
GP should not be making profit from patients taxes, if they want to run a profit organization they should be doing it from the private sector, they should be stop from getting early retirement with our money and pretending they care about us, how are we monitor they do not abuse the new system??

Dr Robert Bobson

Position
Health pundit and bon viveur,
Comment date
01 July 2011
Hooray! Bring on the lovely jubbly.

Betty Driven

Organisation
Farm
Comment date
07 April 2011
As a wife of a hard working farmer and an ex Nurse to boot, what's going to happen in a few years when I visit my GP. Is he going to be hunched over a calculater, roulette wheel and a couple of dice. Is my inevitable hip replacement going to be a long winded lottery. Currently me and my husband live on a meagre wage from the farm, we are simple but hard working. I rue the day I voted for Mr. Cameron.

Judith Roberts

Position
Nurse and Snr Lecturer,
Comment date
07 April 2011
With regard to Sheila Kennedys comments and Neil’s reply... ‘a bitter midwife’.

Mmm I understand why Sheila is bitter, primary care is about skilled teams working together. If she is bitter she has reason to be for her comments are very accurate and could have included may other activities performed by nurses HV and midwives for which the practice gains an income ..

On a minor note (but important to some) nice to see a female voice in the discussion especially given that Nick seems to have an implicit opinion that all of changes will be implemented solely by male GPs.....
(over and above his practice income and the bonuses made by his practice in meeting the ICO’s quality targets).

No, it’s not the 1st April, my comment is more of a tease then a serious point, but nonetheless it is a further reminder that sustained quality care is achieved by everyone in the team, and thus, perhaps, everyone’s efforts should be rewarded?

sheila kennedy

Position
midwife,
Comment date
05 April 2011
Your senses serve you well - and my blog was no joke, Bernard!!

sheila kennedy

Position
midwife,
Comment date
01 April 2011
Since when have GPs ever done anything for nothing? There has to be a profit in it or it wouldn't be happening. For decades GPs have been paid for maternity services they did not perform, and for immunisations they did not give. They wouldn't make profits from patients?? They've been making profits from midwives and health visitors for years.

Paul Moore

Position
GP,
Comment date
31 March 2011
Really disappointed in the Kings Fund that the author's ill-educated comments have been published in this form. The £1m GP is way less likely than the £millions that will be funnelled away into private firms and away from health care as shareholders' profits. GPs who profit will at least have an ethical consideration, whereas private firms will be ruthless in stripping out any overfunded commissioning budgets. Budgets that are underfunded (such as here in East Sussex) will just result in cuts in care, and the money to address the budget setting error is lost.

William Laing

Position
Director,
Organisation
Laing & Buisson
Comment date
31 March 2011
While the profits will not come easily, Nick is quite right in posing the question: are we prepared in principle to see GPs (and others) profit from helping to make the healthcare system more cost effective. I would have no problem as long as there are good governance rules and provided we can actually be sure that care of at least equal quality and lower cost is being delivered.

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