All businesses will need to take lessons learned over the last few weeks into their future and our GP Practice clients, and Primary Care as a wider spectrum, will be no exception to this. So, what can we advise them to help the thought process on the financial aspects?

Workforce

The Government has been slow to agree a comprehensive package of support for general practice and it is now seeking evidence that there is additional capacity required before it is likely to agree additional funding. Hopefully this will be resolved soon so that both practices and PCN’s can recruit additional help if and where it is needed.

Remaining on the staff and resource question, we need to applaud the fact that enormous levels of innovation have taken place over the last few weeks. There will be many things that GP practices and PCN’s will wish to keep and use, and to challenge the way that Primary Care services are delivered longer term. It is likely that there will be a range of decisions made according to the local and individual need and national direction may support but not confine. Clients will now have used technology to a much greater degree to triage patients and consult remotely; they should now seek to build on these changes and develop their remote services. The one key message I have consistently received from my clients which we need to remember going forward: they will never practice medicine in the same way again.

Staff costs will always be the most major cost in a GP practice and PCN, and this has to be carefully planned, budgeted and understood. Thought will need to be had around whether the staff mix is still the most appropriate now practices are working differently in the medium to longer term. As always, but perhaps to a more acute degree now, how should succession be planned for and how should natural wastage be replaced? ‘Like for Like’ will not always be the best course of action, both in terms of service delivery and cost. Always make sure when advising that clients are reminded that the total cost of a staff member’s salary is gross salary + employers' NIC + employers' superannuation. This is a common error found in client budgets. If staff are being asked to develop the best models of working in new ways as the pressure of emergency comes off, practices need to consider what training is needed to help this, and what is the resulting cost. There is often financial assistance for training at CCG level and clients should always explore this possibility.

Over the last few weeks especially, working collaboratively with PCN’s has freed up capacity. Locums have found it more difficult to find work and are likely now perhaps to have a more open mind to permanent, more secure jobs. This should ease the recruitment position to a degree as permanent positions regain popularity. Practices should carefully look at the use of locums in terms of capacity and cost. HMRC IR35 legislation has added to the issue here and anything other than very temporary locums are in many instances hard to justify as self-employed. Now, working more remotely, practices can offer more flexibility to salaried GP’s and partners.

We must also not forget the new £20,000 loan incentive in the 20/21 contract for new partners coming into general practice: this loan is non-repayable if the individual remains a partner for more than 5 years. Precise details of the scheme are yet to be published but the scheme commenced from 1 April 2020. (Be careful with the taxation treatment!) There is also a training grant for these individuals of up to £3,000 to develop business skills.

In year 1 of Primary Care Networks' reimbursements under the (ARRS) Additional Rates Reimbursement Scheme were, for some staff, at 70%. Staff under this scheme in this year are now reimbursed at 100% and the risk of future redundancy cost has been removed. As we move forward, PCN’s and practices should look to utilise this scheme to aid capacity and delivery of service.

Overtime can be expensive and often uncontrolled in budget terms. Where this has not been needed under lockdown, practices should think very carefully before falling back into old habits.

Do practices have staff members who have really gone above and beyond during COVID -19, should they consider any bonus payments, remember bonus payments are not pensionable.

Covid-19 costs

There will be costs that practices have incurred as a result of the pandemic for example PPE costs. Practices will be aware of this but it needs to be considered whether they have analysed these carefully within their accounting records so that they can double check they have a complete record. There is a BMA reclaim form that can be used to claim reimbursement for all such costs from NHS England: practices should double check that they have and continue to claim all such costs.

One would assume that as we emerge from COVID -19, there will be continued costs of deep cleaning which should form part of these reimbursement claims. Practices should also make sure that they have made the appropriate claim for the extra staff costs incurred for the bank holiday weekend that practices were required to work during May. COVID costs and reimbursements should be shown separately within the accounts and should be easy to identify.

GP Practices were not entitled to use the Government furlough scheme for their core NHS work and any claims made would be repayable. There may be fringe medical businesses separate to the main practice that may have been eligible to make use of this scheme, but this needs to be carefully considered.

Income funding

With regards to funding during the pandemic NHS England stated: ‘that means that we will be continuing to pay global sum at the rate agreed for 20/21, there will be arrangements for continuing to pay QOF, DSQS in dispensing practices and then around some of the DES’s.’

Practices should review monies received from NHS England to ensure that payments have indeed been received in line with these proposals.

We are beginning to see emerging CCG differences in terms of some LES funding. I would expect Q1 to be fairly certain, but not all areas seem to be continuing to guarantee funding from Q2 onwards at historic levels. Practices should make sure now that they fully understand the position that they are in with regard to LES funding both directly from the CCG and via Federations. I hope that there will be more clarity with regard to this as we move forward.

Where funding in full is not receivable going forward without activity taking place, i.e. those enhanced services based on procedural claims, then for the rest of this NHS year practices will need to consider what can still be achieved with the resource and time available. They will need to balance up the most profitable areas together with those most crucial for patient care. Hopefully PCN groupings will work together to maximise what can be achieved.

PCN’s and their Clinical Directors in many instances have been innovative over the last few weeks and it is hoped that this will continue to develop as we emerge from COVID-19. Practices should make sure that they work with their PCN partner practices to have their voice heard and to understand what the PCN as a unit will endeavour to achieve over the next few months, and what challenges and opportunities this will entail.

Practices are likely to be extremely busy with general practice work in the next few months as a catch-up of routine care is resumed, where safety allows. It is important however that finance managers take a step back to make sure that all claims appropriate were made for the COVID period and indeed for Q4 of the 19/20 year as the emergency actions began. This may be in the form of claims for work done and also for claims such as maternity and sickness reimbursements and possibly locum insurance claims. It should be checked that all invoices have been raised for any non-NHS work that was carried out previously and any claims for student training payments. Care should be taken to ensure that any claims have been made for government funded SSP monies as we entered lockdown, for those who were affected.

Increases in drugs costs

Over the last few months we have seen significant increases in the costs of both drugs, and instruments and consumables, bringing profit levels on personally administered drugs and dispensing down. Whereas this is not as a result of COVID, it is, nevertheless, an area that practices should refocus attention to as soon as possible, to make sure their internal controls, both in respect of purchasing and claiming, are as tight as they can be. Buying groups may be an answer in some instances, but if buying in at PCN level for bulk discounts, VAT consequences should be considered carefully.

Income tax payments on account

HMRC have allowed self-employed income tax payments on account due in July 2020 to be deferred without interest until 31 January 2021. Hopefully many doctors will have preferred to make the payment in July but there will be some that will not. It is very important that we remind these individuals of the likelihood of the size of the January tax payment should they take advantage of this deferral. Where partners draw net and the practice pay, the tax practice managers must ensure that they budget carefully for the cash outflow.

2018/19 End of year superannuation adjustments

Practice managers should now be looking at whether the 2018/19 superannuation end of year adjustments have been properly taken or repaid. They should understand the cash flow consequence if this has not happened, and, if due a particular repayment, should raise a query on the PCSE portal to request this cash be repaid as it is now significantly overdue.

Surgery premises

We remain in unprecedented times and property values are uncertain. There is hopefully more security in the value of GP premises than other commercial property because of the guaranteed rental streams, but this does not mean valuations will not reduce. Premises transactions will have to be dealt with delicately and professional advice taken thereon. Primarily, the terms of the partnership deed must be adhered to, and valuation movements will need to be understood. Entrepreneurs' relief remains available for up to three years after a partner retires from the partnership and it is likely that some premises' transactions will be deferred. With new and more remote ways of working, space needed to run NHS services may decline and practices and PCN’s as a group should consider space available, and how best to utilise the space for all services to be provided. Practices should also remember that space used for non-NHS purposes will be subject to notional rent abatement. Due to fears of a fall in value, I have begun to see some premises disputes emerge between partners: these should be treated carefully and advice from a specialist medical lawyer may be needed.

Banks will be more cautious in such times but will continue to see lending to GP partners as a safer investment, backed by guaranteed rental streams. Interest rates are likely to remain low and GP partners, if buying in or refinancing, should carefully balance the risks of fixed and variable rate arrangements. A low and long fixed rate loan may be attractive but redemption penalties and exit routes may be penal. Variable rates are likely to be low now, but will potentially vary significantly over time and this should also be considered. If there is significant equity built up in a practice premises, partners who have a share of that equity may want to consider capital recycling when a future premises transaction takes place. Capital gains tax rules on eventual sale should be carefully explained in writing. Capital repayment holidays are attractive but allow for when capital payments resume.

The key message

In conclusion there is much for practices and PCN’s to consider and the crux of this will be for careful budget and cash flow forecasting with the following considerations:

• what are the guaranteed future income streams;
• what income streams have been lost or are at risk;
• what are the cash flow implications of changes brought about by COVID-19;
• what will be the staff costs including locum costs over the next few months;
• will there be staff or partners leaving and how will they be replaced;
• are there any significant costs forecast to adapt to working in different ways;
• are there any private sources of income that will permanently cease as a result of COVID-19;
• when and how much tax is due by partners or practices;
• as a result of all of the above do partners drawing levels need to be revised;
• did practices remember to renew those insurance policies;
• operating permanently in overdraft is far from recommended but does the practice have an overdraft facility agreed with the bank if it is likely to need to utilise it.

We will emerge from COVID-19 and, as always, the most successful practices will amongst other things have good financial management and advice.

Sally Sidaway FCCA 05/06/2020
Director of Medical Services at RSM tax and accounting.