The healthy route to GP management success
19/01/2007

GP practices will under-perform financially unless they adopt a commercially focused approach, says a specialist business adviser.

Kevin O'Brien , a partner at UK top 30 accountancy and professional services firm DTE, warns that commitment and enthusiasm may not be enough for many GP practices, without strong financial management.

"The new GMS contract has had a significant impact on the way GPs run their practices," says O'Brien, who is based at the firm's Bury office.

"GPs are empowered to control most of the expenses paid out of a practice, which means they must focus on their financial controls and reporting systems to show responsibility and accountability."

As the new-style contract becomes more embedded in practice management, there is an increasing requirement to demonstrate business and commercial acumen.

O'Brien comments: "Some practices must improve their monthly management accounting reporting process so they can compare the actual performance with budgeted performance, because control over expenditure can affect the profitability of the practice."

As with any other commercial business, expenditure budgets must be set twelve months in advance together with the appropriate cash flow forecasts. It is also essential to plan for future tax liabilities.

"The introduction of practice-based commissioning will mean that any tender bids must include a proposal supported by financial forecasts, including income and expenditure account, cash flow and projected balance sheet," adds O'Brien.

"It is logical for GPs to use and be familiar with such financial forecasting and budgetary control in their own practices in readiness for the NHS reforms ahead."

As well as preparing business plans, DTE supports practices by reviewing their current financial reporting systems and controls, recommending improvements, and ensuring they are put in place.

O'Brien adds: "I have been preparing business plans for more than 20 years for all types of businesses, including professional services organisations, yet I never cease to be amazed by inappropriate financial arrangements.

"A business plan can make a critical difference to the successful management of a practice. So placing matters on a professional footing is well worth the expense - not least because it will be recovered many times over through greater efficiencies and cost savings."

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