Close monitoring of costs will be needed to protect margins
We are going to continue to see widespread pay freezes across the NHS in 2012 and the impact of that is going to be tighter budgets. NHS funding is going to remain harder to come by and the costs of being in a NHS pension scheme are also going to increase.
In order to move forward, or even stand still, against this backdrop, GPs are going to have to be more resourceful and will need to explore alternative income streams.
Many practices are still benefitting from borrowings with very low interest rates. That will continue throughout 2012, so if practices are looking at any sort of external finance or looking to refinance an existing loan, it may be wise to do that sooner rather than later.
We are also advising our GP practice clients to review their existing staff structures to ensure they have the right mix of staff and make sure work is being done at the right level so they are getting the most from employees.
A review of staffing levels has to be done in the most cost effective way.
Like any other business, GP practices should be reviewing all supplier costs, such as utilities providers, to help improve margins. Close monitoring of stock levels will also help to avoid dead money being tied up in stock.
GPs need to be sitting down with their practice managers and external advisors and planning their budgets in advance. We know GPs lead very busy lives and historically may not have spent enough time working on the business rather than in the business. Going forward they need to have a better understanding of practice financial management to keep on top of costs and cashflow.
The role of the practice manager has grown in importance in recent years and I think we will continue to see far more emphasis being placed on this role in 2012.