Understanding GP funding streams to get your sales pitch over the line
The way general practice is funded and contracted is a particularly complex part of the health system that I find myself trying to explain to my Pharma, MedTech and Device company clients all the time.
Just in the last few weeks, I was delivering separate workshops to two distinct pharmaceutical companies – one very secondary care-focused with no real primary care presence, the other with a secondary care focus but an impact most often felt in primary care – and the topic came up, even though it wasn’t particularly relevant to either firm.
I hadn’t planned to talk about GP funding flows, but once we got stuck into it, I realised how useful this information is to industry in terms of sales pitches because it’s very different to other parts of the health system such as community services, mental health trusts and hospital trusts.
GP practice size has doubled in 20 years
General practices are small-to-medium sized businesses but rather than have a diverse customer base, they have an exclusive contract with NHS commissioners to provide general medical services to a geographical area and the population within that area.
While you’ve still got some practices that are just single-handed individual GPs, most of them nowadays are run by a general practice partnership.
When I started out in this industry 20 years ago, the average size of a practice was 4,800 people. It’s risen steadily over the years and we’re now at the point where each practice has around 10,000 patients.
A partnership is two or more GPs and they sometimes now have nurses and practice managers and business managers, who are also partners. But as long as they’ve got at least one partner who is a GP, they can continue to function and deliver the core contract.
They take the income from the core contract and all the other additional income streams and they then own a stake in running this small-to-medium sized business.
The risk puts some people off buying into a practice
The key to the partnership is that the partners are jointly and severally liable and responsible for meeting the requirements set out in the contract for their practice. They share the income it provides, but if they were to rack up losses, they would all be jointly and severally liable for those losses.
That’s why a lot of people now coming through don’t necessarily want to be partners. They can see there’s an unmitigated risk, and if it did all go badly wrong, it would land on their doorstep.
From an industry perspective, that risk can explain why GPs will and won’t engage with projects. If there’s too much risk, there’s unlikely to be buy-in.
The three types of GP contract
There are three contract types – GMS, PMS and APMS.
The GMS contract is the national standard GP contract and around three-quarters of all practices operate under it. It’s a contract that’s negotiated nationally every year between NHS England and the general practice committee of the British Medical Association which is basically the trade union representative of the GPs in England.
It’s then used by the integrated care systems to contract local general practices in their area.
Read my guide to integrated care systems here.
The PMS contract is another form of core contract but unlike the GMS, it’s negotiated and agreed locally by the integrated care board (ICB) or NHS England with local general practices that want to operate in a PMS contract.
This contract offers an alternative route with a little more flexibility to tailor requirements to local need but obviously it has to keep within national guidelines and any legislation.
The PMS contract used to be huge – when I started my consultancy it was much bigger than the 20 per cent of practices that hold one nowadays.
APMS contract offers flexibility and opportunity
The APMS contract – which stands for Alternative Provider Medical Services – offers greater flexibility than the other two contract types. Its framework allows contracts with organisations such as private companies or third-sector providers – basically people other than general practice partnerships – to provide primary care services.
Some practices have bid to run APMS contracts when a local practice is put out to tender by the commissioner. You also find the APMS contract being used to commission other types of primary care services beyond that of core general practice.
As an example, you could get a community interest company or social enterprise contracted to provide some sort of primary health care to people who are homeless or asylum seekers. The reason I use that example is I can think of a practice in my work that does exactly that. Around five per cent of practices hold APMS contracts.
Where else do GPs get their money from?
So funding streams into general practice are not huge. And in fact, the latest contract imposition – the third year in a row that general practice had its contract imposed on it – saw a two per cent increase in the global sum payment when they had asked for 8.4 per cent to get them back to the equivalent of where they were in 2019.
This contract imposition was incredibly unpopular and has made many question whether their contracts are viable – with some practices handing them back.
Alongside the core contracts mentioned above, GPs also have the Quality and Outcomes Framework (QOF), local enhanced services and direct enhanced services as funding streams. The local enhanced services are just as they sound, dealt with by the local commissioner. Direct enhanced services is money coming from NHS England.
They also receive non-NHS income from things like medicals, insurance reports and medical examinations for HGV drivers, public service vehicle drivers and taxi drivers as well as cremation fees, occupational health payments and money for research.
Some practices have started to offer private GP services but there are strict rules around which make it very complicated for GPs to offer.
Some services are mandatory, some GPs opt out of
It’s mandatory for a practice to provide essential services to its registered population. That’s essentially identification and management of illness, providing advice, guidance and referrals into other services.
They have to be open from 8am to 6.30pm Monday to Friday, excluding bank holidays, with no exceptions.
There is also the option to deliver out-of-hours services provided outside those core hours but the issue there is all the practices opt out of delivering that. I can’t think of a single practice in my client base that delivers that service.
Read my blog – Why GPs need permission to say no – or we risk losing them – by clicking here.
The money for that goes back to the integrated care system who then find an out-of-hours provider to supply out-of-hours care.
There are additional clinical services that practices are assumed to provide such as minor surgery or joint injections but they can opt out of delivering those procedures.
We’ve already mentioned enhanced services – there’s two types, local and national – which are agreed services that the holders of GMS, PMS and APMS contracts can provide alongside their core services if they choose to opt in.
And sometimes beyond that, practices will deliver locally commissioned services on the instructions of the ICB but again, that’s something they can opt in and out of.
Making a living is a tightrope for partners – and the situation’s getting worse
The reason for all this detail is that people often don’t understand the funding flow to general practice.
Coming in are – the global sum payment, QOF, the enhanced schemes, local incentive schemes and money for training.
Going out are staff costs, salaries, building costs, clinical consumables, office and IT costs and interest and depreciation.
What’s left is how the GPs and partners earn an income. In a market where income is declining and expenditure is going up, we’re expecting the GPs to take less and less.
Keep in mind that partners are not just clinicians, they own the business, they also employ the team. That brings real challenges when expenditures are rising and income is going down in real terms, especially when you consider they’re liable for any losses. So the partners take a really keen interest in maintaining and growing the business.
Pharma, MedTech and Device companies therefore, have to understand the problem they solve when they’re pitching to the NHS. If your product or service has the potential to positively impact income – or at least not reduce it any further – you might have an angle to work from.
The funding challenges in general practice right now are ongoing and creating real pressure. I’ll be writing in the not too distant future about what the BMA is proposing to do in terms of industrial action in response to this situation.
Scott McKenzie helps pharmaceutical, medical technology, and appliance firms get their products and services in front of the right NHS decision-makers. He helped to land no fewer than 53 new projects with the NHS in 2023 alone and has now developed a 12-month mentorship programme that helps individuals and teams get straight to the heart of the challenges of selling to the NHS. If you want to get your products fully embedded into treatment pathways, Scott can help. Get unprecedented access to key customer insights, proven tools, resources and strategies plus 1-2-1 coaching and decision-maker introductions to finally get your project over the line. Find out more here.