3 Pay And Expenses
- A new practice income guarantee will operate to ensure practice income stability.
- A new funding formula that better reflects GP workload will be introduced from 2018 with additional investment of £23 million.
- A new minimum earnings expectation will be introduced from 2019.
The SGPC and the Scottish Government recognise that an appropriate and secure level of income is a key prerequisite to attracting GPs to the profession and ensuring the future viability of general practice. Existing GPs need to be adequately rewarded for the work they do. GP trainees and anyone considering a career as a GP needs to have a clear understanding about the rewards of the career.
The New Funding Model And A Phased Approach
We recognise that the current funding arrangement is complex, leads to uneven funding allocations and needs to be reformed. We also recognise that practices require funding stability. To deal with these historical shortcomings of the current system, we are proposing:
From 1 April 2018:
- To introduce a new funding formula to better address practice workload (details are provided below)
- That new arrangements will include the correction factor (Minimum Practice Income Guarantee) and core standard payments (previously QOF payments) in a consolidated global sum. The funding associated with these elements of the 2004 GMS Contract will be subject to the new formula and would cease to exist as separate funding streams thereafter.
- To make these changes in a protected manner so that no practice will lose funding. To maintain funding stability the Scottish Government has committed investment of an additional £23 million to fund the practices that receive a greater formula share and protect all other practices
- That seniority arrangements remain unchanged
- That there will be no out of hours opt-out deduction under the new arrangements. Nationally, 6% will be deducted from the 2017/18 Global Sum prior to applying the new funding formula. This will conclude the opt-out arrangements made under the 2004 GMS contract.
From 1 April 2019:
- The government will introduce a GP partner whole-time equivalent minimum earnings expectation. On current evidence around one-fifth of GP partners earn less than a whole-time equivalent income of £80,430 (inclusive of pension contribution), based on partner shares of total practice GP income. We agree that no GP should receive less than £80,430 (inclusive of pension contribution) for a whole-time post. This is a first step towards greater income security that will be further bolstered in the following years.
From 1 April 2020 we propose to:
- Introduce an income range that is comparable to that of consultants
- Directly reimburse practice expenses
- As these measures would again change GP practice funding and GP income they will be subject to negotiation and a second poll of the profession after specific details (including financial details) are available. Negotiations on this phase will include arrangements for the protection of GP income and practice expenses.
Underlying this investment are a number of key agreements:
- To invest £250 million in direct support of general practice by 2021/22
- To ensure that proposals stabilise practice income
- To ensure that an allocation mechanism better recognises the demand for GP and other staff time for any given practice population
- To develop a process that, at its endpoint, provides all GPs a guaranteed income on a range comparable to that of consultants and reduces risk through the direct reimbursement of premises and staff costs
- To ensure that there will be no loss of funding to general practice. Any disputes regarding funding will be ultimately reviewed by the Scottish Government and SGPC
- To ensure that practices can expect that support services they are provided with locally will continue
We have agreed that GP income should not be subject to arbitrary variation and should instead reflect the value of a GP’s work as an expert medical generalist. Ultimately, this can only be achieved by providing practices with the necessary funding for expert medical generalist work and the necessary expenses to support this work.
To achieve this, we propose two separate phases of transition:
Figure 1: Two-phased approach to funding
Phase 1 - Introduction of a new funding formula
The current funding model under the 2004 GMS contract has led to a disparity of income and expenses between practices in Scotland because it is based on a methodology that performs two distinct functions simultaneously:
1. It allocates resources to GP practices according to population requirements and differences in costs; and
2. It determines GP partner pay as the difference between this funding and GP practice expenses.
While this arrangement incentivises GP partners to use their funds in the most efficient way to maximise their income, differences in local circumstances that are not captured adequately by the formula lead to differences in costs, income and provision of services.
Phase 1 sees the introduction of a new GP workload based resource allocation formula (the GP Workload Formula) to replace the existing Scottish Allocation Formula ( SAF).
The new formula was developed as part of a 2016 review of the SAF.  It re-estimates the number of consultations per patient, dependent, in the main, on their age, sex and the deprivation status of the neighbourhood in which they live.
The new formula is a methodological improvement to the previous SAF. It is based on the best available evidence and as such it more accurately reflects the workload of GPs. Compared to the workload-related weightings of the original SAF, the new formula gives greater weight to older patients and deprivation.
The impact of deprivation on the workload of a practice is better reflected in the new workload formula than the previous SAF. Methodological improvements mean both deprivation in urban areas and isolated pockets of rural deprivation are better addressed by the new formula.
With the introduction of the new formula, GP practices will be protected from any potential funding losses. To this end, the Scottish Government has committed to invest an additional £23 million to fund the practices that receive a greater share under the new formula while protecting all other practices. This additional investment is to improve services for patients in areas where workload is highest.
We will monitor the impact of the funding formula during implementation.
Increased investment of £23 million
We have calculated the impact of the new formula on GP practice funding for each GP practice in Scotland. This information will be provided to your GP practice in a separate letter in November 2017.
The guarantee to protect GP practice income and expenses in Phase 1 will continue until there is a proposal acceptable to the profession for the introduction of Phase 2. Future funding uplifts will apply to all GP practices’ share of the total, derived by the new formula during Phase 1, including the new income guarantee. Population increases will apply to the formula sum only.
Phase 1 - Minimum Earnings Expectation
In early 2017 the Scottish Government and SGPC commissioned a review of GP earnings and expenses in Scotland.  The review found significant differentials in income and expenditure in the sample of 109 practices, with around one-fifth of GP partners earning less than £75,000 (including any private work, excluding employer superannuation) in a whole-time equivalent post.
We propose that no GP partner should receive less than £80,430 (including employer pension contributions) NHS income pro-rata up to a whole-time equivalent (40 hours) from April 2019.  This extra income will be provided through NHS: National Services Scotland Practitioner Services on the basis of the income, hours and session information.
Start collection of data to inform Phase 2
We considered a single transition to an agreed income range with pay progression and direct re-imbursement of expenses (staff and premises), but there are a number of reasons why it is necessary to split the transition into two phases:
- We need time to develop the administrative capacity to enable the direct re-imbursement of expenses and payment of income.
- We need time to collect data to allow us to calculate the impact on individual partners if the funding model is replaced.
- We therefore cannot calculate the total cost and provide ministers. Parliament and the profession with the necessary assurance of the affordability of the preferred model.
In order to prepare for Phase 2 we need to fully understand the current expenses of running a GP practice, the income of salaried GPs and the income of GP partners as well as the hours worked by individual GPs.
This data is necessary to calculate partners’ earnings entitlement and the total costs of introducing a consultant comparable income scale. We have agreed that all GP practices will be required to provide this data (earnings, expenses, hours/sessions) in a similar way to the data already provided for pension purposes.
To ensure confidentiality data will be held and processed by NHS National Services Scotland Practitioner Services (which currently handles GP income data for pension purposes) and only anonymised, non-identifiable data for the purposes of analysis will be provided to government, NHS Boards or the SGPC during Phase 1. In Phase 2 this data will be required to authorise payments and provide supporting information to ensure appropriate individual GP practice resourcing.
Phase 2 - Income Range And Expenses Re-Imbursement
In Phase 2, which is subject to further negotiations and another poll of the profession, an income range with pay progression for GPs (comparable to that of consultants) and direct re-imbursement of expenses (staff and premises) will be introduced. Negotiations will include the arrangements for protection of GP income and GP practice expenses.
Direct re-imbursement of expenses and an income range for GPs will remove the direct link between the new formula and practice funding. Instead, the new formula will act to define the GP input and an expenses ‘norm’ for a practice. This will guide the allocation of primary care resources across the country but will not be used to allocate money directly. The formula will indicate the necessary resources of individual practices to meet patient demand. The flexibilities that will be required under this proposal will be negotiated between the Scottish Government and the SGPC and presented to the profession before the poll for Phase 2.
Meeting the primary care needs of the people of Scotland
The intention of Phase 2 is that the new formula will inform the establishment of a baseline of the number of GPs required to meet the primary care needs of the people of Scotland. The determination of the baseline will be subject to negotiations and is also dependent on how much variability at a practice level is agreed to be allowed.
Once a baseline is determined, the new formula will help define the optimum GP supply required every year to deal with the workload generated by a growing and ageing population. This puts the onus on the Scottish Government to ensure sufficient training numbers and provide the necessary funding to enable the number of general practitioners to grow in line with overall workload. Further detail on initiatives to increase GP supply in Scotland will be contained in the forthcoming National Health and Social Care Workforce Plan: Part 3 Primary Care.
Phase 2 and GP pay
Under these proposals for Phase 2, GPs will have assured income and pay progression, providing stability. The allocation of GPs across GP practices will be informed (but not wholly determined) by the workload formula to allow for some flexibility while broadly ensuring the provision of GPs reflects population need.
In necessarily small remote GP practices, extra resources will continue to be made available to ensure long-term sustainability. Remote GP practices will, as they do now, continue to provide a broader range of services more appropriate to remote settings.
Phase 2 and GP Expenses
The composition and necessary amount of GP practice expenses will change over time in the context of the extra resources to be provided to the practice as part of the development of the wider multi-disciplinary approach.
We know that rural GP practices have, on average, higher expenses per patient than urban ones. Partly, these can be explained by the diseconomies of scale of small GP practices and the costs of dispensing, or having one or more site/branch surgeries and we recognise that these differences will need to be addressed by proposals for Phase 2.
We agree that GP practices need sufficient time to adjust their resources and that there needs to be sufficient flexibility to allow appropriate funding to account for exceptional circumstances.
This chapter started with a recognition that an appropriate and secure level of income is a key prerequisite to attracting GPs to the profession and ensuring the future viability of general practice. We believe that the proposals outlined deliver on these needs. We also recognise that as well as being rewarded financially for doing their work, GPs need to have a manageable workload. Chapter four explains how we plan to deliver this.