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The GP Contract

14th May 2007

Negotiations for the 2007/08 GP pay deal have stalled amid reports of massive increases in GP earnings over recent years. Here we have a look at the changes since GMS was introduced in 2004, and where the current stand off between the BMA and NHS leaves the new contract.

GP contract1

What is the new GP contract?

Not so new now, the General Medical Services (GMS) contract was introduced in April 2004 as a way of linking significant investment in primary care directly to outcomes, and of recruiting and retaining more GPs by making their working life and pay more attractive.

GMS involves money being paid to GP practices based on how they perform against a range of indicators set out in the Quality Outcomes Framework (QOF). All practices have to provide essential services, and are then free to agree with their PCT which additional and enhanced services in the QOF they wish to provide over and above this. They are paid for each point they achieve against the QOF across this range of services. Essential services cover initial care for patients presenting as ill, some care for long term conditions, and non-specialist care of the dying. Additional services include things such as cervical screening, immunisations and vaccinations, and some minor surgery. Enhanced services cover an extended range of surgical procedures, and work undertaken by GPs with special interests. There are opportunities for further payments to practices if they meet a series of other targets:

• National Enhanced Services (NES) for things such as drug and alcohol mis-use services

• Directed Enhanced Services (DES) for delivering various health reform initiatives such as Choose & Book and Practice Based Commissioning

• Local Enhanced Services (LES) which can be negotiated where there is a specific local need eg for healthcare for asylum seekers.

At the same time, the new contract allowed GPs to opt out of providing services out of hours if they wanted to eg on-call and weekend surgeries. This was left to Primary Care Trusts to commission through separate arrangements with other providers if local GPs no longer wanted to be involved.

An alternative to the GMS contract was also introduced for practices where the QOF approach would not be effective in improving health because of the nature of the local population, nor address specific local challenges in recruiting and retaining primary care staff. Personal Medical Services (PMS) contracts are available in such circumstances, and apply to around 40% of GPs. PMS is a locally negotiated contract for service provision made between the practice and PCT. PMSPlus contracts are available to support the development of new services over and above standard PMS.

As well as GMS and PMS, three other types of contract are available for the provision of primary care services:

• PCTMS (between an SHA and PCT where the PCT is the provider)

• Alternative Provider Medical Services (APMS, where the PCT commissions services from non-NHS providers)

• Specialist Provider Medical Services (SPMS, where groups of NHS clinicians other than a GP practice with a patient list join together to provide NHS services which can help meet the needs of particularly vulnerable groups not adequately catered for under GMS and PMS).

Why the recent controversy about GPs’ pay?

It is GMS that is in the spotlight at the moment because it appears to have led to massive pay rises for GPs since 2004. Negotiations over the settlement for the year just started have now stalled with a deal still not close.

Analysis from the Information Centre for Health and Social Care suggests that GP earnings averaged £100,170 in 2004/05 - an increase of nearly 23% on the previous year before GMS (though nearly £7k of this is due to super annuation being included in figures for the first time). There are reports of a small minority of GPs making up to £250k a year - possible if they run a network of surgeries providing an extensive range of services, including an in-house dispensing pharmacy.

This pay increase seems to have come because the QOF approach has had the impact on GP’s clinical activity that it was intended to have - and more! The Department of Health estimated that GPs would achieve on average about 70% of the maximum possible score against the QOF, but achievement has actually been around 90%. Whilst this is good news for patient services, and means that GMS is having the desired impact on health outcomes, the Department estimates that this higher level of achievement has cost them £300m more than they had anticipated.

But what concerns the Department of Health now is the finding that a significant proportion of the pay rise has come from GPs taking more of their practice’s income as profit than they did before. As GMS is a contract between the PCT and the practice for services, it is not, as such, a direct earnings payment for individual GPs. The practice must cover all its running costs from the GMS payment, and the rest can be taken by its GPs as profit (their personal income). It is this personal income figure which is being widely quoted and compared to their previous levels of income. The analysis has found that not only has their income reached record levels by them performing so well against the QOF, but also by them now taking an average 45% cut of practice’s gross earnings as profit, compared to the average 40% they took before GMS. This means that a smaller proportion of the practice income is being used to invest back into existing and new services.

The BMA argues that the large pay increases are deserved and have simply enabled GP earnings to catch up after years of relatively low pay which led to the crisis in recruitment and retention. And the Department of Health points to the massive outcomes-linked investment in primary care that has been achieved, along with an improvement in recruitment and retention of primary care staff. But what is worrying is that at the same time productivity in primary care has arguably dropped, with GPs working shorter hours and not having to cover on-call, and a smaller proportion of funding is now being used to invest in developing services.

The Department appears to be trying to claw back some of the ground it has lost on the pay deal in recent years, and is negotiating hard for the current year's settlement. The Secretary of State has accepted the Pay Review Body recommendations for 2007/08 under which GPs will have their pay frozen (a real terms pay reduction after inflation is taken into account). This follows the deal struck for 2006/07 which also saw no inflationary uplift in pay for GPs, plus higher thresholds being set for achieving QOF points, all amounting to a 7% efficiency saving. The BMA representing GPs in the negotiations is furious at what amounts to a pay cut two years running, and is seeking a 4% pay increase for 2007/08. But the NHS side maintains that GMS is a contract for services, not a pay deal, and should be negotiated on different terms. In the process it is trying to build in to the deal some kind of break on increases in GP individual earnings. The negotiations are left with little progress being made to agree 2007/08's inflationary uplift, the level of service efficiency savings to be achieved under GMS, and how investments in new services should be achieved. Patricia Hewitt has recently said that in hind sight individual earnings as a percentage of practice income should have been capped. Barbara Hakin, the lead negotiator on the NHS side, has said that this is now being looked at for future years’ negotiations.

It is unclear how the stale mate is going to be broken and in what time frame. What is clear is that the recent media interest in GP earnings leaves GPs enjoying little public sympathy for their plight. And their status as self-employed contractors to PCTs, who have a growing array of alternative providers now to choose from, leaves them in a negotiating position which appears to be increasingly weak.

Lastest news

  • The BMA considered recommending strike action against the proposed pay deal for GPs, with modernisation initiatives such as choose and book being boycotted in protest. There remains no agreement on pay for the current year with both sides holding their existing lines.
  • Gordon Brown has stepped into the argument about GP pay in his campaign to become the next prime minister. He has pledged to tackle GP salary increases, wanting them to bring back out of hours services or face a pay cut. He believes the existing GP contract can be used more effectively to lever improvements such as longer surgery opening hours.
  • The National Audit Office is to investigate value for money achieved by the new GP contract since its inception. Its report is expected in early 2008. Its investigation will follow their recent damning report into the consultant contract.
  • APMS is to be used to address inequalities in access to primary care in four especially deprived areas under the governments new 'Fairness in Primary Care Procurement' initiative. APMS will be used to attract a full range of possible providers to increase primary care staff numbers and improve service access in the selected regions.


For more information about the GP contract go to:

www.nhsemployers.org/primary/primary-886.cfm

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