The client
A two-partner GP practice based in London with nine salaried GPs and 12,500 patients had out-of-control spending on staffing and locum costs.
The dilemma
When AISMA accountancy firm Ramsay Brown was appointed by the GP practice in May 2023 they found it in a perilous financial position.
There were no financial controls in place as a result of recent partner changes and staff turnover. Expenditure was based on demand, rather than being driven by affordability.
Ramsay Brown’s first task was to prepare the accounts to 31 March 2023. This revealed full-time partner profit share of only £25,000, alongside overdrawn partner current accounts to the tune of £169,000.
On learning of their dire financial situation, the partners initially believed the practice was not viable and were considering returning their contract to the NHS.
‘The clients were extremely distressed, not only for themselves, but also for the consequences for their patients and staff,’ says Laurence Slavin, partner at Ramsay Brown who led the case.
Action required
‘Using benchmarking information comparing key financial data across other GP practices of a similar size and patient demographic, we helped the partners and practice management team understand what level of expenditure was appropriate for their own practice,’ explains Laurence Slavin.
Budgets were then set up to control the level of expenditure, with the accountants reviewing practice costs on a regular basis.
After two years, full-time profit share had increased to above average levels and the partner current account debt had reduced to just £10,000.
The conclusion
‘The key issue we faced was gaining the trust of the client and showing them what could be achieved by referring to the financial performance of other practices,’ says Laurence Slavin.
‘As specialist medical accountants we were able to persuade them that they had a fundamentally profitable practice and that we had the knowledge, skills and experience to lead them out of their financial distress.’
‘Working with our firm has helped them to become profitable, solvent and stable practice.’