Minimum Practice Income Guarantee

Dan Poulter Excerpts

Wednesday 26th March 2014 Westminster Hall

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

It is a pleasure to serve under your chairmanship again, Sir Roger. I congratulate my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) on securing this debate, which is pertinent to many constituencies in England. Indeed, it is pertinent to my own constituency in Suffolk. Later in the debate, I hope to reassure him by giving good local examples from Suffolk of how the joint working he has described can be very effective. The issue is not just money, but improving the quality and availability of care for patients.

We all recognise the importance of local GP practices, particularly in rural communities such as those in my hon. Friend’s constituency. I would like to reassure him that the Government believe that high-quality local services can be maintained. I will not rehearse all the background to the 2004 GP contract negotiations, which we know changed the way that GP practices were funded, but it is worth drawing out a couple of points. Rather than receiving a series of fees and allowances, since 2004, GP practices have been paid based on a formula to take account of need and work load. Practices can also earn money by participating in the quality and outcomes framework—commonly known as QOF—or offering enhanced services.

To smooth the transition to the new system, a minimum practice income guarantee was introduced and used to top up practices’ core funding to match their basic income levels before the 2004 contract was introduced. We must also remember that many GP practices are of course small businesses in their own right. They value and enjoy the flexibility that the GP contract implicitly recognises, and that can bring great benefits to patients. In a moment I will talk a little more about the minimum practice income guarantee and the changes under the recent GP contracts, which from now on will be negotiated by NHS England, as my hon. Friend outlined.

It is worth talking a little about rural practices and highlighting some of the measures in place to support them—it is important to get that on the record. We recognise the fact that rural practices, in areas such as Hawkshead and Coniston in my hon. Friend’s constituency, play a vital role for their local communities. We also recognise the rurality and the often sparsely scattered populations that such GP practices look after. Both the Government and NHS England intend high-quality local services to be supported and maintained.

My hon. Friend will be aware that the funding formula for general practice already includes an allowance for rurality, and there is also provision for the costs of temporary residents. That can be a particular issue during the summer months with the arrival of tourists in the Lake district. The funding formula already includes additional support for rural areas and places with a more transient population because of tourism, or for the seasonal population fluctuations in more agricultural constituencies where there is a high reliance on temporary, summertime or seasonal labour.

Rural GPs may also be able to increase their income in other ways. For example, dispensing practices tend to be in rural areas, although not exclusively. That is potentially another way to provide additional income for a practice, as well as important support for the community, which can have closer-to-home access to prescribed medications and drugs.

I understand that NHS England is working with local GPs through the Cumbria clinical commissioning group to decide how to maintain accessible, responsive, high-quality primary medical services—my hon. Friend alluded to that in his speech. For example, NHS England can help practices to work more closely together. It is looking at doing that by sharing IT and other back-office support in order to improve care and practice efficiency. NHS England is also ensuring that, through practice patient participation groups and local healthwatch services, patients are being kept fully informed and are able to contribute to discussions.

I would like to talk briefly about the phasing out of the minimum practice income guarantee, which last year we announced would begin this April. As my hon. Friend outlined—I was pleased that he supported this—we consider that the payments are no longer equitable, because under the system, two surgeries in the same area serving similar populations could be paid different amounts per patient they serve. That is inequitable and does not make sense.

The payments of the MPIG will be phased out not simply overnight, but over seven years. The overall intention is for the funding for GP practices to be properly matched to the number of patients they serve and the health service needs of those patients.

Funding will also continue to take into account the unavoidable costs of providing services in rural areas. The issue is not one that affects only rural practices, as both rural and non-rural practices receive MPIG payments.

[Dr Wollaston]

Regarding the point about funding following the number of patients, the Minister will be aware that there is now greater flexibility for patients to register. Relatively young, mobile patients may choose to be registered near their place of work; indeed, they should have that flexibility. However, that is an additional income drain on small and sparsely located practices. Is the Minister aware of that?

[Dr Poulter]

Absolutely. I alluded to that point in some of my earlier comments. We know that there is the tourist trade, which is an important part of the local economy in the constituency of my hon. Friend the Member for Westmorland and Lonsdale. Recognition of that factor is built into the funding formula for GP practices. People moving locally to work somewhere is already taken into account as part of the formula, which will benefit the funding of some of the local practices in my hon. Friend’s constituency. I hope that is a helpful clarification of the point about people moving from one location to another.

[Dr Wollaston]

Does the Minister accept that not all sparsely populated areas will see that offset by incoming tourists? Many areas of the country will not see that offset benefit.

[Dr Poulter]

Absolutely. As I have outlined, other parts of the formula recognises rural areas; they are already recognised in GP funding allocation. Therefore, on both counts, additional support is available for areas such as those described by my hon. Friend the Member for Westmorland and Lonsdale in his constituency, and indeed those in Totnes and in my own constituency. Rurality is already factored into GP contracts and funding for GP practices and health care.

What will happen with the money that is recycled and released from the MPIG is an important point. The money released by phasing out the MPIG will be reinvested into the basic payments made to all general medical services practices, which are based on the number of patients and key determinants of practice work load, such as the age and health needs of patients and the unavoidable costs of rurality.

Another factor that we all recognise—I know it is a factor in Totnes and, I believe, in Westmorland and Lonsdale—is that many older people choose to live in rural areas. Older people once used to retire to seaside towns, but they are increasingly retiring to predominantly rural areas. The changes and the freeing up of cash from the MPIG will benefit all practices. In the health care funding formula—not necessarily the GP funding formula, but how clinical commissioning groups allocations are allocated—there is a strong weighting for age which will bring broad benefit to rural areas, particularly those that have a high proportion of older people.

NHS England has been undertaking specific analysis of the withdrawal of the MPIG. Inevitably, a small number of practices will find themselves in more difficult circumstances. NHS England has been considering the small number of significant outlier practices, as my hon. Friend the Member for Westmorland and Lonsdale mentioned, for which alternative arrangements may need to be made to ensure that appropriate services are maintained for local patients. We appreciate that that is a matter of concern for some practices, and my hon. Friend has outlined concerns in his own constituency. That is why we have decided to take seven years to implement the change to the MPIG funding. Phasing in the changes over that period will allow the minority of practices that lose funding to adjust gradually to the reduction in payments.

NHS England has been looking carefully at how its area teams can support the practices that are most affected. It has invited practices that believe they will have problems as a result of the phasing out of the MPIG to raise that concern with their area team. In a small number of cases where there are exceptional underlying factors that necessitate additional funding, NHS England has asked its area teams to agree different arrangements to ensure that appropriate services for patients continue to be available. That includes looking at how services are funded.

Importantly, NHS England has suggested that practices with small list sizes could look at collaborating with other practices, for example through federating, networking or merging with nearby practices, to provide more cost-effective and better services for patients, a point I will come to in a moment. Practices can also identify other ways they could improve cost-efficiency, such as reviewing staffing structures, and they can review commissioning or contracting options.

[Tim Farron]

I am grateful to the Minister for that explanation. I simply want to point out that neither Hawkshead nor Coniston, despite both being put in an unsustainable financial situation in the future, technically count as outliers. Will he guarantee that NHS England will look at the sustainability of all surgeries, not just those that have lost the most from the withdrawal of the MPIG?

[Dr Poulter]

The answer is in exactly the point made by my hon. Friend in his speech: it is about local area teams working effectively with practices.

Let me provide my hon. Friend with an example of how collaboration between services and GP practices can work well, from not just a financial perspective but a patient care perspective. In Debenham, Otley and Grundisburgh in my constituency, all of which have important rural communities, there is a practice that works collaboratively and a practice that serves and looks after populations across a number of sites. That works well for local populations, because they have an accessible local GP service.

That practice model has also produced considerable economies of scale. It has allowed the practices to invest in additional services for the benefit of local patients. Where there are pressures caused by an ageing population and the complex needs of older patients, that has allowed more money to be freed up to focus resources appropriately. In some cases, it has also allowed greater flexibility in the use of the infrastructure—certainly, surgery buildings —to provide greater community benefits.

The model can work, and it is important that practices, even though they are small businesses, consider that they need to collaborate and work with neighbours, where possible—not to lose their independence or identity, but to make efficiencies where they can, so that more money can be directed into front-line patient care. That is part of the answer.

Providing a sustainable solution is about practices working well with their neighbours. Sometimes it might mean rebuilding relationships that have broken down in the past. We know that, with the best will in the world, we do not always get on well with our colleagues, although we all do our best to look after patients. Sometimes it is about practices setting aside past disagreements, working collaboratively for the benefit of patients and making efficiencies where possible.

[Tim Farron]

Of course, many surgeries will be able to find ways of surviving and thriving through different working arrangements. There will be some, however, that are essential and strategically vital for rural communities such as mine, which will have done everything they possibly can but cannot make ends meet. Will the Minister confirm that funding will be available through NHS England to support those surgeries?

[Dr Poulter]

That is a matter for area teams to look at. The first approach that area teams will take is to ask, “Where can we make efficiency savings that will mean there is more money for front-line patient care, such as IT, back-office services and administration costs?” Hospital providers have been doing well in reducing administration and freeing up money for patient care. Are there economies that can be gleaned through better procurement practices and surgeries working together?

That has got to be the first thing: surgeries looking to help themselves. Later on down the line, if everything else has been exhausted, the area team will have to make a decision about whether other mechanisms are in place to provide additional support.

I am confident that, with a funding formula that recognises rurality, and a funding formula for CCGs that particularly identifies the importance of an ageing population, we have a formula that will support rural practices into the future.