Leveraging Financial Benchmarking to Optimise GP Surgery Performance

As a GP partner or Practice Manager, navigating the challenges of delivering high-quality patient care while maintaining financial viability requires a deep understanding of your surgery’s financial performance and how it compares to industry standards. Financial benchmarking, a powerful tool for assessing and optimising financial performance, can provide the insights needed to make data-driven decisions and ensure the long-term success of your surgery.

The Fundamentals of Financial Benchmarking

At its core, financial benchmarking involves the systematic comparison of your surgery’s financial metrics against a set of predefined standards or peer group averages. This process enables you to identify areas of strength and weakness, and to develop targeted strategies for improvement. Key financial metrics to consider in benchmarking can include:

1. Income per patient: This metric assesses the average revenue generated per registered patient, taking into account factors such as NHS contracts, enhanced services, and private income.
2. Staff costs ratio: Analysing staff costs as a percentage of total revenue can help you determine if your surgery’s staffing levels and remuneration are in line with industry norms.
3. Operating margin: This ratio measures the profitability of your surgery by comparing operating income to total revenue, providing insight into the efficiency of your practice’s operations.
4. Current ratio: Assessing your surgery’s ability to meet short-term obligations, the current ratio compares current assets to current liabilities, offering a snapshot of financial liquidity.
5. QOF achievement: Comparing your surgery’s Quality and Outcomes Framework (QOF) achievement to national averages can help you identify areas for clinical performance improvement, which can have a direct impact on financial performance.

How to Implement a Robust Benchmarking Methodology

To ensure the accuracy and relevance of your benchmarking efforts, it is crucial to follow a structured methodology:

1. Define your benchmarking objectives: Clearly articulate the specific financial aspects you wish to assess and the desired outcomes of the benchmarking process.
2. Select appropriate benchmarking partners: Identify a cohort of GP surgeries that share similar characteristics, such as patient list size, demographics, and geographic location. Primary Care Networks may provide the best opportunity for you to benchmark as you look at member practices, not just in terms of statistics but at systems and best practices. This will ensure that your comparisons are meaningful and applicable to your practice’s unique context.
3. Standardise data collection: Develop a consistent approach to gathering financial data, ensuring that all benchmarking partners adhere to the same reporting standards and timeframes. This may involve the use of standardised templates or the engagement of a third-party benchmarking facilitator.
4. Conduct comprehensive data analysis: Employ robust statistical techniques to analyse the collected data, identifying trends, outliers, and areas of significant deviation from benchmarks. This may involve the use of specialised financial analysis software or the expertise of a financial professional.
5. Interpret results and develop action plans: Translate the benchmarking insights into tangible, actionable strategies for improvement. This may involve collaboration with clinical and administrative staff to identify root causes of underperformance and to develop targeted interventions.

Addressing Limitations and Ensuring a Balanced Approach

While financial benchmarking offers significant benefits, it is important to acknowledge its limitations and to adopt a balanced approach:

1. Timely and accurate data: Up to date and accurate data play a critical role in successful benchmarking, helping to ensure that you make reliable comparisons, maximise the opportunity to identify improvements and it provides a realistic baseline to set performance goals and aid decision making.
2. Contextual differences: Recognise that each GP surgery operates within a unique context, and that benchmarking comparisons may not always account for these differences. It is essential to interpret benchmarking results through the lens of your surgery’s specific circumstances, for example it may be more appropriate to use weighted list size for some of the metrics rather than registered list size.
3. Qualitative factors: Financial benchmarking primarily focuses on quantitative metrics, but qualitative factors, such as patient satisfaction and staff morale, also play a critical role in the overall success of a GP surgery. Ensure that your benchmarking efforts are complemented by a holistic view of your practice’s performance.
4. Continuous improvement: Benchmarking should not be viewed as a one-time exercise, but rather as an ongoing process of continuous improvement. Regularly reassess your surgery’s performance against benchmarks and adapt your strategies as needed to maintain a trajectory of growth and success.

Financial benchmarking is a powerful tool for GP partners and Practice Managers seeking to optimise their surgery’s financial performance. By leveraging a structured benchmarking methodology, selecting appropriate benchmarking partners, and interpreting results in a balanced way, you can gain the insights needed to carry out data-driven decision-making.

Get in touch with Ballards LLP, chartered accountants, at 01905 794 504.

Disclaimer (as of 21/05/2024): This article has been prepared for information purposes only as of the stated date. The information provided may not be relevant or accurate for any other date. Formal professional advice is strongly recommended before making decisions on the topics discussed in this release. No responsibility for any loss to any person acting, or not acting, as a result of this release can be accepted by us, or any person affiliated with us.