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Making a tasty profit requires the right ingredients

My wife Linda is good at many things: a good mother, a good GP, but she is an excellent baker. I was watching her making a honey cake, with the ingredients laid out on the kitchen table.

A thought came into my mind: I asked if she could make her honey cake twice the size with the same ingredients. She gave me her withering stare and told me not to be stupid. I carried on regardless: 'I have a client, Dr X,' I told her, 'who is being told to carry on baking cakes all the same size but with less ingredients'. Her stare pierced deeper. 'OK,' I said, 'it is not exactly baking, but it’s not so different.'

Dr X runs a successful practice, widely respected with excellent patient care and generally an all-round good egg. His practice gets a higher than average PMS budget allocation which gets spent on additional services but at the end of the day he earns an average share of profits. The PCT doesn’t like this, and is actively seeking to reduce his budget (the analogy here being reducing the ingredients).

Remember, the profits he makes are only average, so he has two choices: either suffer the loss or cut costs (services). Like most centrally planned economies, where the decision making is based on the allocation of resources rather than possibility of outcomes, the results are inevitably going to be dull and unimaginative with innovation almost impossible.

I also have another client, Dr Y, who has a similar practice profile but has the dubious honour of being our only client to have made a loss. Spending 101% of his income on staff and locums (before drawings) is not only poor business sense but poor management and ultimately less effective patient care.

If you looked at this from an outcomes perspective, maybe you would give the resources allocated to Dr Y to Dr X and ask him to run the practice? But no.

In our increasingly centrally planned primary care economy, Dr Y continues to burn the cakes and Dr X is having his ingredients taken away.

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