The controversial contract to improve GPs pay and efficiency cost £1.76 billion more than the Goverment expected and NHS productivity has actually fallen, a damning report by auditors concludes. The findings, by the National Audit Office, show that GPs who run their own practices received huge pay rises while giving up responsibility for the 24-hour care of their patients.

But GPs employed on salaries gained very little, while practice nurses actually saw a real-terms decline in pay. Hoped-for gains in productivity did not occur: productivity fell two years running, by an average of 2.5 per cent a year.

The costs of the contract were partly covered by extra cash from the Department of Health, but the primary care trusts who pay GPs were not fully reimbursed. As a result, they had to find £406 million between 2003-04 and 2005-06 from their own resources, limiting their ability to improve services.

The NAO report does not openly criticise anyone for the outcome, which enriched GP partners at the expense of almost everybody else. But when pressed, Karen Taylor, director of health at the NAO, said: “I think as far as the public and taxpayer is concerned, the benefits they should have been expecting to see have not materialised to the extent they should have done. From their perspective, it’s not a good deal for them.”

There were some positives, she said. Recruitment and retention of GPs had improved, and the focus that the new contract brought on long-term conditions, such as diabetes, had helped patients. The average general practice appointment was longer — twelve minutes rather then eight — largely because an increasing proportion were being dealt with by nurses. But NHS managers from top to bottom are found to have failed, by allowing the British Medical Association to negotiate a contract that enriched some of their members, shortened their hours and used up so much cash that reforms to services were stymied.

The report says that in its “business case” to the Treasury justifying the contract, the department had quoted figures that underestimated its actual cost by £1.76 billion over three years.

There were three reasons, Ms Taylor said. The department underestimated how much GPs would earn from the quality and outcomes framework, which rewards them for the number of quality points they earn;

it underestimated the cost of switching out-of-hours responsibilities to primary care trusts; and it underestimated what it would cost PCTs to administer the contract.

GP practices are paid a gross sum, out of which the partners pay the cost of running the surgery, including salaries of nurses and other working doctors. The partners share the profits.

Perhaps the most damaging aspect of the report is the figure showing what partners did with their increased payments. They boosted their own incomes by 58 per cent over the three years, to an average of £113,614 in 2005-06. Salaried GPs whom they employ gained just 3 per cent in the first two years, to £46,905, while the average practice nurse’s income reduced in real terms, the report says.

The NAO concludes that one reason the contract has so far failed in the redesign of services is that the BMA negotiated a minimum practice income guarantee (MPIG), which ensured that no practice would earn less under the new contract than it did under the old. It meant that GPs retained the benefits of the old contract where it suited them, while gaining greatly from the new one. MPIG should be phased out, the report says.

Tim Burr, head of the NAO, said: “There is no doubt that a new contract was needed and there are now 4,000 more GPs than five years ago. But in return for higher pay, we have yet to see real increases in productivity.”

Ben Bradshaw, the Health Minister said: “The GP contract, as the report recognises, has stemmed the haemorrhaging of GPs from the NHS and improved the quality of care for the public. Longer consultations, quicker appointments and being able to book ahead are improvements valued by patients.”

Laurence Buckman, chairman of the BMA’s GP committee, said it was meaningless for the audit office to talk about productivity because the way GPs worked had changed. “Productivity should be measured in improvements in health, not the frequency of consultations. The early evidence is that the contract is leading to improvements in clinical care,” she said.

Average GP partners’ pay
£113,614 2005-06
£72,011 2002-03

33,000 GPs in England and Wales
22,000 of whom are partners and the rest are salaried
24,000 nurses employed in GP practices. They carry out 34% of consultations

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