The government’s 10-year NHS plan was published in July 2025, setting out plans for a new model of care that is fit for the future. As part of this, the government has committed to reviewing how GP funding is currently distributed in England.
Research shows that GPs in poorer areas currently receive, on average, 10% less funding per patient than those in more affluent areas under the much-criticised Carr-Hill formula. This formula, which is currently used to allocate funding to GP practices across England, is to be reviewed so that ‘working class areas receive their fair share of resources’.
Whilst this may help reduce health inequalities across the UK, concerns are being raised about where the additional funding will come from. GPs are urging the government to accompany any changes to the Carr-Hill formula with an overall increase in funding, as redistributing the existing pot of funding will only cause issues for the surgeries whose funding is reduced.
So, with the funding model under review and changes in the pipeline that will affect the finances of medical practices up and down the country, how can practice managers prepare?
Practices need to make sure they’re on top of their finances, and the 10-year NHS plan includes a commitment to breaking the old, short-term cycle of financial planning by asking all organisations to prepare robust and realistic five-year plans.
Effective financial planning and forecasting has never been more important for GP practices. By integrating strong financial forecasting methods into daily operations, practice managers can improve financial resilience and make data-driven decisions to support long-term sustainability.
Whilst we wait for this and the expected funding changes to come into play, practices can get ahead by putting strong financial and practice management strategies in place.
Having up-to-date cashflow forecasts enables practices time to plan for any dips in cashflow and avoid unnecessary overdraft or short-term loan charges - as although these will attract some tax relief for the partners, they can be costly. Forecasts should be set for a minimum of 12 months and compared to actual monthly results with any discrepancies evaluated and acted upon, including making any necessary updates to future forecasts.
Financial forecasting also allows practices to anticipate challenges before they arise, ensuring that resources are allocated efficiently and strategically.
Rolling budgets enable practices to act quickly if income is reduced or if costs increase, meaning they can plan for any changes and ensure they remain profitable.
Keeping on top of financial strategies is key - there’s no need to rely on year-end accounts to monitor results, because there is some fantastic software available which allows GPs to set and regularly monitor forecasts and budgets. This software can also be used to create bookkeeping efficiencies, allowing practice managers to identify and deal with problems in a timely manner.
Using digital bookkeeping tools as part of wider financial planning and forecasting processes can provide real-time insights into practice performance and financial trends.
Recruitment is often one of the largest costs for GP practices, and efficiencies can be made in this area. For example, plan ahead for annual leave to keep the cost of cover to a minimum and don’t automatically replace people when they leave or retire. Instead, look at what the practice needs and consider cross-skilling team members ensuring operational continuity and versatility even during unforeseen challenges.
Just like any business, being on top of money coming in and money going out is key for practice managers.
With practices reducing spending wherever possible, it’s important that cost cuts don’t result in a reduction to the quality of patient care. The 10-year NHS plan outlines that high-quality care will attract a bonus - whereas payment for any poor-quality care will be withheld, and block contracts deconstructed.
Rather than looking to remove some costs entirely and risk reducing quality of care, GPs should consider efficiencies and ways to streamline processes instead. Business cost saving consultants can review costs like utilities and insurance to help secure the best deals with no fee.
There will always be times when practices see periods of heavier investment in assets such as property, property extensions, fixtures, fittings and medical equipment. To help with these costs, practices should consider if there are any grants or government funding available and, when it comes to property, it may be that ETTF funding is available from the NHS and/or Section 106 money is available from the local council. If this is the case, practices should ensure their tax adviser is carefully reviewing how this money is allocated against the spend, to ensure maximum tax relief.
Strong financial planning and forecasting can help practices identify these funding opportunities early and plan strategically to maximise return on investment.
The new 10-year NHS plan and Carr-Hill formula review has created uncertainty for GP practices. In the meantime, keeping on top of financial strategies and regularly reviewing income and expenditure will help put practices in the best position to adapt to funding changes and ensure profitability, without compromising on patient care.
At this crucial time of NHS reform, financial forecasting will play a key role in helping practices prepare for the future.
Duncan & Toplis provides accounting and business services specifically designed to support medical practices, GPs and healthcare practitioners, to find out more contact us.
