GP Earnings and Expenses Enquiry - 2005-2006, Final report

Section A - national averages for contracted GPs

The main findings from a sample of 17,581 GPs are:

• for contracted GPMS GPs in the UK, average net profit was:
  • £106,312 for GMS GPs (an increase of 10.4 per cent since 2004/05)
  • £120,272 for PMS GPs (an increase of 9.2 per cent since 2004/05)
  • £110,004 for GPMS GPs (an increase of 9.8 per cent since 2004/05).
• for contracted GPMS GPs in the UK average gross turnover was £245,020 (an increase of 6.5 per cent since 2004/5). Average expenses were £135,016 (an increase of 3.9 per cent since 2004/5)
  
  The GPMS expenses to earnings ratio (this is a measure of the proportion of an individuals gross turnover that is consumed by business expenses and for ease of understanding is expressed as a percentage throughout this report) was 55.1 per cent. This is a decrease of 1.4 percentage points from the 2004/05 expenses to earnings ratio of 56.5 per cent, which reflects the higher increase in overall profit compared to expenses over this period
  
  The gross turnover and net profit figures associated with the expenses to earnings ratio include income from private work in addition to NHS earnings
• PMS net profit was 13.1 per cent higher than GMS net profit (£120,272 compared to £106,312); for 2004/05 the corresponding percentage was 14.4 per cent (£110,164 compared to £96,322)
• average net profit among GMS GPs (those working under General Medical Services) was:
  • £102,648 for non-dispensing GPs (an increase of 11.4 per cent since 2004/05)
  • £124,891 for dispensing GPs (an increase of 6.7 per cent since 2004/05)
• average net profit among PMS GPs (those working under Personal Medical Services) was:
  • £118,109 for non-dispensing GPs (an increase of 9.9 per cent since 2004/05)
  • £134,268 for dispensing GPs (an increase of 5.2 per cent since 2004/05).
• average net profit among GPMS GPs (those working under GMS or PMS contracts) was:
  • £106,681 for non-dispensing GPs (an increase of 10.4 per cent since 2004/05)
  • £127,061 for dispensing GPs (an increase of 6.3 per cent since 2004/05).
• GMS dispensers had a 21.7 per cent higher average net profit than GMS non-dispensers (£124,891 compared to £102,648). PMS dispensers had an average net profit 13.7 per cent higher than their non-dispensing counterparts (£134,268 compared to £118,109). In 2004/05, average GMS net profit was 27 per cent higher among dispensers and average PMS net profit was 18.7 per cent higher among dispensers.
• there are a number of reasons for these differences in the rate of growth of earnings between GPs. These are likely to include the increase in the number of pounds per QOF point which benefits practices with large list sizes, as the payment is associated with the practice list size, and large practices are generally non-dispensing practices.
  
  Another issue to take into account is the changes in reimbursement for dispensed medicines. In 2005 updated versions of the NHS Drugs Tariff and Pharmaceutical Price Regulation Scheme (PPRS) came into effect, which were designed to reduce the NHS drugs bill. This means that dispensing GPs saw a slower rate of growth in their gross turnover and the profit made on the reimbursement of drug costs.

Section B - country level breakdown for contracted GPs

• in 2005/06, average net profit was £113,614 in England, £98,656 in Northern Ireland, £90,619 in Scotland and £102,194 in Wales
• Between 2004/05 and 2005/06, average net profit increased by 9.7 per cent in England, 8.2 per cent in Northern Ireland, 9.6 per cent in Scotland and 11.6 per cent in Wales

Section C - distributional results for contracted GPs

• in 2005/06, it is estimated that 2,001 GPs (5.9 per cent) had a net profit of up to £50,000. In 2004/05, this figure was 3,060 (9.0 per cent)
• in 2005/06, it is estimated that 12,342 GPs (36.4 per cent) had a net profit of between £50,000 and £100,000. In 2004/05, this figure was 15,442 (45.6 per cent)
• in 2005/06, it is estimated that 14,534 GPs (42.9 per cent) had a net profit of between £100,000 and £150,000. In 2004/05, this figure was 12,264 (36.2 per cent)
• in 2005/06, it is estimated that 3,876 (11.4 per cent) of GPs had a net profit of between £150,000 and £200,000. In 2004/05, this figure was 2,492 (7.4 per cent)
• in 2005/06, it is estimated that 815 GPs (2.4 per cent) had a net profit of between £200,000 and £250,000. In 2004/05, this figure was 475 (1.4 per cent)
• in 2005/06, it is estimated that 307 GPs (0.9%) had a net profit of at least £250,000. In 2004/05, this figure was 154 (0.5 per cent)
• dispensing GPs are distributed towards the higher ends of the gross turnover, expenses and net profit distributions, compared to non-dispensing GPs. In 2005/06 it is estimated that 317 GPs (6.0 per cent) of dispensers and 805 GPs (2.8 per cent) of non-dispensers received a net profit of at least £200,000. In 2004/05, these figures were 209 GPs (3.9 per cent) for dispensers and 420 GPs (1.5 per cent) for non-dispensers.

Section D - national averages for salaried GPs

• for all UK GPMS GPs identified as being salaried (more employed income than self-employed income) in 2005/06 average pre-tax earnings from all sources of income (both from employment and self-employment) reported was £46,905.

It is important to note that the results presented for salaried GPs do not differentiate between full- and part-time GPs, and that these results only refer to a sample of salaried GPs who submitted a self-assessment tax return for 2005/06 and have been identified as being salaried.

Section E - detailed results for contracted GPs

• average net profit and average total expenses rise with increasing age of GP up to the 50-59 age group, and then decrease slightly in the 60 and over age group. Average net profit among GPMS GPs in the 50-59 age group was £117,820 in 2005/06
• GPs whose practice is categorised as rural have higher average gross earnings, expenses and net profit than GPs whose practice is categorised as urban. GPMS GPs in rural practices have a net profit of £116,967, whilst GPs in urban practices have a net profit of £108,455
• among GPMS GPs classified as working at rural practices, 57.5 per cent of these are dispensing GPs. This compares to GPMS GPs classified as working in urban practices, where 6.5 per cent are dispensing GPs
• a comparison of earnings amongst GPMS GPs by Government Office Region in England shows that GPs in the South West have the lowest net profit at £99,001
• a comparison of the expenses to earnings ratio amongst GPMS GPs by Government Office Region in England shows that GPs in the South West have the highest expenses to earnings ratio at 59.1 per cent
• average net profit decreased as the number of partners in the practice increased. Among GPMS GPs, single-handed contractor GPs have the highest net profit at £132,010, and GPs working with six or more partners have the lowest net profit at £105,769.

Section F - headline figures time series for contracted GPs (1971/72 to 2005/06)

• this section presents information on contracted GP earnings between 1971/72 and 2005/06. Data are presented in both nominal (cash) terms and in 2005/06 real terms using GDP deflators published by Her Majesty's Treasury. As 2005/06 has been used as the base year, the nominal and real terms amounts in 2005/06 are identical.
• when interpreting the figures it is important to note that the nature of GP contracts and their work has also changed over time. Earnings information represents just one element of understanding change over time.
• in 2005/06, GMS GPs had an average net income of £106,312. In 1985/86 their average net income was £25,254 in nominal terms, equivalent to £51,512 in real terms.
• in 2005/06, PMS GPs had an average net income of £120,272. In 2002/03 their average net income was £85,019 in nominal terms, equivalent to £91,798 in real terms.
• in 2005/06, GPMS GPs had an average net income of £110,004. In 2002/03 their average net income was £72,716 in nominal terms, equivalent to £78,512 in real terms.
• the average Expenses to Earnings ratio (EER) is higher among PMS than GMS GPs. The difference between the respective EERs has grown from 0.2 percentage points in 2002/03 to 3.0 percentage points in 2005/06.
• in 2004/05 average NHS pensionable income among GPMS GPs was £86,225 in nominal terms. In 2002/03, this was £64,443 in nominal terms.
• the source of the (nominal) earnings information is past TSC reports, held by the TSC secretariat and earlier reports held by BMA GPC.

Section G - Accounting Year-End Analysis

• in 2005/06, 64 per cent of GPMS GPs had one or more accounting period ending in Q4, an increase of one percentage point from 2004/05
• the latest analysis using the 2005/06 enquiry shows that the difference is significant between the Q4 EER of 55.1% ± 0.3 per cent and the all-quarter EER of 55.7 per cent ± 0.2 pre cent for GPMS GPs, albeit small in absolute terms.