12 Sep 2023

A spotlight on management reports in healthcare

GMS contract amendments regarding staff payrises within the NHS are still unclear and the healthcare sector is currently in limbo over the outcome of several issues, including what government investment in Primary Care Networks will look like past March 2024.

With this uncertainty in mind, it’s key to ensure that GP practices build-up as much financial resilience as possible. And an integral part of that resilience is having a good grasp of what is happening financially during the year, rather than waiting for the year end accounts and this is where management accounts are incredibly helpful.

Management accounts can be created in a variety of ways but the key is ensuring that you have a comprehensive budget set out so that you know what you’re expecting for the year and then charting your actual performance against that budget.

In other words, having a thorough understanding of the inner workings of your finances throughout the year, to reduce the risk of surprises within the year end accounts.

Management reports are a key tool at our clients’ disposal for tracking and monitoring income and expenses, and at Monahans we are increasingly seeing practice ask for help in this area to monitor the ever changing world of GP finances.

What is it about healthcare that makes tailored management reporting so important?
The NHS contract is complex and GP practices have many sources of income paid in a variety of ways and as a result, they have more complex accounting needs than regular businesses.

Because of this, it’s crucial that the management reports recording this data are as comprehensive and clear as possible, but also that they are tailored to each practice’s specific needs and priorities.

At Monahans, we can present and include information in a format that will be most useful to the client. This might mean, providing a top-line summary report, or we can dive into greater detail and create a report that breaks down each source of income to a granular level. These reports can also present comparisons, so that clients can contrast income this year with the same quarter last year or budgets to measure performance against expectations.

What is the main advantage of management reporting?
The biggest advantage in the collection and monitoring of real-time information is to better inform financial decision making and help clients to anticipate potential challenges.

For example, a practice monitoring finances will know during the year if locum costs are higher than expected – this gives the practice crucial information during the year – can they make efforts to reduce this cost moving forwards? Can they change their policy on when locums are booked? Can the practice increase partner or salaried GP sessions which may be more cost effective? It may be that nothing can be done to reduce locum costs but by having the knowledge during the year, practices can make choices during the year rather than experiencing unexpected and disappointing year end profits.

Another scenario might be that a salaried GP becomes a partner during the year. If a practice generated a standard profit and loss report from accounting software, the profits would look largely positive because the salaried GP costs have reduced, but in reality, profits will now be shared between more partners and are therefore diluted.

By carrying out this level of reporting, practices can gauge what’s going on during the year and monitor the direct effect on their profitability at both practice and partner level.

Determining the lay of the land is not only a worthwhile investment now, but also in the long-term resilience of an organisation, and leaning on tailored tools such as management reporting will play a vital role in achieving this. By helping our clients to get on top of their finances, we aim to empower them to make informed decisions, based on where they are and where they want to be.

Our dedicated team of specialist medical accountants work with practices and individual healthcare professionals on a daily basis, and with our knowledge and experience, we are confident we can help practices to thrive and individuals to feel supported and in control of their financial outcomes.

With years of experience in providing healthcare accounting services, we are proud to be able to offer you an accountancy service that is specifically tailored to your needs and strives to translate numbers into meaning. Get in touch with the team today.

Iwona Silverio