Top tips to improve your Medical Practices cash flow

Practice Managers and Practices continue to face uncertainty over cash flow and continuity of income. The effects of PMS clawback, renegotiation of APMS baselines to mirror GMS, phasing out of the correction factor and enhanced services reducing and in some cases disappearing means that many practices are fighting to prevent a serious drop in profits. Now more than ever it is the time for Practice Managers to explore new income streams and tighten up spending to a level that will enable increased profitability but not compromise quality of care.


When looking at new income streams or services consider the costs of providing the services to ensure they are profitable:

  • Time: ensuring that the availability of practice/staff time to provide the services is feasible (overtime costs)
  • Resources: Practices should ensure the resources are available to provide the service as this can lead to additional costs


Medical expenses

Medical expenses need to be well maintained as these are a significant and essential expense. Practices should shop around for the best prices or discounts on drugs and consumable supplies. Communicate with other practice managers and look at using buying groups. Keep a record of drug and consumable stocks to prevent over purchasing and prevent missing items.


Staff costs are often the largest item in a practice’s accounts but staff are a practice’s biggest asset. Practices should ensure they have a good staff mix and that the right person is seeing the right patients for the best use of staff skills. Look at freeing up GP time with the use of practice nurses. Try to reduce overtime costs where possible with the use of part-time staff. Keep on top of staff training needs to ensure your staff are working to the best of their abilities.


Premises expenses are an inescapable cost and where possible should be kept as low as possible. Heat and light costs are not going to go down anytime soon and therefore practices need to ensure they are getting the best price for gas and electricity and should be looking at possibly changing suppliers for more favourable rates. Practices can reduce their premises costs at a more hands-on level by switching off appliances when not in use and use of energy saving light bulbs and other energy-saving equipment.


Administration costs have also been another big area of increase in the past few years. The reasons for this including cost of toner cartridges and postage price increases. Practices should consider using a log of toner cartridges stock to ensure usage is accountable. Stock should be allocated to a specific printer and usage monitored. Where possible bulk purchase stock to obtain discounts using buying groups.


Make a practice commitment to embrace technology. This will improve efficiency, free up staff time, make activities cheaper and easier. Consider modernising systems of communication, for example, use of emails and text message services, reducing telephone and postage costs. Use of cloud accounting systems for ease of access and more efficient processes of bookkeeping.

Review and plan ahead

Always remember there is a limit to how much costs can be cut before it starts a downward spiral effect on the business. Look to ensure you are getting the best value out of essential expenditure.

There is no magic wand to improve practice profitability or to find new income streams to replace lost ones. However, ignoring the problem and taking no action is definitely not the answer. Instead. review where you are now, what you want to achieve and make some small steps along the lines outlined above to help keep you moving in the right direction.

If you would like to discuss cash flow issues in more detail, or you would like to speak with a member of our Healthcare team about your Medical Practice, please call 01903 234094.

A version of this blog originally appeared on the website of one of our MHA association member firms, Moore and Smalley.