A common complaint many GPs have about their PCN is that the finances are not transparent.  Behind the comment lurks an unspoken implication that not every practice is receiving their fair share, or that certain practices are being favoured.  However, the reality is PCN finances have been set up in such a way that it is hard for anyone in the PCN to really understand the financial position of the PCN.

Why is this? There are number of reasons.  The first is that the funds received by PCNs come in various different formats.  Some money (the £1.76) goes directly to practices.  While most come into the PCN bank account, the timing and amount varies (and is impossible to predict!).  The biggest pot of money, the ARRS, has to be reclaimed based on actual expenditure.  Other pots are paid according to a formula (e.g. PCN CD funding, the £1.50).  Clarity as to when any of this funding will arrive has never been that forthcoming.

Some of the funds are paid on performance, the main one being the Investment and Impact Fund (IIF).  The payment for this ends up being made in the year after the achievement has been calculated, i.e. it will only be sometime probably towards the end of this quarter when PCNs will receive the payment for achievement of last year’s IIF, and they are only just finding out what that amount will be (and there are often reasonably sized discrepancies between what PCNs expect and what the system claims they have earned).

Every year changes are made to the allowances that PCNs can receive, and during Covid these changed in year as well.  The restrictions on how different pots of funding that the PCN receives also vary.  Some have a very specific way in which the funding can be used (e.g. ARRS), whereas others have far less restrictions (e.g. the £1.50).

Then each local area has different funding streams available to PCNs on top of those in the national DES.  These vary considerably across the country, but we are increasingly seeing many local enhanced services with PCN components (if not being entirely commissioned via the PCN).

The financial questions for a PCN to work out then include cash-flow (do they have enough money in the bank to pay the bills), overall income and expenditure (by year), and what all of this means for available expenditure at any given point in time (e.g. can we afford an IIF clinical lead).

Larger PCNs are now multi-million pound businesses, with a relatively complex financial framework sitting behind them.  The funding provided for PCNs to manage these finances are lumped in with all the other running and leadership costs.  If a PCN has a bookkeeping function, even allowing members to access that system does not provide transparency because it will just provide a snapshot of the cash position and give no real sense of the overall financial position of the PCN.

What PCNs need is financial management accounts, i.e. someone with the skills, expertise and financial nous to convert all the financial flows and commitments and create easy to understand summaries of where things are, what is expected and what financial options the PCN has at any point in time.  But how can a PCN afford what it needs given the running cost resources it has?  Some PCNs use a shared resource, e.g. from the local federation, that can make this a possibility.  But for many the costs of obtaining this level of financial support simply feel too prohibitive.

Finally many PCNs have not yet established their own financial strategy.  Is the plan for the PCN to reinvest as much available resource as it can into practices (like a PCN dividend), or is the plan for the PCN to reinvest any available resources into something like support and infrastructure that builds capacity for medium to long term collective sustainability and resilience?  Sometimes concerns about transparency come because different members have different financial expectations of the PCN, without the explicit conversation ever having been held.

My sense is we have reached the point now, where the sums involved have become so significant and are going to increase again over the next two years, that PCNs can no longer manage without effective management accounts, and that making the most of the opportunity of PCNs requires a worked through, agreed PCN financial strategy.  If nothing else, it will at least enable PCNs to get past the complaints about lack of transparency!