The GMC’s Annual Retention Fee
Introduction
The GMC’s Annual Retention Fee (ARF) last rose in 2002 to its current level of £290 for full registration and retention and £100 for provisional registration. The freeze at these levels has been made possible through prudent management of the GMC’s resources and by the gradual running down of reserves to a level more commensurate with the GMC’s charitable status.
The GMC’s Resources Committee has determined that unrestricted reserves should be maintained within the range of £10 million – £15 million. In reaching this conclusion, the Committee considered the risks faced by the organisation, including the potential transitional costs that might flow from the White Paper. On current assumptions, continuing current patterns of income and expenditure would cause reserves to drop to less than £3 million by the end of 2008. It was therefore considered prudent to increase the ARF to balance the GMC’s finances over the next two years.
With effect from 1 April 2008 the fees for full registration and for restoration to the register will be increased to £390 with the fee for provisional registration rising to £135. The threshold for the lower income discount where doctors pay a reduced rate of 50% will rise to £21,391. These increases will allow reserves to be maintained at around £10.1 million at the end of 2008 and rising to between £10.5 million and £14.5 million at the end of 2009, dependent on expenditure in 2009.
Economy, efficiency and effectiveness
Since 2003 the GMC has introduced a wide range of initiatives designed to improve our overall economy, efficiency and effectiveness.
We define economy as reducing the cost of acquisition of the various resources we need; efficiency as increasing output from the same input resources; and effectiveness as the extent to which the actual outcomes of our activities match their objectives.
We calculate the benefit to the organisation of these initiatives to be in the range £20 million to £30 million between 2003 and 2007. Had our costs been higher by this amount over that period then we would have had to increase the ARF in 2006.
A number of the many initiatives that the GMC has pursued to improve economy, efficiency and effectiveness are set out below.
Relocation of work
The relocation of work to Manchester has led to savings of just under £4 million per annum split equally between accommodation and salary costs. Our accommodation costs per square foot in Manchester are less than half of our London facility whilst staffing costs in Manchester are around 80% of those in London on a like for like basis.
In house legal team
Since 2002 we have expanded our in house legal team. Undertaking legal work in-house eliminates the usual profit margins and added costs associated with using external suppliers. We estimate the annual saving achieved from the transfer of work in-house to be in the region of £3.5 million per annum.
Procurement
We have monitored the savings achieved through our supply chain following the creation of the post of Head of Procurement in late 2003. Total savings reported to Council in this period exceed £3 million. Included in the savings log are the cost reductions which derive from optimising our tax affairs, particularly with regard to ensuring that our VAT liabilities are minimised through proper use of our charitable status.
Improved capacity for hearings
We have seen a steady improvement in hearing room utilisation throughout 2007 and exceeded our 80% target in July and August 2007. Although the key driver of the project has been improved timeliness, the overall average cost per hearing day is anticipated to reduce by £539. This represents a full year efficiency saving of £1.2 million.
Strategic Applications Project (SAP)
The Strategic Applications Project positively affects economy, efficiency and effectiveness. We have replaced a series of bespoke, standalone systems with a suite of integrated applications, reducing support and maintenance costs; improving efficiency through the elimination of many administrative tasks; freeing staff to focus on our core functions.
Conclusion
The Council’s decision to increase the ARF has not been taken lightly. The GMC’s first duty as a regulator is the protection of patients, nevertheless we also have a duty to provide a cost effective regulatory system. We will continue to be prudent in our expenditure and to seek improvements in our efficiency, economy and effectiveness to ensure that the costs of regulation to doctors and to the health service are maintained at an appropriate level.
