At one of 98 GP surgeries in England under threat of closure there is despair that NHS reforms could kill off good care

"Give it a year and I think we will have to close," says Naomi Beer, a frustrated and angry GP who works in a surgery which has been providing care to a largely poor and deprived area since the start of the NHS in 1948. In February, NHS England admitted that 98 surgeries could be under threat of closure as a result of what doctors' leaders have described as a "toxic mix" of a flawed funding system and seemingly uncheckable demand for medical care.

It was thought that most of the surgeries at risk are small practices in rural areas. But Beer works at the Jubilee Street practice, on the traffic-choked Commercial Road in the East End of London. This is something of a model practice in an area where fewer than half of the patients speak English as a first language and many present with more than one serious medical problem.

The 12 GPs (not all full timers), three practice nurses, two healthcare assistants and a physician's assistant all know their patients and provide old-fashioned continuity of care, yet embrace new ways of making access easier. It has introduced new ways of monitoring and caring for patients with long-term conditions so that they minimise the risk of emergency hospitalisation – a key national priority as A&E attendance is hideously expensive.

The practice hits all the government's quality targets, has a 94% patient satisfaction rate, and has introduced internet-based consultations, appointments, repeat prescriptions, and while-you-wait phlebotomy. And it is the only surgery in Tower Hamlets that has received the Royal College of General Practitioners (RCGP) Quality Practice Award – for excellence in training and for the quality of its care.

And these achievements are against a backdrop of intense pressure of work. Tower Hamlets is an area where demand is particularly acute – the population has mushroomed by over 25% in the last decade – the largest increase in England, according to official census figures, and the growth is mostly in the under-35 age group.

And that demand is set to get worse according to research released earlier this month by the RCGP, which revealed that funding for general practice in England is due to fall by 17% in real terms by 2017/18, while patient demand in terms of consultations are set to rise by 69m to 409m a year.

But, due to changes in the labyrinthine system of funding general practice, Jubilee Street faces the loss of many hundreds of thousands of pounds, which Beer and the equally angry practice manager, Virginia Patania, say will soon make it financially unsustainable.

"We are now eating into practice savings to continue providing a quality service. But we are planning for a 'red button day' when we will have to dissolve the practice," says Patania, who gives a detailed breakdown of their financial crisis. "I have been raising our concerns with NHS England since Christmas and I get no satisfactory answer. I want to know sooner rather than later because I'd rather dissolve at six months than wait 12 and face even higher losses."

Patania says the problems started last year when, ostensibly to reduce paperwork for GP surgeries, health minister Jeremy Hunt announced that a whole range of payment-related performance indicators known as QOF (Quality and Outcomes Framework) points were to be cut. While some indicators were removed, the value of the points, and therefore the hard cash value of the remainder, was increased but the total number of points available was cut from 1,000 to 900 – so the Jubilee Street practice lost 100 points worth £30,000.

This year, by way of trying to equalise earnings, the government said that it would move the value of several income streams into the global sum – the general allocation for GP services in England adjusted for list size and age and sex with women, children and elderly people having a higher cash value. But Patania and Beer say the global sum is flawed as the allocation takes no account of the level of deprivation, ethnicity and general unwellness of their patients, nor the "immense" work involved in achieving top quality QOF points.

One of the biggest financial hits comes as a result of a government decision to withdraw the Minimum Practice Income Guarantee (MPIG). Introduced in 2004 to protect surgeries from losses as a result of contract changes, MPIG is worth £219,508 a year to Jubilee Street. The loss of this element alone was the factor that NHS England said could put 98 surgeries at risk.

Jubilee Street will also lose around £14,000 of start-up funding for providing "enhanced services" – such as caring for patients who are seriously ill or at risk of emergency hospital admission, assessing patients at risk of dementia, introducing telemonitoring of patients at home and introducing internet bookings and repeat prescriptions. They say these services will be cut because they don't have any money they can reallocate to keep them going.

Beer and Patania say the loss of QOF, enhanced services and MPIG funding means the practice will be down £77,263 by the end of 2014-15. It already lost £30,000 QOF income last year and will lose its £219,508 a year MPIG allocation incrementally over the next seven years – the accumulated loss due to MPIG alone amounting to over £903,000.

To make up those MPIG losses the practice would need to sign up 1,000 new patients. Beer says this is not an option. "If we do that the quality of care would suffer, you would get tick-box medicine, the focus on quality would be completely gone. To maintain quality would mean more doctors, nurses and ancillary staff which would simply perpetuate the existing funding crisis."

Partners have taken wage cuts to try to keep the practice afloat and protect staff wages. "I have taken a £250 wage cut this month – with a mortgage in central London that is pretty tough," says Patania. While GPs elsewhere may earn six-figure sums, Beer says she expects to earn around £30,000 to £40,000 this year. "We are not complaining – for most people that is an excellent wage – but I work something like 50 hours per week – and this was the wage we started on 20 years ago."

Patania issues a final plea: "This is a good business, we provide a quality service that is not based on making money. We achieve high QOF targets for managing chronic conditions like diabetes and cardiovascular disease and we have an extremely high level of patient satisfaction, so we know and can measure that we are doing a good job, yet we are in this position."

Dr Richard Vautrey, the deputy chair of the British Medical Association's GP committee, fears the Jubilee Street situation could be repeated in several hundred practices, not just the 98 identified by NHS England as at severe risk. "This is the tip of the iceberg," he says. "Practices are struggling with workload and funding and many GPs, although they love general practice, are seriously considering retiring early. The knock-on effect of losing high-quality general practice and cutting its funding will be more pressure on hospitals. We need concrete action from NHS England and that requires more financial resources."

Since the Guardian alerted NHS England to Jubilee Street's plight officials have agreed to a meeting. A spokeswoman for NHS England says: "We have identified those practices likely to be most affected, and will be offering to meet with them to discuss how we can support them through the changes, which will take place over seven years. We will be contacting the Jubilee Street practice shortly to arrange a meeting to discuss their financial challenges."