1. Practice Finance in a Nutshell

2. GP Registrar Tutorial Dr Andrew Mowat
Overview
Independent Contractors
Permanent nationally-determined contract until PMS
GP Registrar Tutorial Dr Andrew Mowat

3. GP Registrar Tutorial Dr Andrew Mowat
Important History
1948 Formation of NHS
1966 GP Contract
1990 New GP Contract
1990 NHS Trusts
1992 Fundholding
1998 Primary Care Groups
1998 PMS Pilots
GP Registrar Tutorial Dr Andrew Mowat

4. Sources of information
Medeconomics
AISMA guide
Accountant
Library
GP Registrar Tutorial Dr Andrew Mowat

5. Doctors’ and Dentists Review Body
Advises Government on what average Doctor should earn
Government allocates a non-cash-limited budget for GMS activity
If budget exceeded nationally, Government adjusts next year’s pool
GP Registrar Tutorial Dr Andrew Mowat

6. GP Registrar Tutorial Dr Andrew Mowat
Partnership
A group of Doctors working together
Usually in the same or linked premises
Co-operating in on-call and rota arrangements
Assuming responsibility for one another’s patients in absence
Pooled resources and expenses
GP Registrar Tutorial Dr Andrew Mowat

7. GP Registrar Tutorial Dr Andrew Mowat
Premises
Partnership finds appropriate premises from which to practise (LHA to approve)
May be purpose-built
Finance
Partners finance
Private Finance Initiative
Health Centres
GP Registrar Tutorial Dr Andrew Mowat

8. General Medical Services
Independent contract
Nationally-negotiated
Within DDRB framework
24hr care responsibility
Statement of Fees and Allowances (SFA)(Red Book)
Payments on quarterly cycle
GP Registrar Tutorial Dr Andrew Mowat

9. Personal Medical Services
Employed contract fixed-term
Payment system bases on central budget based on previous GMS activity, with additional development money
Contract: initially to be locally-negotiated, but now centrally-imposed without national bargaining or safeguards
Pension rights as yet unclear
Potentially big winners and big losers
GP Registrar Tutorial Dr Andrew Mowat

10. GP Registrar Tutorial Dr Andrew Mowat
NHS Income
Allowances
Fees per patient
Item of Service
Reimbursement
Dispensary
Cost-Rent Scheme
GP Registrar Tutorial Dr Andrew Mowat

11. GP Registrar Tutorial Dr Andrew Mowat
NHS Allowances
Basic Practice Allowance
Seniority Allowance
Quality Allowance
Postgraduate Education Allowance
Out of Hours Allowance
Other
Designated Area
Assistant
Associate
GP Registrar Tutorial Dr Andrew Mowat

12. GP Registrar Tutorial Dr Andrew Mowat
Fees per patient
Capitation
3 bands (<65, 65-74, >75)
Deprivation
Child Health Surveillance
Target Payments
Cervical Cytology, Childhood immunisations
Health Promotion
Asthma, Diabetes
GP Registrar Tutorial Dr Andrew Mowat

13. GP Registrar Tutorial Dr Andrew Mowat
Items of Service
Maternity Care
Contraceptive Services
Out-of-Hours consultation
Vaccination/Immunisation
Temporary Resident
GP Registrar Tutorial Dr Andrew Mowat

14. GP Registrar Tutorial Dr Andrew Mowat
Reimbursement
Cost-Rent Scheme
Rent & Rates
Maternity Locum Fees
GP Registrar Tutorial Dr Andrew Mowat

15. GP Registrar Tutorial Dr Andrew Mowat
Dispensing Income
Can dispense for patients >1 mile from chemist in non-urban area
Get paid:
Cost of Drug
LESS Discount (NHS assumes discount 9%)
PLUS Container Allowance
AND Dispensing Fee
GP Registrar Tutorial Dr Andrew Mowat

16. GP Registrar Tutorial Dr Andrew Mowat
Cost-Rent Scheme
Partners own building
Partners need loan to pay builders etc
Cost Rent Scheme provides parameters for paying loan interest on certain things – fixed room sizes, purposes etc
Variable interest rate
different borrowing rate from cost-rent rate
GP Registrar Tutorial Dr Andrew Mowat

17. Private (non-NHS) Income
Legal & Insurance Work
Local Authority Work
Work for Private Business
Use of Premises
Private Patients
hobby/work/driving medicals
travel health services
GP Registrar Tutorial Dr Andrew Mowat

18. GP Registrar Tutorial Dr Andrew Mowat
Expenses
Include
Staff Costs
All drugs and equipment used
Heat/Light/Water
Financial
Accountancy, Banking
Administration:
Telephone
Postage
Important that DDRB gets accurate view of what expenses are incurred
Beware “netting-out”
GP Registrar Tutorial Dr Andrew Mowat

19. GP Registrar Tutorial Dr Andrew Mowat
Taxation
Income Tax
Schedule E
Schedule D
Value Added Tax (VAT)
Capital Gains Tax (CGT)
Inheritance Tax
GP Registrar Tutorial Dr Andrew Mowat

20. GP Registrar Tutorial Dr Andrew Mowat
Schedule E (PAYE)
Can claim as an expense against tax the cost of buying or maintaining any item used “wholly and necessarily” for business.
i.e. any item without which you cannot carry on business
GP Registrar Tutorial Dr Andrew Mowat

21. Schedule D (Self-Employed)
Can claim as an expense against tax the cost of buying or maintaining any item used “wholly or exclusively” for business.
i.e. any item used wholly or mainly (in which case you claim a proportion of the tax) within the business
GP Registrar Tutorial Dr Andrew Mowat

22. GP Registrar Tutorial Dr Andrew Mowat
Tax Payment
Tax calculated on whole-year basis
Two payments made: January and July
Each payment consists of an actual amount plus an estimated “on account” payment
Practice will probably set aside money
GP Registrar Tutorial Dr Andrew Mowat

23. GP Registrar Tutorial Dr Andrew Mowat
Retirement
GPs can retire from age 50 onwards
Early retirement will mean reduction in pension
Age 50 multiply by 0.599
Age 55 multiply by 0.754
Age 59 multiply by 0.943
Can buy “added years” superannuation
GP Registrar Tutorial Dr Andrew Mowat

24. GP Registrar Tutorial Dr Andrew Mowat
Added Years
Allows GP to buy added years of benefits to increase up to maximum 40 years at age 60
Pay fixed percentage of NHS Superannuable income every year
Price according to age
GP Registrar Tutorial Dr Andrew Mowat

25. GP Registrar Tutorial Dr Andrew Mowat
NHS Pension Scheme
Basic contribution 6% NHS income per year
Benefits:
Lump Sum 4.2%
Annual Pension 1.4%
Ill Health Retirement pension
Death benefit
Widow(er)’s pension
Children’s allowance
GP Registrar Tutorial Dr Andrew Mowat

26. GP Registrar Tutorial Dr Andrew Mowat
Pension
Pension calculated on whole-career earnings
Different portions are pensionable (superannuable) to different degrees
Dynamised upwards to represent career earnings at current prices
4.2% lump sum
1.4% per annum
GP Registrar Tutorial Dr Andrew Mowat

27. GP Registrar Tutorial Dr Andrew Mowat
Profits and Losses
Business makes a profit
Profits divided among stakeholders
partners
profit-share staff
Partners take drawings in anticipation of profits
Losses equally shared
GP Registrar Tutorial Dr Andrew Mowat

28. GP Registrar Tutorial Dr Andrew Mowat
Equity
Business has assets
Premises
Stock
Equipment
Furnishings
May require capital investment
Equity Partners draw more than non-equity partners
GP Registrar Tutorial Dr Andrew Mowat

29. GP Registrar Tutorial Dr Andrew Mowat
What to look for …
Check Partnership Agreement
property ownership
equal division of profits?
Inspect Accounts:
?recent (less than 18m old)
assets > liabilities
parity profit share
regular sustained drawings (may need to ask)
expenses <50% of turnover
GP Registrar Tutorial Dr Andrew Mowat