Yes, as we approach the new Government’s first budget, we all wait to see where and on what the axe will fall. Practices are worrying about their already tight budgets, whilst Pensioners wonder whether to boil a kettle or turn the heating on whilst politicians enjoy their freebies.
Pennies from ………..
Every Practice has its own way of handling its income and expenditure and hopefully ends up with a decent profit to share between its Partners. The level of interest in Practice finances has in my experience varied dramatically from Practice to Practice. Some have taken a non-involvement approach whilst others have been keen to challenge and chase up absurdly small amounts using the argument that it’s the pennies that make the pounds.
It’s just a Lottery
I once gave a lecture to a large group of GP Trainers in North Yorkshire and I asked them a series of questions.
- How many of you have asked to see any bank statements this year?
- How many of you have seen a Quarterly statement of NHS Income from Open Exeter?
- How many of you have seen and studied the most recent set of annual accounts?
- How many of you have signed off a cheque or authorised a bank payment this year?
- How many of you have attended a meeting with your accountant this year?
- Do you know whether your drawings are likely to increase this year.
You will not be surprised to learn that despite an audience of over thirty doctors only a handful of arms shot up in response to each question – not enough to use as Lottery Numbers. One doctor remarked that if his bank accounts were in the ‘red’, it would all balance out at the end of the quarter. Oh dear, Oh dear!
The money goes around in a circle
So looking at your NHS Income consider how it is spent and who gets the money, is it the doctors, the staff, your suppliers or the hand that feeds you, the Government. You might be shocked at the proportion of your income that ends up back in the Government’s coffers! There’s personal taxation and pension contributions. After discounting the now fixed personal tax allowances we, as employees or retirees, all suffer from the extraction from our salaries of income tax be it 20% or 40%. Likewise self employed folk pay tax too. Employers pay National Insurance and NHS Pension contributions. These so called ‘deductions’ may amount to say 25% to 30%. Don’t forget that VAT is levied on goods and services at a rate of 15% but you may be registered for VAT and be regularly coughing up.
Why was the Ancillary Staff reimbursement pegged at 70%?
I often wondered why the Government had set the reimbursement of ancillary staff salaries was set at 70%. This was probably because the Practice as an employer paid back to Inland Revenue around 30% in tax. Budgeting is all the more difficult where the financial resources are shared with other Practices in a Primary Care Network.
The real problem for Practices is the mounting cost of employing salaried doctors and Locum GPs, whether they be short or long term. In my experience, it is often difficult to persuade salaried GPs, Locums or otherwise to take onboard a fair share of the full range of duties undertaken by a Partner. Salaried GPs might be trying to work to rule, limiting daily appointments and home visits. What happens to clinical needs and the responsibility to provide immediate treatment and care, including prescribing what is necessary.
What are you paying?
Net salary
Incom tax
Employee National Insurance
Employers National Insurance
NHS Pension Employees contributions
NHS Pension Employers contributions
General Medical Council annual retention fee
British Medical Association membership
Medical Indemnity fees
Additional Sessions fees
Study Leave expenses
The Practice may also need to take account of employers sick pay and employers maternity pay in addition to statutory payments.
The crux of it! – Shared Workload
Overall, Practices need to assess whether it is more expensive to employ a range of clinical staff not necessarily covered by reimbursement systems rather than take on partners who cover their professional expenses out of their drawings. In addition, Partners need to ensure that the burden of managing the treatment and care of their patients, including acting on clinical letters, test results, and repeat prescriptions is shared with employed clinicians.
Robert Campbell – October 2024
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