Practice Finance
Keith Fuller GCGI, FInstLM(Dip), ACIB, CVPM, MIHM, ACMI
Managing Partner (Downs Way Medical Practice)
Introduction – Keith Fuller
• Managing Partner – Downs Way
Medical Practice – Istead Rise &
Shorne Gravesend – 7500 patients,
training, dispensing on both sites, 7
partners (5 gp’s, NP and me!)
• Both sites are PFI (Private Finance
Initiative)
Introduction – Keith Fuller
• 4 years as Practice Manager of DWMP
• 5 years as Practice Manager of Elands Veterinary Clinic
• 1985 – 2000 – Nat West Bank – last 3 jobs – Assistant Branch
Manager at Maidstone Sutton Road, Service Centre Manager
Dartford Service Centre and finally Clearing House Payments
Team Manager – City of London Account Management Unit,
Bishopsgate, London.
• Final role – responsible for 2 teams handing same day
payments for 15 City of London branches – totally 2 billion £’s
per day!
• Married, four children, spare time – Lieutenant Commander
(SCC) Royal Naval Reserve – Commanding Officer Westerham
Sea Cadet Unit.
Introduction – Keith Fuller
Introduction – Keith Fuller
Practice Finance - Overview
• Different funding models for GP
Practice
• How practices are funded
• What costs practices incur
• Overview of Practice accounts
Practice Finance - Overview
• GP medical practices, whether sole trader or
partnership, are similar to all other small businesses
• As self employed individuals, the proprietor or
partners are responsible for the whole business,
including staffing and running the practice
• The business holds a contract with the PCT for the
provision of NHS medical services to a designated
list of patients
• The practice is paid to provide NHS healthcare to
patients. The practice receive this money and spend
it how they decide is appropriate, on staff, premises,
admin etc. Any money left over is effectively the
profits, which are allocated to the
proprietor/individual partners.
Practice Funding Models
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GMS
PMS
APMS
(PCTMS)
GMS
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General Medical Services
Paid a Global Sum of ….
£54-72 per weighted capitation
This takes into account actual list sizes,
age/sex indices, nursing and resident patient
population, new patient weighting…
• Falls in list size will have significant impact.
• MPIG (minimum practice income guarantee)
was put in place when new contract came in
2004, to compensate practices who would be
worse off under this contract. Now being
scrapped.
PMS
• Personal Medical Services
• Paid a baseline payment determined by
size of practice.
• Falls in list size will have greater impact
than GMS practices.
APMS
• Alternative Provider Medical Services
• Intended to offer substantial opportunities for
restructuring of services to offer greater patient
choice, improved access and greater
responsiveness to the specific needs of the
community.
• Intended as a tool to address under provision
• PCO’s can enter APMS contracts with any individual
or organisation that
• Meet the criteria set out in the guidance from DoH
• The focus is on innovation and competition
• Locally negotiated contract, service specification,
performance monitoring.
PCTMS
• Primary Care Trust Medical Services
• PCT’s are able to provide services
themselves by directly employing staff.
• Must comply with the guidance.
Funding Streams
Income Streams
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Global Sum
Enhanced Services (NES, DES, LES)
QoF (Now GQ (GP Quality) scheme)
Reimbursements
Private Income
(Dispensing)/Prescribing
Global Sum
• Paid in GMS Practices
• £54-72 per weighted population
• Paid monthly, after deductions for
partners pension, statutory and
voluntary levy.
• Variations made for other items to be
mentioned later.
Enhanced Services
• Three types of enhanced service:
• NES, DES and LES (National, Direct and Local
Enhanced Services)
• National – anticoagulation, near patient testing –
usually require specialist skills, facilities and
equipment
• Direct – those which PCT’s must provide according
to national terms and conditions, Alcohol, Ethnicity,
Learning Disability
• Local – priced and negotiated with the PCT – ECG’s,
minor surgery, coil insertion, phlebotomy
• ALL are subject to claim for work completed, usually
on quarterly basis.
GQ Scheme
• Formerly QoF – Quality and Outcomes
Framework.
• Originally 1050 points available for
clinical and administrative work
involved in designated areas.
• Now 1000 points, at £124.50 per point.
• Dependant on disease prevalence.
Seniority
• Payments made to Partners based on
NHS Service
SFE
• All NHS payments are listed in the SFE
– Statement of Financial Entitlements available on the D o H website.
Reimbursements
• Surgeries are generally reimbursed for rent of
premises – depends on whether owned or leased
• Owned – paid a notional rent for use
• Leased – rent reimbursed up to 100% dependant on
valuation of NHS use of space set by District Valuer
• 100% for rates, water and waste disposal incurred
on surgery premises for NHS purposes
• Personally administered drugs and dressings. NHS
vaccines, such as childhood vaccines.
• Computer hardware etc – normally supplied direct by
PCT.
• Training practices – salary for Registrar is
reimbursed.
Reimbursements
• All premises reimbursements are listed
in Primary Medical Services (Premises
Costs) (England) Directions 2004 –
available on DoH website.
Private Income
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No more than 10% of practice income can come from private work, or
the reimbursements from the PCT for premises etc will be reduced
Many ways to gain private income – examples:
Yellow fever vaccination centre
Police medical officer
Visiting medical officer for local authority
Holiday travel advice – vaccination etc
Medico legal work
Life assurance reports
ENG1 (seafarers medicals)
PCV/HGV and taxi medicals
Private consultations
Passport countersignature
Cremation fees
Lecturing
Hire of rooms to other health professionals
Dispensing
• Some practices – generally rural – have
rights to dispense medication.
• Patients can only be dispensed to if they live
>1.6 km from a pharmacy.
• Practices buy the drugs from wholesalers
and are reimbursed at drug tariff price by
PPA.
• Profits are made from discounts from drug
companies and wholesaler discounts.
• Practices have to stand cost of staff.
Practice Costs
Practice Costs
• Staff costs
• Salaries of administrative and nursing staff,
plus income tax (PAYE), National Insurance,
employers pension contributions (14%)
• Also have to cover costs of Salaried GP’s,
retainers and practice employed GP’s on
flexible career schemes
• Usually the largest expense of a practice –
expect to be around 40% of income
Practice Costs
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Medical expenses
Drugs and medical supplies
Medical committee levies
Locum costs
Important to keep a close eye on
buying – involvement in buying groups
etc
Practice Costs
• Premises
• Depends on whether owned or
leased…
• Insurance, potentially ground rent,
mortgage interest, finance costs
• Heat, light, maintenance and repairs
• Redecoration
Practice Costs
• Finance Costs
• Business loans, leased items, HP.
• Bank overdrafts, loans.
Practice Costs
• Administration costs
• Postage, stationery, telephone,
computer consumables, health and
safety inspections, payroll
maintenance, licences, Performing
Rights, TV licence…
Overview of Practice Accounts
Overview of Practice Accounts
• A good set of GP accounts will start with 3 to 4
pages of the accounts proper, followed by 8 pages of
notes to the accounts.
• The first page will simply show the income and
expenditure, with the all important bottom line – the
practice’s net income after deduction of all expenses
– which the partners then divide by share. It will be
clear what the profit share ratio is, for example
reduced for part timers.
• The Partnership Agreement will determine which
items of income and expenditure are attributed to
individuals (seniority is the classic example) and
which are “pooled”
• The previous years figures are shown as well for
comparison.
Overview of Practice Accounts
• The last page of the accounts will be the
balance sheet:
• fixed assets such as property (if owned),
equipment
• current assets such as stock of drugs, cash,
debtors (people owing you money)
• Current liabilities, such as tax, finance and
creditors (people you owe money to)
• Represented by (balanced by) the Capital
Accounts of the Partners.
Overview of Practice Accounts
• The notes will include a fuller
breakdown of income and expenditure.
• Useful often in comparison with other
practices, or averages published in GP
press
• Specialist medical accountants publish
benchmarking figures.
• Final page shows partners actual
drawings.
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Example Practice Accounts
Overview of Practice Accounts
• Practice accounts paint an important
black and white snapshot of the
practice
• They underpin the impressions you
perceived in interviews and your
background researches.
• But – remember – they are a
HISTORICAL viewpoint – not a
CURRENT one!
References
• “Accounting for General Practice” –
East Somerset GP Vocational Training
Scheme produced by Lentells
Chartered Accountants – go to
www.lentells.co.uk/pdf/68-accountingfor-general-practice.pdf
References
• “Managing money for general
practitioners” – second edition 2009 –
Mike Gilbert (Radcliffe Publishing –
www.radcliffe-oxford.com (£23-74 from
Amazon)
And finally…
And finally…