1. Understanding Practice Accounts Jenny Stone, ACA Ramsay Brown and Partners Ramsay House 18 Vera Avenue London N21 1RB Tel: 020 8370 7705 E-mail: Jenny@ramsaybrown.co.ukJenny@ramsaybrown.co.uk

2. What are Practice Accounts?  Historic record of the financial performance of the practice  Accounts will be prepared from the books & records the practice maintain throughout the year  Consist of Profit & Loss account & Balance Sheet  Profit & Loss – Record of practice income & Expenses  Balance Sheet – Provides practice with a value of their assets and each partner’s share of those assets.  The accounts will include notes to support the profit and loss and balance sheet

3. Purpose of Accounts  Purpose of accounts  Calculate profits to declare to tax man  Useful tool in making financial decisions  Calculating projection of drawings  Bank may require for lending purposes  Accounts will usually be prepared annually to the practice year end  Accounts will include comparative figures, this will be the results for the previous accounting period  Figures in brackets means they are deducted from another figure in the accounts

4. How are GPs Paid  GP practices have a contract with the PCT, this will be a GMS, PMS or APMS  GMS Practices  Receive a global sum payment calculated based on number of patients  MPIG Correction factor  Quality & Outcomes framework  Enhanced Services  Seniority income to reward experience within NHS  Reimbursements of expenses e.g. Rent & Rates, drugs purchased  Other income from medical reports and other sources

5. How GPs are Paid  PMS Practices  Locally negotiated contract  Can also include growth money towards cost of employing salaried GPs  Quality & Outcomes framework  Enhanced Services above those included in baseline  Seniority Income  Reimbursements similar to GMS practices  Other income similar to GMS practices

6. Profit and Loss Account  Shows profitability of the practice  GP & nurse partners are running a business and the object is to make a profit  New partners thinking about joining will be interest in the profitability of the practice  Profits need to be calculated for the tax man  Profit of the practice is allocated between partners according to profit sharing ratios  Profit sharing ratios are usually based on number of sessions worked

7. Balance Sheet & Current Accounts  Balance sheet shows snapshot of the practice assets and liabilities  Two halves to the balance sheet – top half lists the assets & liabilities, the bottom half shows each partners ownership of those assets – both halves will equal  Current accounts are very important as show the individual partners money left in the practice

8. Drawings  Need to be set at a realistic level, take into account expected lost income and/or increased expenses  Drawings need to be reduced to take account of changes to superannuation from 1 st April 2008  Employees superannuation increase  Earnings cap removed  Review throughout the year, if practice is getting into cash flow difficulty may need to reduce

9. Changes to income for 2008/09  Global Sum will increase by 2.2%, amount per patient increases from £54 to £56  However, if practice in receipt of MPIG, the correction factor will be reduced by any increase in global sum and therefore will receive no increase  QOF – Removal of 58 QOF points to be put into extended hours  Enhanced Services – No inflation uplift

10. Maximising Profits Increase Income  No Inflationary Increase global sum & MPIG  Increase practice list  Practice Mergers  No Inflation increase in QOF  Aim to achieve maximum QOF points  Ensure max enhanced services income and taking up new directed enhanced  New Sources of non-nhs income

11. Maximising Profits  Difficult to maximise income  In addition need to control/reduce expenses  Review all areas for potential savings  Cheaper suppliers for telephone, gas, electricity  Keep an eye on stationery expenditure, costs can escalate  Review work carried out by staff  Review use of locums  Setting budgets for all areas of expenses for year, allows you to monitor and control expenses

12. Superannuation for GPs  Superannuation based on GPs NHS pensionable profits  GPs to complete end of year certificate to declare profits  PCT make deductions each month based on an estimate of profits  Once certificate submitted, PCT will collect any shortfall or refund of superannuation  Ensure PCT deducting superannuation using up to date estimate of profits  GP and non GP partners responsible for both employees and employers superannuation

13. Changes to Superannuation Contributions  Employee’s Contribution increased from 1 st April 2008 (2008/09)  Based on tiered contribution rate  0 to £19,682 – 5%  £19,683 - £65,002 – 6.5%  £65,003 - £102,499 – 7.5%  £102,500 – 8.5%  Rate for 2008/09 will be based on pensionable pay for 2006/07  Earnings cap removed for ee & er contributions  Earnings cap will still apply to added years contract commenced before 1 st April 2008, for those GPs who were previously capped