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Practice Finance Keith Fuller GCGI, FInstLM(Dip), ACIB, CVPM, MIHM, ACMI Managing Partner (Downs Way Medical Practice)

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Presentation on theme: "Practice Finance Keith Fuller GCGI, FInstLM(Dip), ACIB, CVPM, MIHM, ACMI Managing Partner (Downs Way Medical Practice)"— Presentation transcript:

1 Practice Finance Keith Fuller GCGI, FInstLM(Dip), ACIB, CVPM, MIHM, ACMI Managing Partner (Downs Way Medical Practice)

2 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)

3 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.

4 Introduction – Keith Fuller


6 Practice Finance - Overview Different funding models for GP Practice How practices are funded What costs practices incur Overview of Practice accounts

7 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.

8 Practice Funding Models GMS PMS APMS (PCTMS)

9 GMS 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.

10 PMS Personal Medical Services Paid a baseline payment determined by size of practice. Falls in list size will have greater impact than GMS practices.

11 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.

12 PCTMS Primary Care Trust Medical Services PCT’s are able to provide services themselves by directly employing staff. Must comply with the guidance.

13 Funding Streams

14 Income Streams Global Sum Enhanced Services (NES, DES, LES) QoF (Now GQ (GP Quality) scheme) Reimbursements Private Income (Dispensing)/Prescribing

15 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.

16 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.

17 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.

18 Seniority Payments made to Partners based on NHS Service

19 SFE All NHS payments are listed in the SFE – Statement of Financial Entitlements - available on the D o H website.

20 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.

21 Reimbursements All premises reimbursements are listed in Primary Medical Services (Premises Costs) (England) Directions 2004 – available on DoH website.

22 Private Income 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

23 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.

24 Practice Costs

25 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

26 Practice Costs Medical expenses Drugs and medical supplies Medical committee levies Locum costs Important to keep a close eye on buying – involvement in buying groups etc

27 Practice Costs Premises Depends on whether owned or leased… Insurance, potentially ground rent, mortgage interest, finance costs Heat, light, maintenance and repairs Redecoration

28 Practice Costs Finance Costs Business loans, leased items, HP. Bank overdrafts, loans.

29 Practice Costs Administration costs Postage, stationery, telephone, computer consumables, health and safety inspections, payroll maintenance, licences, Performing Rights, TV licence…

30 Overview of Practice Accounts

31 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.

32 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.

33 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.

34 Example Practice Accounts





















55 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!

56 References “Accounting for General Practice” – East Somerset GP Vocational Training Scheme produced by Lentells Chartered Accountants – go to for-general-practice.pdf for-general-practice.pdf

57 References “Managing money for general practitioners” – second edition 2009 – Mike Gilbert (Radcliffe Publishing – (£23-74 from Amazon)

58 And finally…


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