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Considerations for replacing an outgoing partner

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We are a four-partner practice and our senior partner is due to retire in September 2005, we have already been advertising for a replacement partner, but are having difficulty filling the vacancy. What other options can we consider and what impact does this have on our finances?

The new GMS contract gives practices greater flexibility for replacing outgoing partners with employed GP’s. The funding is now practice based and as long as your list size does not change, you will not lose any income when the partner retires. Taking on an employed GP could also give the existing partners an opportunity to increase their individual share of profits.

Locums
Locums are an expensive option but can be used in the short term while the practice considers long-term options for replacing the outgoing partner. Short-term locums will be self-employed, so the practice will not have the additional cost of employer’s national insurance and employer’s pension contribution.

Salaried GP
An increasing number of GP’s have a preference for being salaried and therefore it may be easier to employ a salaried GP rather than taking on a partner. The practice could then decide whether they wanted to make the salaried GP a partner in the future. The salary of the GP will depend on the current market, practical experience, and length of NHS service and whether they can offer any additional services. You will need to negotiate this with the GP you are considering employing.

Currently average salaries for a full time equivalent GP are between £65,000 to £75,000. The total cost to the practice will be the salary plus the employer’s national insurance (12.8% of the salary after their personal allowance) and if the GP is a member of the NHS pension scheme, the practice will also have the cost of the employer’s pension contribution (14%). For example, if you took on a salaried GP on a salary of £65,000, the employers national insurance will be £7,693 and the employer’s pension contribution will be £8,415, therefore the total cost to the practice would be £81,108.

As the salaried GP is an employee of the practice, they would also be entitled to holiday and sick pay. They would also need a contract of employment like any other member of staff.

If the practice wants to eventually take on a partner, then the salaried GP, if suitable could have the opportunity of becoming a partner in the future. However, if the total cost of employing the salaried GP were less than the outgoing partner’s profits, then there would be more profits left to distribute between the existing partners. Which could result in their individual profits increasing, this is illustrated in box a. Remember, if you decide to take on the salaried GP as a partner, your individual profits will decrease.

Flexible Careers Scheme GP
Employing a GP under the flexible careers scheme allows the practice to receive a reimbursement towards the total cost of the GP. However, a flexible careers scheme GP must work a minimum of two sessions per week and no more than 5 sessions per week. They must also be given 8 sessions per annum of funded education time. The practice would be reimbursed 50% of the cost in the first year, 25% in the second and 10% in the third year. However, you will need to consider the number of hours that you require a GP for and their level of commitment to the practice.


GP Retainer
A GP retainer can be employed for up to 4 sessions per week. As long as the conditions for employing a retainer were met, the practice would be eligible for a small reimbursement towards the cost of the salary, which is £57.33 per session. The practice would be expected to fund the rest of the salary.

Other Considerations
When looking for new doctor to join the practice, there will be other factors to consider as well as the financial implication. In particular, their commitment to the practice, for example a profit sharing partner would want to work hard to achieve as many QOF points as possible, as this will increase the income coming into the practice and their profits. Whereas the number of points the practice achieves would not impact on a salaried GPs income. As an incentive, the practice could offer a bonus for their contribution to the quality and outcomes framework.

The remaining partners may feel that they want to take on another partner in order to share the responsibility of running the practice.

Also a new partner may bring a new skill, which could enable the practice to offer new services to their patients, which could also increase the practices income.


BOX A

  Total Dr A Dr B Dr C Dr D
Profits per accounts
Profits per accounts
Less: Cost of salaried GP
Profits to distribute
380,000
380,000
(81,100)
298,900
95,000 95,000


99,634
95,000


99,663
95,000


99,633

 

June 2005