Understanding Accounts & Taxation
Book-Keeping - Setting Up Financial Systems
Pensions & Superannuation
Tax Return & Expenses Forms
Personal Expense Claim Form
Locum Expenses Claim form
Rental Income & Expenses Form
Considerations for replacing
an outgoing partner
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
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.
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.
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.
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.
|Profits per accounts
Profits per accounts
Less: Cost of salaried GP
Profits to distribute