Health check your
Following the introduction of the new contract most practices have earned extremely well from the NHS, but in all the excitement don't forget to maximise your private earnings, says Dr John Couch
The new GMS contract has rightly concentrated GPs' minds on how to earn well from the NHS over the past two years. The danger of this is that GPs may have neglected other areas of income generation.
Private income produces a significant proportion of gross earnings for most GPs, and regular health checks are essential.
New factors have also arisen that affect private work. Overall numbers of GPs are rising, the proportion of part-time GPs is increasing, and most of us are generally less tired, having opted out of out- of-hours work.
All these factors have increased GPs' appetite and competition for such income. This trend will grow. Stabilising or expanding a private income base is vital.
Before researching this article I assumed that higher-earning practices would generally have a higher proportion of income from private sources. In fact, on studying GP earnings 'league tables', it seems that there is no such link. Practices with lower overall earnings can still have considerable private income.
There is also no link with per partner list sizes a practice with a large list can still make enough time to earn a high private income.
The proportion of private income varies between 5 per cent and 20 per cent of total gross income. Given this wide range, and the disparity between practice types, it seems safe to assume that practices actually choose how hard they want to work in this area. The range also gives an excellent idea of how much extra you could earn. Increasing your figures from 5 per cent to 20 per cent could bring in around £30,000 extra per partner per year!
Your current position
So how much does your practice earn privately? Your last set of accounts will provide the answer.
As well as checking the raw figures, work out the private to gross proportion. A figure close to 5 per cent puts you in the lower levels with excellent potential to improve. A high figure is reassuring but necessary to maintain.
Once you know your figures you need to make some important decisions:
·Do you want to improve income levels?
·Are current earnings areas stable and
·When were fees last updated?
Improving private income
The latter point is very important and all practices should check their current private earnings first. Anti-competition rules mean the BMA is no longer permitted to publish recommended fees. However, it is not difficult to establish a ballpark figure. Make sure your fees are not set at too low a level.
Remember also that you can charge patients for a variety of services including private certificates, private insurance claims and some travel immunisations.
It is more difficult to establish efficient charging in larger practices and where locums are used regularly. Make a clear policy to improve this.
Also ensure that you have an efficient invoicing and checking system. Some clients, especially solicitors, can be very slow at making payments. Do chase all payments that are more than two months adrift. If a medical report is more complicated, tell the requesting agency and ask for a higher fee.
Only do the report when you have written agreement to this. Some practices ask for payment in advance of sending a report.
There will be opportunities for new private income in most areas of the country. Some will be practice based and others will involve some travel. Start by making a list of the areas most commonly exploited. It will include the following:
·medical reports on existing patients
·medical examinations these include
insurance, employment and driving medicals; They can involve practice and non-practice patients
·occupational health this includes acupuncture, osteopathy and
homoeopathy; but remember you cannot charge your own patients for this
·drug trials more difficult to source as fewer new drugs are being developed and more trials are being conducted overseas; strict rules, protocols and monitoring are in force; can provide good earnings but needs high time commitment
·prison GP it is now Government policy that outside GP primary care is preferred to full-time prison medical officer; can be
demanding medicine; reasonable income
·school medical officer
·Secondary to primary care service
provision in a sense this can be regarded as private income; practices need to put bids in for such work, in competition with other practices and private providers
·rent income from renting out practice space to private providers such as dentists and physiotherapists
The areas you decide to target will depend on a variety of factors, such as your existing practice skill-base, current opportunities and how much space is available in terms of buildings/GP time.
Appoint one of your partners or the practice manager to explore options. Choose someone who is good at networking, proactive, persistent and a good negotiator.
React to current or new opportunities but also market your skills and services as widely as possible. Expect rejections as well as successes!
The partners must agree from the outset how work and income will be divided. If work can be divided equally or sufficient (and agreed) dedicated time allowed to partners doing a greater proportion, then profits can be shared equally. If it is not possible to allow dedicated practice time but a partner is prepared to work extra in their own time, then profits will need to be shared pro rata. Drug trials income often falls into this category.
Enshrine the rules in your practice agreement to avoid future disputes. Allow for renegotiation if the type of work changes.
Consult with your accountant before you take on any extra work as there will be financial implications.
For instance if you earn more than 10 per cent of gross income privately from work that takes place in your practice building, you should declare this to the PCT and face losing some rent reimbursement. In this situation it may be worth concentrating private work in one or two rooms and relinquishing NHS rent reimbursement on these rooms only.
There are also some tax advantages in providing services as a company. A good accountant will help to decide if this is advantageous and which type of company to set up.
Good financial bookkeeping is also vital. Itemise income and non-NHS expenditure carefully to enable your accountant to claim tax relief and apportion income accurately.
Monitor performance regularly to ensure your chosen strategy is working and make changes where appropriate.
Finally, remember that while private income is not superannuable in the NHS pension scheme you do have the option of investing some of the extra income in a private pension, subject to the new lifetime allowance. The rules now allow much higher amounts to be invested, so your hard work can also be translated into a higher pension.
Points to note
· Opting out of out-of-hours work has given many GPs energy to devote to generating private income
· Practices with relatively low overall earnings can still have considerable private income
· Partners in practices with a large list can still make enough time to earn a high private income
· Practices tend to choose how much private income they wish to earn
· Increasing your percentage of private income from
5 per cent to 20 per cent could bring in around £30,000 extra per partner per year
John Couch is a GP in Ashford, Middlesex