Get It Sorted - A Financial Overview for Busy Practice Managers

Being a Practice Manager these days involves being a master of many trades. You have to keep on top of everything from age discrimination legislation to data protection issues. One of the main issues that you need to focus on is finances. Get this wrong and it could lead to serious problems for the practice as a whole. In this article we’ve flagged up some of the key areas we think you should have covered to make sure your practice is on solid ground. 

Partnership Agreements
Check that you have a partnership agreement in place. If you haven’t updated yours since the introduction of the GMS contract in 2004, look at it again to ensure it isn’t now out-of-date. Every practice should have a formal agreement drawn up that will govern relations between the practice partners. It should focus on partnership finances and decision making, income, ownership and usage of assets, all details relating to the accounts, including sign-off limits and responsibilities for tax returns. It is essential that the agreement covers what will happen if the partnership is dissolved through retirement, death or expulsion.

Having a formal agreement in place can help to reduce both the financial and non-financial risks for partners and clarify the basis on which the practice is run. You also need to think about how decisions are made between partners because they might not always agree on every issue, as well as what would happen if one partner underperforms or builds up excessive expense liabilities. Once you’ve considered these questions, ensure you have the right financial cover to take account of them and the correct legal trusts in place where appropriate.

Locum Cover
It can be a struggle to get through the difficult days of Winter when key people fall sick with cold and flu bugs. Think then how much more difficult it will be to manage if a one of your clinical partners or salaried GPs has to take long-term sick leave. The cost of employing a locum varies from region to region but wherever you live you’ll find it’s an escalating expense. For example in the West Midlands or London you could pay up to £600 per day for locum cover, while in Yorkshire or Humberside the cost rises to £690.

Make sure then that you have locum insurance policy in place to complement any discretionary locum allowance that you might receive from the local primary care trust. Mid-size to large practices should consider group locum assurance. Read the details of the policy carefully before you sign up to anything. Look for a scheme that will offer you a permanent contract so that once underwritten the terms and conditions can’t be altered and will provide cover until the policy ends, no matter how many claims you make. You can find schemes that don’t have standard exclusions so that illness through stress and depression or related to pregnancy or childbirth is covered.

Business Protection
While coping with staff sickness can be struggle, dealing with the death or critical illness of a partner or GP is a whole other matter. You don’t want to wait until you’re in that situation to find out how you and the practice will cope. Make sure you have in place arrangements that will protect you against the financial implications if this does happen. Many practices are set up without thought to what would happen if one partner is ill or dies. Who will inherit the deceased partner’s share of the practice premises? Probably their family who could decide to sell it on to a third party if there isn’t a legally binding option to purchase. This should be covered in your Partnership Agreement but also consider taking out appropriate insurance.

The other thing to bear in mind is what happens if a key practice employee falls ill or dies. Can you imagine someone trying to step in and fill your shoes? It would probably have to be one of the partners who takes over your role, which means employing a locum to carry out their work. If you have key person assurance it will make provision so that the practice can re-organise until the gaps have been filled permanently.


Commercial Finance
You can’t have failed to have heard the gloomy reports in the media about the predicted slump in the economy and in the property market in particular. If the mortgage on your practice is up for review this year than you’re looking at a very different market to the one we were in before. The key thing to remember when choosing your mortgage is that there are factors to consider other than the headline interest rate charge. With pressure on lenders to keep rates low, they may for example charge large up-front arrangement fees for many deals, particularly fixed rates.

Your lender may let you add the arrangement fee to your mortgage so you won’t have to find the cash up-front but you will still be paying interest on it. The key thing to decide is whether you would be better off looking for a mortgage with a higher rate but with fewer fees. Generally if you have a bigger mortgage than the rate is more important than the fees and for smaller loans the reverse is true. Make sure you look at the total costs involved and seek professional advice to help you find the right deal.

If you’re looking to extend your premises or even build a new one and need to raise capital against the practice then you’ll need a loan. Again you should get professional advice from a company that understands the specialist needs of the GP market.

Surgery Insurance
It’s taken as read that you’ll have insurance in place to protect your surgery and its contents against events such as flooding, fire, burglary and so on. The key things to consider here are that you haven’t under-insured and the contents cover you have in place is a true reflection of what it would cost you to replace equipment and all other items.

It’s not an easy job staying on top of practice finances but there are specialists in the market who can give you advice and reassurance that all the key elements are in place, leaving you free to worry about other aspects of the practice business.

If you would like more information or need general financial advice you can request an appointment, please enter your postcode in the locator below. or call 0800 358 6060.