Transcript Slide 1

Understanding Practice
Accounts
Jenny Stone, ACA
Ramsay Brown and Partners
Ramsay House
18 Vera Avenue
London
N21 1RB
Tel: 020 8370 7705
E-mail: [email protected]
What are Practice Accounts?
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Historic record of the financial performance of the
practice
Accounts will be prepared from the books & records
the practice maintain throughout the year
Consist of Profit & Loss account & Balance Sheet
Profit & Loss – Record of practice income &
Expenses
Balance Sheet – Provides practice with a value of
their assets and each partner’s share of those assets.
The accounts will include notes to support the profit
and loss and balance sheet
Purpose of Accounts
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Purpose of accounts
 Calculate profits to declare to tax man
 Useful tool in making financial decisions
 Calculating projection of drawings
 Bank may require for lending purposes
Accounts will usually be prepared annually to the
practice year end
Accounts will include comparative figures, this will
be the results for the previous accounting period
Figures in brackets means they are deducted from
another figure in the accounts
How are GPs Paid
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GP practices have a contract with the PCT, this will
be a GMS, PMS or APMS
GMS Practices
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Receive a global sum payment calculated based on number
of patients
MPIG Correction factor
Quality & Outcomes framework
Enhanced Services
Seniority income to reward experience within NHS
Reimbursements of expenses e.g. Rent & Rates, drugs
purchased
Other income from medical reports and other sources
How GPs are Paid
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PMS Practices
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Locally negotiated contract
Can also include growth money towards cost of
employing salaried GPs
Quality & Outcomes framework
Enhanced Services above those included in
baseline
Seniority Income
Reimbursements similar to GMS practices
Other income similar to GMS practices
Profit and Loss Account
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Shows profitability of the practice
GP & nurse partners are running a business
and the object is to make a profit
New partners thinking about joining will be
interest in the profitability of the practice
Profits need to be calculated for the tax man
Profit of the practice is allocated between
partners according to profit sharing ratios
Profit sharing ratios are usually based on
number of sessions worked
Balance Sheet & Current Accounts
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Balance sheet shows snapshot of the practice
assets and liabilities
Two halves to the balance sheet – top half
lists the assets & liabilities, the bottom half
shows each partners ownership of those
assets – both halves will equal
Current accounts are very important as show
the individual partners money left in the
practice
Drawings
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Need to be set at a realistic level, take into
account expected lost income and/or
increased expenses
Drawings need to be reduced to take account
of changes to superannuation from 1st April
2008
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Employees superannuation increase
Earnings cap removed
Review throughout the year, if practice is
getting into cash flow difficulty may need to
reduce
Changes to income for 2008/09
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Global Sum will increase by 2.2%, amount
per patient increases from £54 to £56
However, if practice in receipt of MPIG, the
correction factor will be reduced by any
increase in global sum and therefore will
receive no increase
QOF – Removal of 58 QOF points to be put
into extended hours
Enhanced Services – No inflation uplift
Maximising Profits
Increase Income
 No Inflationary Increase global sum & MPIG
 Increase practice list
 Practice Mergers
 No Inflation increase in QOF
 Aim to achieve maximum QOF points
 Ensure max enhanced services income and
taking up new directed enhanced
 New Sources of non-nhs income
Maximising Profits
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Difficult to maximise income
In addition need to control/reduce expenses
Review all areas for potential savings
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Cheaper suppliers for telephone, gas, electricity
Keep an eye on stationery expenditure, costs can
escalate
Review work carried out by staff
Review use of locums
Setting budgets for all areas of expenses for year,
allows you to monitor and control expenses
Superannuation for GPs
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Superannuation based on GPs NHS pensionable
profits
GPs to complete end of year certificate to declare
profits
PCT make deductions each month based on an
estimate of profits
Once certificate submitted, PCT will collect any
shortfall or refund of superannuation
Ensure PCT deducting superannuation using up to
date estimate of profits
GP and non GP partners responsible for both
employees and employers superannuation
Changes to Superannuation
Contributions
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Employee’s Contribution increased from 1st April
2008 (2008/09)
Based on tiered contribution rate
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0 to £19,682 – 5%
£19,683 - £65,002 – 6.5%
£65,003 - £102,499 – 7.5%
£102,500 – 8.5%
Rate for 2008/09 will be based on pensionable pay
for 2006/07
Earnings cap removed for ee & er contributions
Earnings cap will still apply to added years contract
commenced before 1st April 2008, for those GPs who
were previously capped