Basic principles of accounts can be studied by referring to standard accounting books. Only the special circumstances pertaining to GP Surgery practice would be highlighted here.
The typical headings for income and expenses for a GP practice are indicated. These are input on the left column. The next set of columns is for the 12 months followed by the Total. The next column is monthly actual ( total divided by the number of months e.g. after 3rd month Total/3; after 7 months Total/7). The final column is original Budget for the year averaged monthly (omitted in the attachment as figures would vary from one surgery to another).
would include the following:
- Contract value
- MPIG Correction value
- Aspiration uplift
- Total Seniority
- Water payments
- LTNC Payments
- Choose & Book
- Childhood Immunisation targets
- Rent/Rates – monthly
- PBC Des component two – ad hoc
- Minor Surgery – monthly
- ACH pay on account – ad hoc
- Sickness / Locum cover – ado
- IM&T Payments
- Flu Payments (influenza)Pneumo Immun. – monthly & ado
- Des C&B component 2 RWD-adhocIUCD – monthly & ado
- Gonadrelin – monthly & ado
- NPT – monthly & Adhoc
- Child pneuomo – ado
- Access Des Award – ado
- repayment GPs…
- Admin LHRH,
- Intra Partum etc.
- Employee Superannuation 6%,,
- Employers Superannution 14%,,
- AVC contributions,,
- Statutory Levy,,
- Voluntary Levy,,
- Total Net Payment
- Prescribing Drugs
- transfers etc.
- Bank Interest/ deposit a/c
- Other Incomes –
The Carr-Hill allocation formula
Geographical and social factors result in differing workload for GPs. When the new GMS contract was introduced in 2004, the Carr-Hill formula (developed by Professor Roy Carr-Hill of York University) was also introduced to adjust payment to individual practices to allow for these factors. It allocates global sum payments and quality payments to practices on the basis of the practice population, weighted for factors that influence relative needs and costs in order to reflect the differences in workload these factors generate. The Carr-Hill formula replaced a previous system of weighting payments to practices according to social factors that was called the Jarman Index. Introduction of the Carr-Hill allocation formula has been controversial and there are likely to be some adjustments to the factors used for weighting in the near future.
Minimum practice income guarantee
The minimum practice income guarantee protects those practices that lost out under the redistribution effect when the Carr-Hill resource allocation formula was introduced in place of the Jarman Index. It is calculated by subtracting the global sum allocation (GSA) under the new GMS contract from the global sum equivalent (GSE) – the amount the practice would have earned for providing the same service under the old GMS contract (The Red Book). If the GSA is less than the GSE, a correction factor (CF) will be applied as long as necessary to make up the difference.
- Staff salaries – Gross pay,,
- HMRC – Employee NI, Tax, Pens.,,
- HMRC – Employer NI, Pension
- GP Locums etc.
- OOH service – Mastercall SVC Ltd
- Premises – Rent, Rates & Insurance
- Premises – Zurich Assurance
- Premises – Axa Sunlife
- Premises – Tesco etc.
- Insurance Premises – Guardian Financial Services
- Premises – Siemens Fin. Service
- Medical Insurance/Testing
- Premises – Gas, Elec., utilities
- Premises, repairs & maintenance
- Drugs & Medical supplies
- Motor Expenses
- Shell UK Ltd
- Telephone, Fax, Mobiles etc.
- Architect / solicitors
- Postage, Printing & Stationery
- Loan account
- Capital Bank
- Subscription e.g. MDU, RCGP, GMCBMA, GMC, RCGP
- Accountancy Fees
- Depreciation: Fixtures / Fittings – est.
- Depreciation: Motor Vehicles – est.
- Sundries (incl. petty cash)
- H3G+ CMP Inform.
- Group Seniority + others
- GPs Bank charges & interest
- Dr A salary
- Dr B salary
- Dr C salary
- Drs D salary
- S/OPCT Deductions
- Surplus / Deficit
- cr/ dt not income/expenses
- Bank o/b
- Bank c/b calculated
Bank monthly closing balance-actual
18.1.3 Budget (setting methodology)
Every year, the PCT sets a prescribing budget for each practice, using a formula that contains a number of factors including:
- Population profile and list size of the practice using a weighted capitation unit known as the ASTRO PU prescribing unit;
- An average spend per patient for the PCT, calculated for cardiovascular, respiratory and diabetes drugs, using QOF prevalence data. This figure is then applied to each practice appropriately;
- Consideration of historic spend of the practice;
- High cost drug spent by the practice;
- Adjustments made for deprivation and care home patients, for each practice;
- Recent NICE guidance and other national clinical treatment guidance;
- New medicines.
Each practice is reviewed regularly by the PCT’s medicines management team using the database of prescription information provided by the NHS Business Services Authority, known as ePACT. The medicines management pharmacists will also provide support and expertise to the practice to help manage their budgets.
The practice will usually set a review programme for key target areas within current prescribing. Some practices have created their own practice formularies to ensure clinical and cost effective prescribing policies are maintained.
All budgets must be based on realistic projections of activity levels, pay, inflation, and priorities and known cost pressures. All available information about future changes and developments must also be considered.
18.1.4 Budget computations.
- PMgr should prepare budget 1-2 months before the end of the accounting year. The income and costs should be estimated on a realistic and conservative basis.
Aim should be to:
- Increase Practice Income
- Decrease costs
- Minimise wastage
- If Staff costs need to be increased due to extra staff for the benefit of the Practice, then have a realistic figure for increase of Income to support an increase in staff. Without that increase in income, the request would be turned down. It is better not to raise the issue than earn a bad opinion from the GP Partners that the PMgr is unrealistic and even out of his depth when it comes to accounts.
- Always ensure that when aiming for staff increase, the increase cost does not exceed more than 60% of the increased income forecast. 50% would be a safer bet.
- Prepare a list of all staff, including GPs
- Prepare total staff Costs inputting hours worked for each, hourly rates and annual salary
- Compute the NI and Pensions – lot of receptionists at low income cannot afford to pay for Pension in formative years of their careers in NHS.
- The % of GP salary to total income should be around 40%; this would be adequate to have two partners earning £120000 each.
- The % of staff costs to total Income should not exceed 30%; preferably 27.5%.
- The present day youngsters are very good in computing and more effort should be taken to use them for work relating to reports, audits etc. Plan for a PT receptionists for 12 hours a week – 3 days @ 4hr per day in afternoon, may reduce backlogs and may not cost an arm and leg to the surgery ( £ 7 x 12 x 52 = £ 4368).
- Specify where the increase in income would come from.
- Specify where the reduction in expenses would accrue and what efforts would be taken to achieve that – re-arranging staff duties, improving performance.
- If a Locum GP has to be discontinued due to their high costs, especially, if they come appointed via an agency, then go for salaried GP. Even it is not the right way for the long term good of the surgery. Always aim for a GP partner, preferably 100% after 4 years of service.
- Aim for more clinics and budget for an increase employ another Nurse to provide a better service. A surgery with two nurses for 5 GPs and 2.5 for 8 GPs would be perceived as a good surgery to register.
- Always aim to provide extra service than last year and the first areas to focus would be ‘pull up the socks’ on those areas where the surgery is under performing.
The figures are all ‘doctored in’ – it does not represent any particular surgery. It shows the basics.
PMgr should prepare such budget, plan for any increase in staff and reduction in costs.
A typical staff budget is attached:
Ensure the realistic reduction costs and any extra income to be received would support any increase in staff costs.
If not, do not make an issue for staff increase, because at the end of the day ‘bottom line – profit’ is the key factor.
If the present PMgr does not understand and appreciate this key principle, there are many in the queue to join the Practice.
Always ‘Help the Partners to help yourself‘.
18.1.5 Auto-preparation of accounts
The excel -based account attached is developed for one surgery and it can be set up for any surgery, if they so wish. Please note none of the totals would tally in the attachment as they have been modified. The integrity of the auto- account preparation is not affected in any way. If any one row were deleted in Income or Expenses, the output would be seriously affected. So leave the row blank for the moment.
The first page is for Income. The appropriate figures need to be input into the respective columns when payment advices are received.
The second page is for Expenses. With all the invoices, bank cheque books and the current bank statements, the monthly details to be input – preferably end of 2nd week in each month.
Both these operations should not take more than 30 min. per month. First time operation may take an hour.
Page 3 is the accounts for the surgery – computed for each month.
This is only an indication of how the surgery is doing so far.
Caution to be exercised if the surgery has surplus funds, say, after 5 months – these are not for immediate spending as PCT give higher amounts in the first quarter but it gets reduced in 2nd quarter.
The advantage of this system is that the final accounts should be ready for the accountant once the closing period month details are input – by mid April of the closing accounting period.
For records purposes Fixed Assets, depreciation, capital allowances, GPs income (not monthly drawings) and profit sharing, staff salary with coding and deductions,
Superannuation monthly deductions for each GP partner have to be completed by the Accountant. However, if the PMgr is adept with accounts, he should be able to prepare these data well before the end of the year.
The monthly averaged Total figures should be compared with the Budget figures and raise alarm during the year and not at the end.
This simple layout would help surgeries immensely and one need not be an account specialist to operate the system.
The objective for the surgery should be to send all records to the Accountant by June./July of each year (if the annual accounting period ends March 31) for checking and filing with HMRC.