How GPs are paid

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How GPs are paid

In my monthly articles on e-health insider I talk about topics related to IT and primary care from my perspective as a jobbing GP doing 4 days a week of general practice.

However there are quite a few topics I’d like to discuss that the remit of that column doesn’t allow me to cover and I thought I’d do a series of posts on here to see what reception I got.

85% of patient contacts in the NHS happen in primary care yet few seem to understand how a General Practice is funded, how GPs earn their money and how that can perversely affect the work that they do.

In my ‘day off” from practice, amongst other things I do some consulting work, which I will loosely describe as trying to help companies, wanting to sell their goods or services to general practice or have them used by GPs, which is often a subtle but misunderstood difference.

The companies I have worked with include IT companies, pharma companies, outsourcing companies and professional service suppliers and no matter which company I constantly find myself having to explain the basics of GP pay in order to explain why some things that they would expect to, don’t motivate GPs.

There are lots of misconceptions about GP pay, in my experience even amongst other NHS staff. The biggest misconception is that we are paid a salary, we aren’t. The next is that we have some pot of money like an expense account that we can spend, we don’t. Every penny spent is one less earned, which is why I walk around the practice turning off the lights.

So in this post I will go over the basics of how English UK GPs are paid and in future articles, if there is interest I’ll cover more some aspects in more detail and I’ll expand on motivating GPs to use/buy your product.

As an aside its interesting that many commentators constantly compare the NHS and primary care in particular to Tesco and other supermarket retailers, stating we should open 24/7 like them and deliver customer services like them. However when you understand GP funding, hopefully you will understand why this annoys GPs, in that we aren’t funded like retailers, quite the opposite so this makes almost no sense and shows how ignorant some of the policy makers are.

Back to the money, first the slightly complicated bit. What is a general practice?

A practice is at its simplest just a business and there are just over 8000 general practices in England. To operate they have to have a contract, currently with NHS England. This is either a GMS contract, a PMS contract or in some rarer cases an APMS contract, which was a means of allowing non standard organizations like hospitals or groups of non doctors to run a practice. APMS contracts are not in the scope of this briefing.

Some would say a practice is a like a franchise – once you have a contract you can use the NHS brand, you have your site and you have your customer base. Some would say that there isn’t enough competition, that burger franchise has other franchises to compete with. This leads some to say the artificial independent contractor nature of general practice is antiquated and should be got rid off.

Others will say the partnership basis and funding explained below is why general practice is usually acknowledged as one of the most efficient parts of the health service. GPs don’t spend money needlessly as its their money. However they also don’t like taking on new work unless it’s funded or evidence based as it usually has a cost, which comes from their pocket.

The vast majority of practices are GMS or PMS and have are owned by a partnership of doctors who are qualified as GPs. There is a lot of guidance on who can hold what type of contract and while solicitors and accountants have moved over to LLPs, GPs appear to have been prevented from doing this potentially liability reducing measure though no one has ever explained to me why.

Similarly other professionals often have quite complex structures with limited companies, owned by the professional and his or her family members, being the vehicle in which the professional is contracted to work for the organization. This is presumably a tax efficient way of taking income, though liability reduction may be part of the rationale.

While our professional colleagues seem to be able to muddy their ownerships and income, the rules seem to prevent this in most cases for GPs. With most GP practices being a simple partnership of individuals.

A few progressive practices have non-GPs as partners though there are pros and cons to this that might make the basis of another article.

The Golden formula.

So a general practice is a company like any other though we’ve explained legally it’s usually a partnership rather than a share based organisation, which would have complications of share price and transfer of ownership.

So just like for any other company the golden equation is

Profit = Income – Expenses.

And that’s it – for the organisation. The organisation profits are split between the partners based on a predetermined ratio.

This is usually according to a straight percentage share based on the number of hours worked though occasionally there are some payments that are paid pre division. E.g. seniority though this is being phased out.

To explain further, most GPs think in terms of sessions or half days. Most do 8 or 9 sessions full time. And so 10 partners 5 fulltime and 5 half time with 8 sessions as full time would give 5X8 + 5×4 = 60 sessions full time.

The organisations profits would be split into 60 and each partner would get their number of sessions. In reality it can be 6 or more months post year end before the practices accounts are finalised. Few individuals are willing to be paid every 18 months so in practice, practices estimate what the profits are going to be and pay monthly drawings to each partner.

These can vary depending on cash flow, one month when we had really bad cashflow, I got £20 for the month. These drawings aren’t a salary as such, they are prepayments of a partners profit share. If a partner draws too much they owe the practice money. If they under draw there is usually a payment out, however this isn’t a bonus its just undrawn profit. Given that recently more and more monies are coming in after the year-end cashflow can be difficult for some practices. Partners often leave capital in the business as a float and a lot of practices have overdrafts to help this.

So it can be seen there is no salary. There are Salaried GPs and these are GPs employed by a practice on its books who aren’t partners. They are classed as employees pay PAYE etc. and count as an expense to the practice.

The interesting bit is what are the income sources for a practice and what are the expenses and I’ll look at these in my next article.

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Feel free to constructively comment on this article – or to ask questions.

Does it cover what you want? Does it make sense? Does it read well?

I’m willing to do more if the feedback is positive.

NB This article is copyrighted by me. You may not use it or quote more than a sentence from it without permission – which I’m willing to give. Feel free to link to it. In all cases acknowledge me as the author.

Neil

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