By Simon Misiewicz
Article relevant to the tax year 2017/18
Will the NHS help your Practice to be profitable and protect your wealth, or should you safeguard your investments?
I was discussing the state of the NHS with a new GP client yesterday, and a few points that came from the conversation are particularly relevant and useful to our investment blog readers here, including GPs.
One of the key concerns my GP client expressed revolved around the profitability of his Practice, and how certain streams of funding from the NHS could assist the financial stability of the Practice, in line with his other selected channels of wealth.
He was concerned that his financial assets needed careful wealth management and tax planning reviews, to ensure his legacy would be fully intact for future generations.
Our team of medical professional accountants are focused on creating greater revenues for your medical professional business such as GPs, locums and dentists, whilst being tax efficient.
Like all GPs, my client wants to provide the very best levels of care for patients visiting his Practice, but he is concerned that over the last 10 years this is becoming difficult, when the number of times per year that a patient sees a GP has doubled – whilst the funding that Practices receive from the NHS to deal with that increase has, according to him, barely risen.
Unlike doctors in hospitals, GPs aren’t usually employed by the NHS, and their Practices work similar to a small business, receiving a sum of money per patient visit, which is used to pay for premises, staff and associated costs. The GPs then pay themselves with whatever is left over.
NHS incentives to retain GP doctors
As costs rises, salaries drop, and fewer junior doctors want to train as GPs – meaning that many older GPs are prematurely leaving their medical careers. This puts even greater pressure on Practices and the NHS. We wrote an article that illustrated how the NHS are now providing incentives to keep doctors working within GP’s through financial and education plans.
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By now you would have noticed that the number of tax changes means that you need to plan for the future to ensure that you keep more of what you earn.
Property investors: How does Section 24 (mortgage interest relief) affect you? How are your properties going to perform once Section 24 (mortgage interest relief) comes into full effect?
Doctors/Dentists: Have you incorporated your private practice work into a limited company? Have you structured it to ensure that you and your family takes advantage of the tax breaks?
Stephen Covey said that “people climb to the top of the ladder, only to find out that it is set against the wrong wall”.
Many people go about their business and at the end of the year they feel that they have not moved forwards.
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Providing patient care through the NHS or private work?
One of the questions my GP client focuses on daily is how much the Practice gets per patient per year. The average in well-off areas is £146 – for which, my GP client is expected to provide unlimited care for a year.
My GP client told me that funding has been cut or stopped completely in some fields, such as minor surgery for non-life-threatening conditions. In the past GPs were given small payments for removing skin tags, for example: now they get nothing, so either do the work for free or the patient gets no treatment.
My GP client was concerned that the system is unable to meet demand, and whenever extra funding is announced, it always comes with extra work attached. And existing work remains hugely underfunded.
It’s impossible to offer quality, convenience and cost – only two of the three can be controlled at once. If, for example, a patient wants a high-quality, highly-convenient health service, it will cost more. If a Practice is working within a tighter budget, then quality or convenience will have to suffer.
As my GP client highlighted, an average figure of £146 per patient isn’t enough, and extra services such as minor surgery should be paid for, to ensure that the Practice remains profitable and able to continue to operate.
As I advised my client, it might well come down to Practices funding themselves more in the future, with certain medical services being charged for additionally, to ensure the survival of the Practice itself. Alternative as we suggested in another article that it may be worth thinking about the focus being on providing care to private clients. It is indeed possible to earn five time the amount of money through treatments that are not longer funded by the NHS. It is worth reading our article that suggests that GP’s can work less hours to earn the same amount of money or indeed simply grow a bigger practice.
Part of our meeting contained an overview of his current wealth management measures, including tax planning for GPs, and how to remain tax-efficient as a medical professional operating a Practice business.
Are you a GP with similar concerns regarding how to safeguard your investments?
I’ve written other articles around wealth management and tax planning which will be useful, including: