It can be really difficult and overwhelming for anybody with little to no experience in accountancy to really get a good grasp on what is required from you as the owner of a private practice. Here at Accounts Unlocked For Doctors, we know how time consuming and confusing managing finances and working out taxes can be, which is why we have developed a range of packages that are available for medical professionals of all calibre, including private practice owners, so that they can concentrate on helping patients instead of jamming numbers into calculators.
We are sharing on our expert tips on managing your private practice’s finances…
SEPARATE YOUR FINANCES
First and foremost, if you don’t already , you should keep your practice finances separate from your personal finances. Having a separate business bank accounts and using a regular tracking tool like Quickbooks are essential tools to have to ensure you keep your personal and professional finances separate. You can then you pay yourself just like you would get a salary from an employed job.
PROFIT & LOSS STATEMENTS
Another area of your financial commitments that is good to look at often is the profit and loss statement. This will give you a really good idea of how well your practice is doing and if you are actually making money or not. It will measure your income and profit and show you where you are spending with expenses. There are so many benefits of using profit & loss statements, not only will this encourage budgeting and will give you a better grasp of what works and what doesn’t, it will also give a forecast of times, days and months that you are excelling profit in.
GET YOURSELF AN ACCOUNTANT
It seems like a no brainer right? But some people don’t consider or understand the full benefits of having an accountant to take control of their taxes, and it’s not until they are faced with a tax return, do they realise that unless you are knowledgable on these returns, it’s almost impossible to know if you’ve done everything right. A medical accountant is a worthy investment for any private practice, whether you outsource or bring someone in salaried to take care of your finances.
We consider these to be the most important elements of taking control of your private practice’s finances and will ensure you can remain focused on your patients. Your financial success in private practice, generally comes from being able to manage and understand the financial side of things. By having knowledge of these basic essentials will give you a better understanding of your practice.
The average funding per patient across all GP practices in England has increased at a steady pace since the initial data on payments to general practice – for the 2013/14 financial year – were published by NHS Digital.
Data published in late 2017 revealed that the average funding per patient for GP practices was £151 for 2016/17 – up from £136.01 in 2013/14. But there are many different circumstances to be considered as well as variations in the average amount of funding GP practices receive between CCG areas which remain huge, and was roughly unchanged in 2016/17 compared with the previous year.
In NHS Central Manchester CCG, practices received £115.54 on average per weighted patient in 2016/17 – the lowest average figure in the country. In NHS North Norfolk CCG, however, practices receive £216.72 – almost twice as much per weighted patient.
Map: find out how funding in your CCG compares
The difference between the areas that receive GP funding between the best- and worst-funded CCG areas in 2016/17 is lower than it was in 2014/15, NHS Digital’s data reveal. In 2014/15, GP practices in the best-funded CCG area received around £215 per weighted patient, compared with £105.19 in the worst-funded area. However, compared with 2015/16, when the range was around £110 to £210, very little changed in 2016/17.
GP leaders have warned that despite a rise in GP funding in 2016/17, overall investment in general practice is failing to keep track with the ever increasing workload and demand.
The BMA has predicted that general practice funding will fall short by £3.4bn in 2020/21 of the 11% share of overall NHS funding the profession needs.
Many consultants think that having a private practice is in the insurance market, when really it isn’t, only around 65% of invoices raised by private practices were accounted for by private medical insurance. Self pay patients are accountable for around 25% of specialists’ incomes (however this can be higher and completely varies on your speciality, type and location) which is why prevention of private patients avoiding their medical bills is imperative to the management and financial condition of your private practice.
Most consultants have an element of patients who are self-pay. Therefore, it would make sense to have a concise price list provided and make sure payment methods are made clear in advance so that your patient is expecting an invoice and is prepared to pay promptly.
Ways you can avoid late payments or payment avoidance is by taking payment on the day by debit/credit card or, dependent upon the requirements of the practice, you can even take money in advance.
Should you not be able to collect payment on the day, you will need to put in place a strict system where the patient is chased for payment after a period of time that is agreed with the patient and then chased on a regular basis until payment is collected.
Another area of private medical payment avoidance comes from a lack of understanding and knowledge by the patient in regards to their insurance policies. Shortfalls in insurance payment are normally by far the largest volume of the self-pay invoices. Most patients do not have a full understanding of their insurance policy and are under the impression that all costs are met by their medical insurer. It usually results in patients being unprepared on recipients of their financial responsibility for medical treatment in form of an unexpected invoice. Many patients will ignore the invoice, with the misapprehension it is a copy of what has been sent to the insurer and when they do become aware of their financial obligation to pay a part of the bill, it is usually met with frustration which leads to further delay as the patient disputes the liability with their insurer.
The self-pay market is inevitably going to continue to come under pressure from the economic situation. So unless you put in place a clear and strict payment plan for patience to follow, it is almost certain that your outstanding debt circumstances will continue to increase as a consequence of the increasing difficulties in getting patients to pay up.
You may want to recruit the help of a debt collection agency or find an accountant that offer credit control and debt recovery options, just like Accounts Unlocked For Doctors. This takes the stress away from your busy, everyday needs and priorities in the practice. We can provide you with expert advice on how to deal with increasing debt issues and ways to tackle unpaid patients.
Is spending too much time and tax on your income giving you a headache? Before reaching for the paracetamol and doing another night shift of finance admin that drains your passion for medicine, we prescribe consulting our team of professional medical accountants who’ll save you time and sanity.
Many doctors in the UK don’t realise that tax relief can substantially increase the bottom line of their bank accounts, through tax deductions on expenses or items related to their practice.
Running a private medical practice can become an incredibly daunting task without the proper staff and equipment. When you thought about opening your own practice you knew there would be a lot to it.