It is important that your hard work and valuable time is rewarded to build a prosperous business. Richard Norbury’s key points will help give your practice the best chance for success.
Consider your private practice as a business and your time and expertise is what the business is selling.
Carry out a review of which areas of your business are most profitable and offer the most reward. This could be by looking at your ‘take-home pay’ or rewards from a non-financial point of view.
You will naturally strike a balance and many of you will take the view that you want or need to continue with less profitable areas of the business.
While it may be awkward, HM Revenue and Customs (HMRC) will expect you chase slow payers and review this regularly and document this to allow you to write off bad debts against profits. Not following this up means you can end up paying tax on income never received!
Understanding exactly how you are paid and how the insurers work will put you in the best position to maximise your profits.
Often an excess is payable by patients and can be deducted from your fees if you are not careful.
Raising your fees is a topical subject, but, with inflation running at over 10% in recent months, you need to consider that your costs will increase more significantly than in recent years. So not taking the opportunity to increase your fees would effectively mean you are working for less.
Fee increases for self-paying patients should be considered, but in order to remain competitive, you need to be aware of the fees your colleagues are charging.
Build the right team
A thriving private practice usually has an excellent team in the background to support you.
An experienced and efficient secretarial/practice management team will often be the first port of call for many patients and will help in many ways, including:
- Managing patient expectations,
- Ensuring that you are paid for the work that you perform;
- Ensuring efficient time management;
- Identifying billing opportunities;
- Keeping accurate records.
A team should not be limited to the people on the payroll. Consider building a network of businesses and individuals who, although perhaps not employed full time, are engaged to achieve a common goal – the success of your business.
Specialist professional advice
Often the advice that you receive from professional advisers is instrumental. A specialist medical accountant will be able to ensure you are trading in the right structure to maximise your take-home pay and offer practical advice.
An in-depth knowledge of the NHS pension is essential to be able to offer you a full package.
In addition to accountants, you should assemble a team of trusted advisers, including solicitors, independent financial advisers and other professionals to achieve your goals.
Often you will find that firms are specialist or have departments that deal with healthcare due to your specific needs as clinicians.
Choosing the right trading structure
Choosing the right trading structure should be considered on a case-by-case basis and you should take advice from a specialist medical accountant.
For companies, corporation tax for profits over £50,000 in a single company has risen recently, as has dividend tax and a review of your trading structure may be necessary.
However, using a company may still be the best option, especially for those individuals facing the ‘cliff edge’ thresholds of £100,000 for childcare benefits or £200,000 for pension annual allowance tapering considerations.
Partnerships offer an alternative way of trading and can sometimes be more efficient in certain circumstances.
Choosing the right trading structure may increase your ‘take- home’ pay or mean you have more free time for the same amount.
Software and systems
Many consultants will use software to track their fee income and also to make other areas of their business more efficient, as some software will hold clinical information.
As your private practice grows, you should be able to check to make sure that you are paid for the work that you have already performed and systems should be put in place for this.
Some of you will already be VAT-registered, perhaps due to medico-legal work. Systems and software can help track and prepare the VAT returns for submission to HMRC.
From 2026, Making Tax Digital (MTD) is planned to be introduced by HMRC to businesses with income of over £50,000, so the requirements of this should be reviewed to make sure you will be compliant when the time comes.
Systems will help to ensure you save for tax as you go along and get into the habit of saving a percentage of your income every month to ensure you have enough saved to meet future tax liabilities.
Consider the risks to your business and how Covid had an impact.
Is there anything that can be done to mitigate this risk, such as applying for admitting rights in more than one private hospital?
Considering your own premises/clinic, could you be expanding the services you currently offer, such as medico-legal work or do some subcontracting for a particular provider?
You should bear in mind that branching out to different areas comes with its own set of issues. For example, medico-legal work usually has a very long delay between performing the work and actually being paid.
This can lead to tax liabilities on work that you have not yet been paid for. In addition, once you reach certain levels, you will need to register for VAT and this can be an additional administration burden.
While diversification may be a good way to mitigate the risk of your business losing income, you should consider your unique skill set and where your time is best placed.
Value for money
Extra fees are always welcome, but additional income often brings about additional costs necessary to fulfil the service. Examples of this could be room charges, staff costs or your time.
However, reducing £100 of your expenses should equate to an extra £100 on your bottom line.
However, take care that reducing costs does not impact on the product or service you receive. A balance should be maintained so that you get value for money and this sometimes means that the cheapest option is not always the best.
Choosing the right group
Choosing the right group to belong to can be a great way to achieve common goals and offer lucrative opportunities. Often this may be working in familiar surroundings with support and logistics already arranged for you so you can concentrate on the clinical procedure.
Take care to consider the groups that you join and in what capacity and level of commitment. Joining a group where you do not share the same ethos is likely to cause friction between colleagues and may mean that the group is less likely to flourish.
Groups have become more prominent over recent years and are likely to continue to be a poplar way for the NHS to reduce their waiting lists.
Consider how committed that you want to be in these groups from full, paid-up membership and running the show down to a level where you may subcontract for these groups and you simply invoice for your services.
It is a good idea to take specialist professional advice on the best structure or contracts that are needed from a legal perspective.
As your private practice grows, you will be expected to have a professional website which is easily found and allows patients to book consultations without problems.
Social media sites are now used widely for marketing and it may be the case that family members or support staff can help promote your business on the various different platforms that are available, possibly tailoring the sites you target to the profile of a typical patient.
Private hospitals often have in-house teams to help with marketing that you can use to help boost your business, as they have their own vested interest in your success.
Taking specialist professional advice will help you follow sound advice to build and maintain a successful private practice and help avoid unnecessary stress and risk.
Richard Norbury (right)) is a partner at Sandison Easson & Co, specialist medical accountants