by Laurence Slavin, Partner
Visited a large practice yesterday who have a mixture of salaried GPs, some of which have their indemnity payments paid by the practice and others who receive a higher rate of pay and pay the indemnity themselves.
The welcome reduction of the indemnity costs now creates a division as those with the higher rate of pay will be better off after paying a reduced subscription out of their earnings. The practice will have to deal with this but it is but so easy to reduce someone’s pay to balance this.
Over to the HR consultants.
Run-off cover is nothing new for accountancy practices but it is for general practice, where up to now having paid your indemnity subscription you are covered for all your work. Run-off cover requires a continuing payment after leaving/retiring from a practice – and since these are essentially paid personally how do you ensure the run-off cover is paid?
A partner in a client practice recently emigrated to the Middle East with no intention of working again. If no run-if cover is paid, it is possible that the practice could be included in a claim without insurance. How can you ensure the run-off cover is paid. Perhaps most importantly – is there an awareness that it will need to be paid?
You could say that the retiring GP has to leave a fund behind to finance the continuing run-off cover, but the insurance is between the GP and their indemnity company, I am not sure how practical a solution that would be?
It may be that the indemnity provider will allow a lump sum to be paid to cover the run off at the time of retirement- but this does need to be thought through and maybe partnership agreements adapted to include this?
This article was written by Laurence Slavin, a partner at Ramsay Brown who specialises in the finances of Primary Care and GPs. He can be contacted at firstname.lastname@example.org or 020 8370 7710