Paid in full?

Under the new General Dental Services (GDS) contract, payments to dentists should become much simpler because the monthly amount will be calculated simply by dividing the annual contract value by 12.

In April, all non-PDS, NHS dentists will receive their normal payment under the old GDS contract and it is likely that there will also be some run-off payments into May and June.

The first payment under the new GDS contract will be made on 2 May, with subsequent payments on the first working day of each month. Associates can therefore expect to receive an extra payment in early May assettlement of their share of the first new GDS payment.

At Humphrey and Co, we are suggesting that payments to associates be deferred to protect both the principal and the associate. The annual contract is based on each dentist achieving their target Units of Dental Activity (UDAs).

Obviously UDAs will not be performed evenly each month – some dentists will be ahead of their target, others will be behind. Were associates to leave the practice without fulfilling their contract or fail to reach their annual UDA target, there would be financial implications, because once an associate has left it would be very hard to recover money from them.

So we are advising our clients to be cautious. Our concerns are based on the importance of principals and associates having a good understanding – making sure both sides are happy with the payment system is vital to the working relationship. We are therefore suggesting two possible methods of paying associates.

By far the simplest method – and probably my preferred option – is for principals to continue to pay associates in arrears. This would entail a two-step process:

• Pay associates at the end of April based on their March FP17s as usual

• At the end of May, pay associates their portion of their new contract value (after their usual deductions) received on 2 May plus their portion of any run-off payments received in May.

This method means associate payments will continue to be made about a month in arrears, leaving funds in hand to correct problems if the contract is not fulfilled.

Practices with good payment systems could pay associates on the UDAs they carry out. The thing to avoid here though is overpaying your associates – it’s good for their bank balance but not yours. You are unlikely to be paid for over-achieving the UDA target and you do not want to encourage your associate to achieve the annual target in only six months!

If you use this method we suggest you place a limit on the monthly UDAs to be paid. Any surplus can be carried forward and paid in a month when UDAs are low. Whichever method you choose, make sure it is covered in the associate’s contract and that everyone concerned, including the practice manager, is clear about the arrangement. Making sure the payment system is fair to all concerned is an important step in generating the positive working environment, which will be essential in the coming months.

Bob McTear is a senior partner at accountancy firm Humphrey and Co and a member of the National Association of Specialist Dental Accountants (NASDA). To find out more about Humphrey and Co or NASDA, go to www.nasda.org.uk.

Leave a Reply

Your email address will not be published. Required fields are marked *

You Might Also Like