Loans for Doctors



Only a year ago, the Guardian newspaper reported that as many as 800 GP surgeries were financially “unsustainable” and that nearly 300 of a surveyed 2,830 surgeries revealed that they may have to close because of those financial difficulties.

The response to date has been an extra £2.4 billion to be allocated from NHS budgets to struggling surgeries, reported the BBC on the 21st of April 2017.

The essential and precarious balancing act between the demands on GP surgeries and the funds available to keep them running lies at the heart of the GP Contract for 2017, which was negotiated by the British Medical Association (BMA), and published on the 23rd of March 2017.

Professional indemnity insurance for doctors

One financial burden which affects doctors in particular is the high cost of professional indemnity insurance. In some practices, individual doctors are responsible for paying for their own indemnity insurance, but in many, it is an essential expense reimbursed or paid for by the practice itself. The 2017 Contract therefore makes some NHS provision available to support surgeries in this expenditure.

Although other medical professionals working in the NHS have their own Clinical Negligence Scheme for Trusts (CNST) scheme, GPs are excluded and need to make private arrangements for their individual cover.

Professional indemnity insurance is not a matter of choice for GPs since the NHS requires all of its practitioners to have a minimum of £10 million cover. Moreover, the cost of premiums for that indemnity is steadily increasing, says the BMA, not least because of the large amounts awarded in medical negligence claims – it is not unusual for a single claim to amount to more than £5 million.

Funding for GPs

The 2017 Contract details those areas in which GPs are expected to perform and the budgetary constraints under which they are struggling to operate. In this, it echoes a detailed paper also published by the BMA in February about the available sources of funding for GP practices.

This makes clear that there are no fewer than 13 different schemes which may provide funding for various aspects of a surgery’s work. A further six potential funding streams” may be available in the future, says the BMA. But these current and future sources of income support are all subject to a competitive bidding process or eligibility criteria.

The sheer number of different sources is also likely to make it extremely confusing and time-consuming for the already over-stretched management of any practice to navigate with any degree of success.

Private funding

In the spate of discussions about NHS funding for GPs, one important aspect has been notably absent – and that is the role played by private funding of GPs surgeries.

Just as few doctors may depend for their income entirely on NHS contracts, but also conduct a private practice, so, too is the availability of private funding critical to the financial viability of any GP practice.

Secured loans

The need for funds might traditionally take the form of long-term borrowing – especially for the acquisition of the surgery premises themselves, through the long-established method of raising a mortgage.

Whether it is by way of a mortgage or other form of borrowing, the drawback with a secured loan is that it requires a charge on the property or other assets owned by the surgery or its partner GPs.

The commitment to repay a secured loan, typically spread over tens of years, imposes its own financial burden on the practice and, over that time, represents a significant sum paid in interest charges alone.

Unsecured loans

Unsecured loans for doctors, on the other hand, involve no such risk of security against practice or personal assets and may be repaid over a significantly shorter period of time – typically, between three months and five years.

An unsecured loan such as this, allows your practice to choose precisely how much needs to be borrowed and budgeting becomes simplicity itself since interest rates are fixed and you are repaying the same amount each month.

The way you apply any fund raised in this way is, of course, a matter for you and the practice to decide. They have been shown to be useful, however, in the acquisition of new assets, apparatus or medical equipment, the commissioning of new IT systems and the associated software, a solution to meeting tax and VAT liabilities and as a way of ensuring that the cost of professional indemnity insurance premiums is met for the practice itself and individual doctors.

An unsecured fixed rate practice loan, therefore, may help you to meet some of the pressing needs for increased working capital for your surgery.