Locum vs Salaried vs Partner - Money

When GP's qualify, they have a possible decision to make. Do I try find a salaried post or do I locum (work ad hoc)? Nowadays with Covid19, a lot of GP work has shriveled up and there is a shortage of locum and salaried jobs, with news that some have had to go on benefits... however in this discussion I'll be assuming a pre-covid time when locum jobs were abundant and there was a shortage of GPs. I'll be mainly looking at these roles from a financial stand point in a GP surgery, there are numerous other pros and cons to these roles which are outside the scope of just the money however.

Locum

Locums are hired either on an hourly rate, 'sessional' rate or day rate. A session usually consists of a morning or an afternoon, but it can be also decided by the surgery. It is defined as 4 hours 10 minutes. Some may say a certain number of patients (e.g.18) with extra things such as prescriptions, visits and admin. This of course can be negotiated by both parties. Pay can also be something that can be negotiated. Very desperate practices are known to pay over £100/hour for locums though how much seems to depend on where in the country you are as well as time of year. This article by Pairoo showed the average hourly pay of locums varying by month, and this was based in London. A quick glance at the RCGP jobs page shows locum jobs being advertised at £850+ at time of writing. 

In terms of NHS pension, locums are entitled to this. To opt in, they will have to contribute a certain percentage of their gross wage from the practice, from 5% to 14.5%. They have to do this on a monthly basis. If there are long breaks in work, it can get quite confusing with annualisation and therefore moving you into the higher contribution bracket so I recommend looking at this article. The employer either adds their contribution (14.38%) on top of the gross pay or has negotiated that the gross pay includes their contribution. Below is are day rate examples assuming 12.5% employee contribution and someone who has opted out.

Another aspect of finances is expenses. A locum GP can expense usually more than what a salaried GP can. That might include mileage, home utilities, computers and mobile phones. This can save on their tax bill. Some locum GPs set up limited companies to further help their tax bill, this is something that salaried or partner GPs cannot do. However, with the recent rules with IR35 and dividend allowance, it likely isn't as tax-efficient as it once was.  

Salaried

A salaried role is the same as any employed job that you might have had previously whilst training. You negotiate a per session annual wage, which was roughly £10k per session annually, though it could vary from £9-11k depending on area and competition. From that, your employer will pay you PAYE, with your pension, tax, student loan (if applicable) and NI all being taken out before being given to you. Your employer will top up your pension contribution with their contribution (14.38%). Depending on the area, there may be 'Golden Handshakes' to commit to a post for a certain time, usually in more remote areas of the country. An annual GP earnings report is done by NHS England, which can be found below:

https://digital.nhs.uk/data-and-information/publications/statistical/gp-earnings-and-expenses-estimates/2017-18  

From there, you can find this table:

It is rare to have a salaried doctor work more than 8 sessions (4 days) in a week. You will likely be expected to look after a set of patient, do home visits, have admin, scripts and referrals to do. So you can do a lot more work as a salaried doctor compared to a locum doctor, with usually a reduced salary. However unlike a locum doctor, you have the benefit of paid annual leave, sick leave and maternity benefits. Employment rights are one of the best perks of being an employed salaried doctor. Plus it could be a stepping stone to becoming a partner. 

Partner

Of all the three, it is the most complicated in working out finances of this group. Partner's own the practice so take a drawing rather than a wage. Whilst it sounds like it would be similar, it is actually quite different. Usually drawings are calculated on the previous years financial results, and can vary from practice to practice in terms of whether tax / pension is included. Occasionally there can be end of year 'bonus's' for a good performing year, but equally, there can be reduction of drawings the next year to make up a poor financial year. 

Annual leave, sick leave, maternity leave and study leave is not mandatory for partners and is usually decided amongst the partners in the partnership agreement. Profits are usually shared amongst the partners, with the ratio determined by number of sessions, experience or any factors that they themselves decide. 

One big factor is whether partners own the building, as they can get a 'rent' from the NHS to carry out NHS services on the premises. This can be a good source of income (or at least pay off part of the mortgage/loan needed to buy in to the practice) and when it comes to leave or retire, if the property has gone up in value, that money will come back to you when a new partner buys in. 

Average partner takings does vary depending on area, whether it is a dispensing practice, what kind of contract it holds and various other factors. From the earnings report, you can see the average earnings of GP partners in the country and you can find the following table of partner earnings:

What is interesting is the gender disparity in both the salaried and partner roles. Why do you think that is the case?

Financial comparison

If we compare all 3, we'll assume that the doctor is male (seeing as they seem to earn more) and gross income. We'll use the earnings report as the comparison, of a full time (37.5hours) male doctor. Also will assume that the locum takes holidays (7 weeks) and has agreed a sessional rate of £300 (which is very generous) and with pension added on top. I have not included pension calculations as that can make it quite complicated, but as its a percentage of pay, it will be equal amongst the roles.

Obviously there is more to a role than just money, but I hope that helps people look at the role from a purely financial view. 

If you found this useful, please feel free to share below.