Protect Your GP Partnership Against a Collapse
Posted On August 8, 2017 By mhauk
Our Medical Accountants Explain how to Protect Yourself Against a Collapse in Your GP Partnership
Despite the UK general practice narrative of working at scale through super partnerships, practice mergers and the like, some GPs continue to operate as single handers by choice, and happily so. Accountable to no-one but themselves, these GPs feel it is the perfect practice model for their particular circumstances.
Others, though, find themselves in the position of becoming a single hander through circumstance, rather than by design and may be unhappy with the outcome.
If you are in a practice with multiple partners, or about to join one, what can you do to protect yourself from becoming the ‘last man standing’?
What is the Problem?
If the contract is held by a single GP, rather than being spread across a number of partners, continuity of contract is one of the main issues. This is because the single partner takes on the burden of liability for anything adverse that may arise.
For example, all of the obligations under any property lease, including repairs and dilapidations, are shouldered by the single GP partner, alongside staff redundancy costs in the event of the practice failing or the GP wishing to give up the contract.
Spotting the Warning Signs
The problem arises through unplanned partnership resignations, perhaps over a short space of time.
A GP retiring at the normal retirement age is something that all practices can expect to deal with. However, if there has been no succession planning, or if your fellow partners leave the practice suddenly through ill health, for example, you could find yourself the only partner left.
As an example, we have seen a five-partner practice drop down to a single partner in the space of two years. There are more extreme examples out there too, involving a combination of factors including planned retirement, ill-health retirement, bankruptcy, suspension or the unexpected death of a partner. More recently, GP partners are deciding to throw in their lot due to stress or burnout.
Finding new partners to succeed an exiting partner is becoming more difficult, with a shrinking number of GPs willing to take on the financial responsibilities of partnership. The dwindling size of the GP workforce in general is only exacerbating the problem.
Check the Partnership Deed
The partnership deed is your first point of reference for the rules relating to partners leaving the practice.
The deed should set out any restrictions on partners leaving and define the circumstances by which a planned retirement is allowed.
It is common to see in a partnership deed that partners are not allowed to retire within six months of any other partner leaving the practice. This rule is not, however, enforceable with retirement through ill health, suspension, bankruptcy or, of course, death.
While these clauses can be useful to attempt to keep stability in a partnership, I have seen partners hand in their resignation and leave within six months of another exiting partner. This was allowed to happen because the continuing partners simply did not want to go through the hiatus of pursuing a legal route to make the partner stay, not least because it could have been unhealthy for the partnership to enforce the partner to stay under duress.
Planning is the Key
The highest risk of becoming the last man standing, naturally is when there are two partners running a practice.
If patient numbers support it, adding a further partner at this stage would reduce the risk of becoming the last partner standing.
If patient numbers do not support three full-time partners, then it may be that a part-time partner could be engaged and perhaps one or more of the existing GPs could drop sessions to accommodate this.
Sharing Partners Between Practices
If you are unable to recruit a third partner, another option for two-partner practices to consider is sharing a partner with a trusted local practice which can help with retirement, holiday cover and succession issues.
Take this example of a husband and wife GP partnership who planned to retire 12 months apart. On the first partner retiring, a GP from a nearby practice was brought in as a part-time partner, while keeping his existing practice. The second partner retired a year later and the practice is now controlled by the remaining ‘new’ partner. If you are considering this option, remember to update the partnership deed to reflect the changes.
Also worthy of consideration is incorporating service agreements between practices to share specialist skills and other resources. This would serve to take pressure off the remaining GP, particularly regarding administrative functions.
Working at Scale
Mergers, either small scale with neighbouring practices, or by joining up with several practices to create a super partnership to cover a wider geographical patch, are an option that many GPs are considering currently.
Many feel that to survive, practices will need to adapt to working at scale, rather than as isolated units. The number of mergers and super partnerships currently being formed is a direct result of funding being directed towards these new scaled models.
Ultimately, no partners can be forced to stay at a practice. However, by watching the warning signs and with careful planning, the risk of becoming the last man standing can be mitigated.
If you would like to discuss your GP partnership with us in more detail or if you have any questions, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Healthcare team.
This article was written by our member firm MHA MacIntyre Hudson and was first published in onmedica in June 2017 .