Partnerships are the primary legal structure for GPs, general practitioners. This type of partnership entails various legal and financial responsibilities, including profit sharing, decision making, and liability. It’s crucial for those involved or considering forming a GP partnership to grasp these elements thoroughly to ensure the smooth running of the business and to mitigate potential risks.
GP Partnerships: The details
Buying into a GP partnership as a medical professional and improving your practice from within offers potentially lucrative opportunities to not only benefit your own career – but also the wider population. To do this, you acquire an ownership stake in the business itself. In the UK, that means applying for a position – not all practices will ask partners to buy in, but many that own their premises will.
When taking on the role, you’ll receive a split of shares to give you an ownership stake. Depending on how the business is structured, this may be a 50/50 split between the existing owner and yourself, or you’ll acquire fewer shares and join a wider team of partners.
You’ll need to apply for the position like a traditional salaried, though the circumstances around the application will determine your approach. For example, many GPs seek to become partners at a practice they already work at, which will require a more personalised approach.
When you apply, you’ll need to demonstrate:
- Your clinical skills and experience
- Knowledge of the wider primary care environment and healthcare sector as a whole
- Any managerial or leadership experience you hold
- Understanding of quality assurance, governance and regulatory compliance factors
Having a GP Partnership Agreement is vital to all GP practices set up as a partnership – without a Partnership Agreement in place, the Partnership Act 1890 sets the rules. This situation is not what you want in a modern business!
Instead, you’ll want a GP partnership agreement or partnership deed which is tailored to your individual practice. It’ll need to cover:
- Partners
- Capital
- Decision making
- Property ownership
- Duties
- Bank/Finance/Accounts
- Indemnity
- Holidays
- Cars
- Maternity/Paternity Leave
- Expulsion
- Payments to Outgoing Partners
- Restrictions
- Confidentiality
And much more besides – tailored of course to your GP Practice and the NHS environment you work in.
The role of a business solicitor in forming GP partnerships
Documentation and advice
Consulting with an experienced business solicitor can be invaluable in setting up a GP partnership. For instance, I can support you to draft a comprehensive Partnership Agreement that covers all critical aspects of the partnership. This includes elements such as financial contributions and profit sharing to decision-making processes and dispute resolution. I can also advise on compliance with UK laws and regulations, registration with HMRC, and the implications of unlimited liability. It’s also crucial to receive tailored guidance on protecting personal assets and planning for the partnership’s future, including adding new partners or dissolution.
Valuing the practice
Prior to investing in a partnership, you must understand its actual value. It’s unwise to solely rely on the valuations provided by current partners; instead, conducting your own thorough due diligence is necessary to determine a fair and objective value.
This due diligence process should include an examination of the practice’s income tax returns and accounting records, such as profit and loss statements, as well as an evaluation of the physical premises and any land owned by the practice, among other factors.
Given that buying into the practice’s goodwill is typically not an option, the most significant valuation often derives from the premises’ value, which is what a partner usually invests in. Should you have any reservations, seeking advice from a property expert is advisable.
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