Should new GPs be concerned about the risks of becoming a partner?
Healthcare lawyer and Partner at VWV, Oliver Pool, explains that while it depends on the practice, the risk run by most GP partners is really very low.
A recent Lloyds Bank Healthcare Confidence Index says that 69% of GPs don’t want to become partners , because of concerns about personal financial losses.
Are they right? It depends on the practice of course, but for most GP practices these days the risks are in fact very close to zero, and the worst case scenario (if it arose) would leave no one out of pocket.
New partners may not realise how low the risks are because all they hear, as outsiders, is concerns from those in the profession about personal risk, and warnings from the likes of lawyers like me about the bogeyman of 'joint and several liability'. And then of course there are scare stories from the press which tend to paint things in as worrying a light as possible for the sake of clicks.
But is it really so bad? So long as a practice continues, the risks associated with personal liability are almost nil - income is guaranteed, the rent/mortgage is paid by the state, and the practice is insured by the Crown. But it's when the practice ends that things can go wrong. Let's look at the worst case scenario. If you hand back your GMS or PMS contract, and if the patient list is dispersed, then there are two main types of cost on winding up:
- First, employment costs. The practice staff are redundant, and have to be given redundancy payments; and
- Secondly, premises costs.
- For leasehold practices, the partners have to pay the rent (and other premises costs) for the remainder of the term, including putting the building back in good repair - without rental reimbursement to cover it. They are personally liable for this.
- For those who own a freehold building, the value is usually much greater because it is occupied by a GP practice. Once it is vacated the value drops. It could well drop to less than the value of any loan secured against it, leaving the owners in negative equity.
However these two types of cost only arise when there is a list dispersal - and list dispersals are no small matter. How likely is this to happen in your case? Consider your practice and ask yourself this: If you gave notice to hand back the contract tomorrow, would the commissioner be able to disperse your patient list? Or would they - as a matter of practicality - have to use your premises for the ongoing delivery of primary care? If it's the latter then your position is probably fairly secure.
It is only if your list is dispersed that the partners suffer the employment and premises costs. If the building continues to be used (by someone else) for serving the patient list, then your staff transfer to that new provider by TUPE, which means they aren't redundant, so there are no redundancy costs. And the new provider occupies your building, which means the capital value should remain intact and/or there is someone to pay the rent for some/all of the remaining term. If so, then that leaves very few other winding up costs for the partners to bear.
There is no getting away from the fact that list dispersals do happen, and staff and premises costs can arise. Indeed that has happened on a number of occasions and many people have experience of it. But as time goes on, dispersals get less and less likely. First, the larger the list, the harder it is for a commissioner to disperse without harming other practices - so as practices get larger, the less likely list dispersals becomes. Secondly, dispersals cause an enormous, and often very costly, headache for commissioners too - so the more often a commissioner has had to do a dispersal, the less likely they are to want to do it again.
As a lawyer, I can't give guarantees! For those with a small patient lists, and/or those who occupy old buildings which aren't compliant and which the commissioner may not want to use long-term, there could well be costs involved from handing back the GMS or PMS contract. But the large majority of practices will find their buildings are needed and are necessary - and for those practices, the risk is really quite low. For those practices, if the worst comes to the worst and you really cannot operate the contract any longer, you can serve notice to hand back the contract, and 6 months later (six admittedly-stressful months) your responsibility will be at an end. As worst case scenarios go, it's not a bad one.
There may be plenty of other good reasons not to become a partner. One may prefer the certainty that goes with employment. One may not want the added responsibility or pressure, one may not be interested in the additional status or money that tends to go with it - or the additional money may not be enough! But in my personal view, it just does not stack up to say that you will never become a GP partner simply because of personal liability. Because there are some practices out there where the personal risk the partners are taking is very close to nil.
We all know that there are problems in general practice, and we have to be frank about those issues. But equally, there are areas where the negatives have been overemphasised. To my mind, new GPs saying they can't risk personal liability is the sort of negative that needs to be addressed and explained. If you are in a practice where (based on the above reasoning) the risk is quite low, then make sure you shout about that, and use it as a selling point to attract new recruits.