We have read Dr Nigel Watson's 'GP Partnership Review' with great interest.
Of particular interest from the legal point of view is Dr Watson's recommendation that GPs should be able to operate as limited liability partnerships (LLPs), thereby giving them the benefit of limited liability. This could help allay the fears of newer partners, many of whom are concerned that the fact they have personal liability means that they could "lose their house" if the partnership collapses. However, our view is that it is a bit more complicated than that!
Currently LLPs cannot hold GMS or PMS contracts, and can't participate in the NHS pension scheme - so using LLPs for running GP practices is a non-starter. Dr Watson's recommendation is that this should change - the legislation should be amended to allow practices to operate as LLPs. That seems a sensible suggestion to us. It isn't a panacea though - many other things would have to change before operating as LLPs would make any real difference, as we set out below.
In most cases, partners worrying about taking on personal risk when joining a practice are (or should be) looking at what happens if the practice collapses while they own it. At present, the two main costs arising from a practice collapse are:
The problem is that under current conditions, the premises costs - which are usually the more significant of the two - would be very unlikely to be affected by moving into an LLP, because the bank or the landlord would almost always insist that the partners gave personal guarantees before doing so - so the partners would still have personal liability to the bank/landlord. When looked at this way, arguably the only ones who would really benefit from practices moving into LLPs would be the professional advisers who helped them to do it.
But as we say above - it's a bit more complicated than that, and there are two key reasons why it seems to us that allowing practices to use LLPs would nonetheless be beneficial in the longer term: