Succession Planning for GP Practices

GP Practices are busier than ever, particularly during the winter months. While the pressures of day-to-day business are felt keenly, GP Practices are also facing up to what the future may look like. GP Practices should consider succession planning as a key business protection measure. By succession planning, we mean considering at an early stage how future business risks can be mitigated now, or in the medium term, to secure the sustainability and future of your business. 

GP Practices should bear in mind the following non-exhaustive list of questions when considering succession planning:

• Who should own the building (where the building is owned) in the future? 
• Who will be named on the Lease when a GP Partner retires? 
• Who will be around to manage the business of the GP Practice in the coming years?
• Will there be adequate funds available to pay out exiting Partners when they come to retire (or resign early)?

While considering these issues, GP Practices should also bear in mind how these questions should be addressed, and this will invariably look different for every GP Practice but may involve:

• Consider your Partnership Agreement and how this can be tailored to make the Partnership a more stable investment for new Partners.
• Consider LLP incorporation to de-risk both the business and the property investment for new Partners.
• Consider a sale and leaseback of the property to allow for property-owning partners to obtain cash benefit for their investment in the property and remove property ownership as a concern for new Partners.
• Focus on building skills within your salaried GP workforce i.e. can anyone be identified at this stage who would be suitable for Partnership and investment by way of education and training be provided to ensure that they develop business management skills?
• Sound recruitment (where possible to do so).
• Consider whether there are any local practices where merging may be of mutual benefit.
• Ensuring that where the property is owned, that the property is valued using a suitable (and consistently applied) methodology to avoid negative equity.
• Ensuring your lease is capable of being taken over by the Health Board when government policy is implemented to do so (i.e. by ensuring it contains suitable provisions in line with the National Code of Practice for GP Premises).

When should a GP Practice be considering succession?

Ideally, a GP Practice should begin succession planning at an early stage and GP Practices should be looking at a time frame of the next 5-10 years on a regular basis.  This will be particularly relevant for those GP Partners where they are approaching natural retirement age, but should also apply to nurturing new talent where it is possible to do so. 

What can I do immediately?

The key step that any GP Practice should take though is to ensure that their Partnership Agreement is fit for purpose, including ensuring it is reviewed at least every five years.  We have considered the essentials for Partnership Agreements here but GP Practices should be conscious of ‘last person standing’ provisions but also ensuring that the business will be attractive to new Partners (i.e. be offering a suitable structure for them to be involved in). 

The GP Practice can also look now at identifying future Partners within their salaried GP pool (where available).