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Why partnerships are still attractive

Salaried service is an increasingly popular option but partnerships still have a lot to offer GPs, even after the

NHS reforms and new contract – Dr Jim Sherifi looks at

the relevance of the GP partnership post April 1

Historically general practice moved from single practitioner to group practices in the early 1960s. These were predominantly profit-sharing and equity partnerships. Partners invested in a share and received dividends proportional to that investment. When a partner left or retired, they would realise that investment by selling it to an incoming replacement.

This business model, adopted by most practices in the UK, continued unchallenged until PMS, which provided practices with a global budget, giving them freedom of expenditure, enabling them to recruit salaried associates.

The high uptake of such positions reflected that new recruits have different attitudes and are less willing to commit to one practice for life. Another advantage for salaried doctors, depending on their terms of employment, was that they could opt out of one of the most onerous aspects of general practice, out-of-hours work.

If GP partnerships are to continue with the new contract, both these points need to be addressed by practices.

The value of partnership traditionally lay in being an independent contactor, which brought tax advantages and a chance to invest in premises with minimal outlay. These benefits have not changed with the new contract, but they may not be obvious to a potential partner.

lAn independent contractor can still seek work and derive income from sources outside the NHS contract.

lSharing practice income among partners leads to higher individual income than the equivalent salary for an associate GP.

lInvesting in premises continues to provide excellent medium- to long-term returns for minimal outlay. It may initially seem to be an unnecessary financial burden at a time when it is least affordable but arrangements under cost-rent or notional rent, both of which will continue, should ensure the actual cost is minimal.

lSchedule D taxation, as an independent contractor, allows for the offsetting of costs, including capital, such as motoring and telephone, used in the business.

The new contract clearly states that it aims to 'help GPs achieve a better work/life balance'. Those of an entrepreneurial nature may feel this is best realised by being at the hub of the practice, involved in all decision making; this can only be gained through partnership. In addition, opting out of out-of-hours care has removed one of the cornerstones that made a salaried role so attractive.

Although partnership continues to be relevant and advantageous, the new contract means practices are less likely to want more equity partners. Minimum practice income guarantee (MPIG), the Carr-Hill formula and global sum and novel arrangements by PCOs over practice premises mean that money follows the patient, not the doctor. The basic practice allowance has disappeared, taking with it the financial logic for appointing a GP principal.

Novel arrangements for buying existing surgery premises, either directly by PCO or indirectly by purchase and lease businesses, have removed the need for an incoming partner to buy-out a retiring one. Ultimately, profits from the global sum provide a healthier income when divided among fewer partners.

All in all, the case for partnership remains stronger than ever, although primary care is likely to continue to move towards a salaried service.

Jim Sherifi is a GP in Sudbury, Suffolk

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