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Should I worry about being trapped in a sinking practice?



I am six months into a partnership ‘trial period’. If I decide to stay, the practice deeds say my resignation could be trumped by that of a more senior doctor, so I could effectively be trapped in a sinking practice. What are the financial implications of being the last partner standing? 

Dr Fiona Cornish: Remember you have legal obligations from day one

A new partner signs a partnership agreement before starting the ‘mutual assessment’ period. Even though there may be a termination period of as little as one month, on either side, it is important to remember that this is a legal partnership from day one.

An incoming partner, once in their post, is entitled to see the practice accounts, so don’t be squeamish about asserting this. Ideally, try to have a discussion with all existing partners about their intentions for retirement, so that planning is in place and the likelihood of shocks is minimised.

If a partner retires, leaving one, then the outgoing partner will need to be paid out their share of assets. It is very unlikely that the new partner will buy into the property during the mutual assessment period, so only the share of the partnership capital will have to be paid. This includes fixtures and fittings, drug stock and equipment.

If you do decide to stay in the practice and this happens, you will need to contact NHS England to inform them of the situation.

There is a statutory period of three months’ notice for retirement of an individual, and six months’ notice for a practice dissolution, under the GMS contract, so a sudden retirement may be in breach of contract obligations, and sanctions may be imposed. There are similar provisions for PMS.

The GPC produced a helpful document, Partnership Agreements, Guidance for GPs, in 2014, which offers advice on many thorny issues.1 This is essential reading, however perfect you think your partnership is.

Dr Fiona Cornish is a GP in Cambridge and a former president of the Medical Women’s Federatio

Dr John Allingham: Sign a partnership deed on the first day of practice

To avoid the terrifying financial implications of being the last partner standing, any partner joining on a ‘mutual assessment’ period (usually six or 12 months) should agree and sign a partnership deed on or before the first day in the practice. A reasonable agreement will probably state that there must be a period between resignations, which is often six months, but may be three. Retirements should be dealt with on a first-come, first-served basis.

During the mutual assessment period, the option of walking at the end should ‘trump’ the senior partner’s resignation and in today’s climate a new partnership should be easy to find.

The GMS regulations do not make it easy to become the sole contract holder in a situation like this. The last man standing has to accept the nomination from the leaving doctor and NHS England needs to approve it.

Otherwise, difficulties recruiting will make it necessary to run on locums, leaving all the practice and a lot of the clinical admin with the singlehanded contract holder. Locum costs may prove unaffordable and returning the contract to NHS England may be the only way out. In this scenario the GP is personally liable for redundancy payments. They may be left with the building to dispose of, and will find a lot of the capital account is made up of furniture and goods, the value of which is difficult to work out.

Dr John Allingham is medical secretary at Kent LMC

Phil Harnby: Take legal advice on the wording of the current deed

In the first instance, you should ask to see full details of the practice’s financial records and future expectations, so you can judge whether there are any points that need clarification.

The financial implications of finding yourself in this position are so severe that you should take preventive measures now. Any probationary period is a two-way street – you’re not only there to prove yourself, but also to find out if the practice is the right one for you.

Given the concerns you’re expressing, it might be that you’ve already decided subconsciously that this isn’t the practice for you. But if you do see your future there, and your partners want you to sign up, there are things you can do to give you greater peace of mind.

Take legal advice on the wording of the existing practice deed – now may be an opportune moment to update it with a medical lawyer. There may be other elements of the deed that make you uncomfortable and you must ensure it meets your needs as well as those of the other partners. There’s no reason why you can’t suggest the deed is brought up to date as part of you completing your trial, especially as reviewing it is good practice anyway.

For instance, maternity/paternity leave is an item that is commonly missing from partnership agreements. There should also be a last man standing clause: a good agreement would not allow a number of partners to retire at once. And if a practice owns its premises, provisions for how the property is to be dealt with should also be included in the agreement.

Phil Harnby is manager at RMT Healthcare, a member of the Association of Independent Specialist Medical Accountants