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17 March 2017

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Preparing for a new GP partner

Keith Taylor explains how a practice manager can ensure that taking on a new GP partner is simple and easy for the whole team

New partners in a GP practice will be investing substantial time, money and effort in creating a potentially lifelong relationship. But introducing a new partner can be a hectic time for practices as they juggle administration and try to maintain patient continuity. As a practice manager, how can you help to make the transition seamless?

Managing accounts

The new GP partner will most probably be self-employed. Salaried partners are very rare as there is no real benefit to this. This means registering with HMRC for self-employment and Class 2 national insurance contributions. This is completed using form CWF1 – which your accountant will provide. 

It is recommended to have a specialist medical accountant to assist with the transition and, indeed, to oversee practice finances in the long term. The incoming partner can decide whether to use the existing practice accountant or appoint their own. Before accepting the position, they should have a meeting with their accountant to discuss the current position of the practice and their financial responsibilities as outlined in the partnership deed. The practice is a business and any new partner will want to ensure their investment is worthwhile. It’s important to ensure the lines of communication are good so that financial information can be easily transferred.

The new partner will have an interest in the workings of the practice. This might be new to them as they may have previously worked as a salaried GP or GP locum. Now they will have to work as an owner of the business. While this might sound straightforward, it can take a period of adjustment while they learn their new role. Although the practice manager will do much of the daily work needed to run the practice smoothly, the partners must oversee the management functions. 

The practice manager’s role 

The practice manager should be patient and forthcoming with any information the new partner might need to assess the practice before accepting the partnership, and afterwards when they are in post. This includes being open and transparent about the management and finances. 

It is worth anticipating what the new partner might ask and having it prepared. If your practice is running efficiently this shouldn’t be hard to do, as your paperwork should be up to date and easily accessible. If not, you can get the information from your accountant.

This includes:

  • Having an up-to-date business plan.
  • Knowing the overall profitability of the practice.
  • Being able to compare the profitability of previous financial years.
  • Having information on the day-to-day cashflow of the practice.
  • Knowing where the income of the practice is coming from.

Understanding accounts 

A new GP partner should have a working knowledge of the partnership annual accounts in order to help guide the management of the practice. The key elements of the annual accounts are the balance sheet, the income and expenditure account (often referred to as the profit and loss account), and the distribution of the net income (profit) among the partners.

Whenever a partner joins or leaves it is vital to get an up-to-date valuation of the premises to get a true representation of its worth. Your valuation report will also include information on how fit for purpose the building is and whether the income on any leases is correct.

The new partner must also know how the ownership is structured and how this affects their income and tax liability. In some cases, practice partners have set up a separate company that acts as a property-owning vehicle to lease the premises to the practice. In this instance, any lease should be healthcare focused and tie in with the Doctors’ Rent and Rates Scheme.

Dissolution agreement 

Every practice with GP partners should have a partnership agreement. Without a formal agreement the legalities of the partnership can come under question, potentially leading to instability if any of the partners decide to retire or move elsewhere. 

A partnership agreement will usually include key issues like automatic continuation, sickness and leave, ownership of the premises, voting and meeting, suspension and retirement. Any uncertainties should be clarified with independent advice.

There should be a dissolution clause – this outlines a designated course of action if anything should go wrong so that all parties know where they stand and the practice can continue to operate as usual.

Having an up-to-date partnership agreement also demonstrates the practice’s efficiency to the incoming partner and creates a positive impression.

The buy-in agreement 

One of the biggest financial aspects of introducing a new partner is the buy-in. All practices work in different ways so it is essential for the incoming partner to know whether they will be required to buy in with a lump sum on entering, or whether the buy-in will take place over a number of years by being subtracted from monthly drawings.

The buy-in of a new partner should be dealt with in a way that does not cause undue financial hardship for either party. The mechanism should be outlined clearly in the partnership agreement.

Ordinarily, a GP partner would also buy into the surgery premises, but there are instances where they can operate as a partner without being a property owner. Instead they will be granted a licence to occupy the premises while they remain a partner, but not participate in notional rent or the practice mortgage. Your specialist accountant will be able to give you a number of options based on the practice finances so that all parties can come to a mutually beneficial solution.

It is also beneficial for the new GP partner to have an indication of how much they can expect to draw on a monthly basis, to set their expectations and plan for future tax liabilities. 

Simply put, drawings are payments on account of annual earnings. The starting point must always be the preparation of a profit forecast. As this is calculated on the overall profitability of the practice and can fluctuate each month with the practice’s finances, the figure may not be precise. The accountant can help you prepare a realistic estimate.

Some practices retain income tax and national insurance and pay the liabilities on behalf of the partners, while other practices pay drawings gross and expect the individual partner to meet their own tax liabilities. The practice policy should be clearly outlined to the incoming partner and as a practice manager this may be part of your remit.

Who should I notify?

The NHS local area team and the NHS Pensions Agency must be notified of the new appointment. The new partner should be put on the correct performers list and the local area team should recognise them as a party to the practice GMS, PMS or APMS contract. In this way, contract payments will be paid to the correct partnership and superannuation deductions can be applied to the correct partners. 

The NHS Pensions Agency should be notified so it can place the new partner in the GP section of the NHS Pension Scheme and transfer funds they have built up in a previous section. 

Human resources tasks need to be completed 

A number of human resources tasks should be completed to welcome the new recruit: 

  • Inform the staff of the upcoming changes and allow them to meet the new partner prior to their appointment.
  • Inform relevant suppliers and insurers of the partnership change.
  • Change the practice stationery and signs.
  • Inform patients of the change – either by direct mail, notices around the practice, or on the practice website.

Housekeeping tasks

Finally, a few general housekeeping tasks need to be completed. Outlining a statement of intent on behalf of the new partner is a good way to introduce the changes and let staff and patients know about the new partner and what they stand for.

Issues such as highlighting the importance of patient forums, placing the patient at the centre of services and establishing appointment protocols and best practice are all things that could feature. Content on the practice website or newsletter can be updated.

The first people to be officially informed should be the staff as they will need to know how to communicate this externally and what impact it will have on patients. 

Usually the best way of achieving this is with a formal question and answer session. This will allow employees to meet the new partner in person and establish how it will affect their working day. 

Having this set up prior to the new partner’s arrival will show that you’re excited to welcome them into the practice and are considerate enough to have the essentials in place in anticipation of their new role.