Workforce/HR/Employment law Policies and Procedures Premises

GP super-partnerships – the legal considerations

Joining a super-partnership can present a number of legal headaches for GPs, as well as benefits. Lawyer Alexander Hall answers key questions to help you avoid the pitfalls and make it a success.

What is a GP super-partnership?

It’s a legal partnership made up of a number of individual practices that have merged together to form one single partnership. The degree of autonomy retained by your practice and how things like profits are shared will depend on the business model adopted. 

What are the benefits?

The aggregate patient list will be much larger than those of the individual practices, which offers a number of advantages. A multi-site practice with a large list can apply for extra funding if it meets certain criteria and can deliver a wider range of services to patients.

The larger group can also share the costs of administrative and regulatory functions and obligations. Savings can be made by avoiding duplication.

Who is financially liable if things go wrong?

In law, every partner in a partnership is financially responsible for the liabilities of the partnership as a whole. Doctors in an individual practice only have to keep an eye on each other and their own books. But in a super-partnership you could suffer financially – and indeed benefit – from the activities of the other partners in the larger group.

It is therefore essential that you carry out some basic due diligence and fact–finding in relation to the financial health and activities of the other surgeries before entering into a super-partnership.

You must insist that a partnership agreement is signed by all the partners. It should contain cross-indemnities whereby each partner contractually promises to financially underwrite any expenses or losses incurred due to their activities – or misdemeanours.

Should we include our own practice property?

You could transfer your property into the super-partnership so that it becomes an asset of the larger group. That way, you will still be occupying the premises (as a partner in the partnership) for the purposes of your business. This may be the best way to ensure that relief from certain taxes will continue to remain available to you.

Bear in mind that when property is transferred, the super-partnership may become liable for Stamp Duty Land Tax (SDLT), unless certain exemptions or reliefs apply. The super-partnership should therefore seek specialist tax advice.

To make sure you retain legal ownership, the partnership agreement can record that you own 100% of the partnership capital connected with those freehold premises. The agreement should also state that if and when you leave the partnership, you can withdraw that capital and take the premises back out of the group.

If you rent your premises and have a standard lease, it may prohibit you from sharing occupation or sub-letting without the landlord’s consent.

The new super-partnership will need the formal right to occupy the building. The landlord will need to be approached for consent, which should just be a formality, though failure to do so would be a breach of the lease, which could have serious implications.

What about the existing partnership agreements? 

Each individual partnership will have agreed specific terms over the years which will be set out in separate partnership agreements.

For example, one partnership agreement may state that a particular partner can park his car in the space nearest to the front door, because he has a bad back. Doctors in another practice may have all agreed to give at least 12 months’ notice if they want to retire.

But things can get more complicated. What if, for example, the most recent partner to join had to borrow money from a bank to buy into the group? The bank may have insisted on taking a legal charge over the freehold surgery premises and this had to be signed by the other partners.

As a result, the newest partner may have agreed an indemnity in the surgery partnership agreement, promising to meet any payments due to the bank.

The partners in the existing partnerships may not want to change their minds about such things. But having to include such detail in the new super-partnership agreement would be a tedious exercise.

The good news is that each partnership agreement can continue as before, but as a branch agreement only. This means they would no longer be ‘partnership agreements’ at all. Instead they would contain the rules and policies agreed between those partners at that branch only. 

The new super-partnership agreement should state that such agreements remain in force and apply only to the branch partners, but will not bind any of the other partners. And where the documents conflict or contradict each other, then the new super-partnership agreement will take precedence.

Will we lose our autonomy as a practice?

No. Subject to agreeing on some very important matters such as group branding, for example, each branch can continue running things as they see fit. The partners could appoint an executive board to consider important group matters if they wish. That board can assist branches that are struggling and it could be agreed that in very serious circumstances, the board could step in and take over.

Will we have to share our profits?

It can be agreed in the super-partnership agreement that each branch retains its own core income and profits, and that any additional income generated by the super-partnership as a result of its status as a larger group – and the benefits that arise from that – can be used first to meet central super-partnership expenses, with any excess money distributed equally amongst the partners.

Will the super-partnership need to apply for CQC registration?

Yes. It will be a new legal entity that will carry on regulated activities so registration is required.

Will consent from the CCG be needed?

Yes – and they may want the agreements that the individual partnerships hold with the CCG to be varied so that they are held by more partners for the wider super-partnership. Whilst the arrangements are likely to be viewed positively, the CCG may want a patient survey carried out.

What if we join and things don’t work out?

Make sure that your super-partnership agreement contains provisions that allow your branch to exit the super-partnership which are not too onerous. You will need to give plenty of notice so that the partnership can plan and prepare for the departure.

Alexander Hall is a partner in Meade King’s company and commercial law team who advises GPs on super-partnership agreements and other commercial and regulatory matters

Guide URL:
XYou have free access remaining to read.

You have reached your limit of free access to articles.

Please login to access all guides.

Or, please register for a free trial to access all of the guides and unlock all features.