There is currently much discussion about whether the partnership model for General Practice is still fit for purpose. It is clear that the model is under severe strain, and the Secretary of State has commissioned a review into how it might need to evolve. In this blog we draw on our experience of working with over 1,000 practices to offer our thoughts on the future of the partnership model.
Background & context
In common with other professionals like lawyers and accountants, GPs have traditionally organised their businesses as either sole practitioners or partnerships. The partnership model for General Practice long predates the NHS, and indeed the NHS Act 1948 had surprisingly little impact on the business model as GPs retained their independent contractor status. The GP Partnership model has served the profession well over the years, but it is interesting to compare GP practices with what has happened in the law and accountancy. Most other professionals still organise themselves as partnerships, but they are typically managed very differently to GP partnerships.
Partnerships are simply one of many ways of running a business. Most businesses are actually run as limited liability companies, so why is this much less common in the profession? The answer is that Limited Companies are designed to separate out the ownership from the management, and to provide more flexible options for financing. This is very useful in capital-intensive businesses that require multiple layers of management. The professions, by contrast, sell the skills of highly trained people who are largely able to self manage. Such businesses typically require only low levels of finance, which can be easily secured through mortgages and bank loans. There is therefore no need to separate ownership and capital from management.
Benefits of Partnerships
Partnerships, by their very nature, pool the risks of the business between the partners. This shared risk-taking strongly encourages collaboration. All the professions encourage members to understand their own limitations, and to seek the advice of colleagues when they come across something new or unexpected. This requires the kind of open, trusting relationship which forms naturally in a partnership, but which can be more difficult to forge in a hierarchical employer/employee relationship. This in turn creates an environment where tacit skills are easily transferred. These are the kind of human skills which will never be mastered by Artificial Intelligence, but which form the bedrock of what GPs and other generalist professionals do. Investment in the partnership encourages a long-term commitment, which is of course well aligned to ensuring continuity of patient care. The model is also very flexible: there are very few laws about running partnerships so you are largely free to contract with your partners about how you want to run things, and to change this agreement over time as the needs of the business evolve.
Problems with Partnerships
Unlimited liability is one of the most obvious problems with traditional partnerships. It used to be felt that limiting liability was inappropriate for professionals as it might encourage them to act recklessly. However, this idea evolved as society became more litigious, and limited liability partnerships (LLPs) have been permitted since 2000. Most accountants and solicitors have since become LLPs, but this structure is not currently allowed for NHS GP partnerships. Finance has also become an issue as partnerships take on bigger risks, particularly in the form of long-term leases or larger freeholds. Small partnerships risk becoming unviable when there is concern about becoming ‘the last man standing’ with large financial obligations – particularly when these are unlimited and there are recruitment issues. Lastly, there is a generational question over whether younger professionals actually want to manage themselves anymore, or whether they would rather be ‘managed’ as an employee or locum.
The benefits of the partnership model in a generalist profession are, in our opinion, significant. In many ways they underpin the key cultural values of the professional, but many commentators miss this link and assume an organisation’s values are completely independent of the business vehicle. This is not our view. However, the GP partnership model does need to change. There is no obvious reason why GPs should be prevented from forming LLPs, and larger partnerships would enable practices to better deal with the increased finance and risk in modern general practice. There is undoubtedly a role to play for a variety of business models in primary care, but we believe that an evolved partnership model still has an important role to play. We will be exploring this further in subsequent blogs as we provide our input to the Key Lines of Enquiry of the Partnership Review.
For more information about the GP Partnership Model and any other related topics, please contact Daphne Robertson on 01483 511555 or email [email protected]