The risks of GP partnerships

Introduction

Becoming a GP partner is more than a significant career change. It’s a step into business ownership, and it comes with greater legal and financial responsibilities.

While the reward is there, so is the risk. Understanding the key differences between salaried employment and a GP partnership is the first line of defence. In this article, you’ll learn how to manage these financial risks and put precautions in place.

Understanding vicarious liability

When you become a GP partner, you’re not just taking on additional responsibility and a share of the profits, you’re accepting unlimited personal liability for a multi-million-pound business and the actions of every single person within it.

This includes:

• Practice loans and debt
• Property-related liabilities
• Contractual disputes
• Staff related claims and settlements

Under joint liability, you and your partners may be pursued personally if your practice can’t meet its obligations. And if your partner can’t make a financial contribution, you may be required to cover the shortfall.

In a worst-case scenario, your savings, investments, and even property could be exposed. A high-profile case from the last couple of years saw one doctor and his partners facing a claim exceeding £10 million, all from the actions of one salaried GP.

Even where claims are successfully defended, the financial impact can be substantial. Large disputes often involve high legal and professional fees that can run for several years.

Not all of these costs may be fully covered by indemnity arrangements provided by medical defence organisations, especially if the issue falls outside standard NHS clinical work. Long-running cases can also affect your practice’s cashflow and reduce partner drawings during that time.

While catastrophic outcomes are rare, dealing with complex disputes can still place significant financial pressure on both the practice and individual partners.

Financial advice is key to understanding your personal risk exposure, and the preventative measures you can put in place. Having a watertight partnership agreement is a start, alongside exploring your insurance options - from partnership protection to GP surgery insurance.

While there’s no way to eliminate your risk exposure, you can make sure you have protection in place should the worst occur.

The business impact

As a GP partner, you’re effectively underwriting a high-value medical business.

This exposes you to:

• Borrowing and refinancing risks
• Changes in funding or contract structures
• Staff cost inflation
• Pension scheme administration issues
• Fraud or financial mismanagement

Strong governance reduces these risks, but it doesn’t eliminate them entirely.

Risk vs reward

We may have created a stark image up until this point, but the risk is not without great reward. Entering into a partnership can bring you higher long-term income potential, greater control over your financial strategy, equity in property and the ability to build capital over time.

It goes without saying that higher potential reward is linked to higher financial exposure. The real question is whether your personal finances are structured to absorb unexpected shocks.

Can you reduce risk?

The simple answer is yes, but you need to put in the groundwork. If you’re about to enter into a partnership agreement, understanding exactly what this entails is the first key step.

We have a handy guide to help, sharing exactly what a good partnership agreement looks like and how often it should be reviewed. This is also where independent legal advice should come into play.

If you’re already a partner, now is a good time to review your insurance coverage. Is your medical business fully protected? Our business protection guide can help you spot the gaps.

Consider your financial exposure too. What would happen if the worst occurred? Do you have personal assets ring-fenced?

And lastly, discuss exit strategies with your partner. Even if you can’t visualise it now, think about what circumstances would cause you to leave and how you’d want to leave the practice. Again, our guide on exit strategies can help you get started.

Speaking to a financial expert

At Wesleyan Financial Services, we understand the unique challenges and risks facing GP partners. Our Specialist Financial Advisers work exclusively with medical professionals and understand the complex liability landscape you navigate.

We can help you:

• Assess your current insurance coverage and identify gaps
• Structure your financial affairs to protect your family
• Plan for the worst while hoping for the best
• Understand the real risks you’re taking