In today’s fast-evolving healthcare landscape, General Practitioner (GP) partnerships operate in an environment full of regulatory, financial, and operational challenges. A robust and current partnership agreement is not just a formality—it’s a safeguard. This article begins by highlighting the risks of not having a well-defined agreement, then explores the benefits such an agreement offers, and finally explains why keeping it up to date is essential.

Risks of Not Having a Current Partnership Agreement

Operating without a clear, comprehensive partnership agreement exposes your practice to a variety of risks:

• Uncertainty and Instability:
  Without defined roles, responsibilities, and protocols, partners may face sudden changes in the practice’s structure. An absence of clear guidelines can lead to confusion and disruption, especially during critical events like the unexpected departure of a partner.
• Legal and Financial Liabilities:
  Without an agreement, disputes over profit-sharing, decision-making, or responsibilities may escalate into legal conflicts. This ambiguity can expose the practice to financial risks and prolonged legal battles that divert time and resources from patient care.
• Operational Disruptions:
  A lack of structured guidelines may hinder smooth operations. Unclear expectations regarding duties and processes can negatively impact patient care, staff management, and overall operational efficiency.
• Risks Associated with Partnership ‘At-Will’ Arrangements:
  In practices that operate on an ‘at-will’ basis (where any partner can leave at any time), without clear procedures, there is increased potential for instability. At-will arrangements can lead to sudden changes, disputes over liabilities, and difficulties in long-term planning, all of which can jeopardise the practice’s financial and operational health.

Benefits of a Comprehensive Partnership Agreement

A well-crafted partnership agreement provides numerous advantages that help ensure the smooth running of your GP practice:

• Clarity and Structure:
  Clearly defined roles, responsibilities, and decision-making processes prevent misunderstandings and ensure that all partners know what is expected of them. This clarity helps maintain a stable, efficient practice.
• Defined Profit and Loss Sharing:
  Establishing explicit guidelines for how profits and losses are distributed minimises conflicts and creates transparency in the financial management of the practice.
• Dispute Prevention and Resolution:
  A comprehensive agreement outlines procedures for handling disagreements, reducing the likelihood of prolonged disputes and potential legal action.
• Mutual Assessment Period for New Partners:
  Incorporating a trial phase for new partners ensures that both existing partners and prospective additions have a clear, mutually beneficial framework for evaluating the fit. This trial period, typically ranging from six months to a year, allows for periodic performance and compatibility reviews, ultimately safeguarding the practice’s culture and operational integrity.
• Exit and Succession Planning:
  By detailing clear procedures for partner exits or transitions, the agreement helps protect the practice from unexpected disruptions and ensures continuity during periods of change.

The Importance of Keeping Your Agreement Current

A partnership agreement is not a “set-it-and-forget-it” document. Regular updates are critical for several reasons:

• Adapting to Regulatory Changes:
  Healthcare laws and compliance standards are continuously evolving. Regular reviews ensure that your agreement remains aligned with current legal requirements and best practices.
• Reflecting Operational and Market Changes:
  As technology, patient demographics, and partner roles evolve, your agreement must be updated to reflect these changes. A current agreement ensures that all partners remain aligned with the practice’s operational realities and objectives.
• Enhancing Strategic Planning:
  Regularly revisiting your agreement provides an opportunity to discuss future goals, assess business performance, and implement changes that support long-term growth and stability.

Best Practices for Maintaining a Current Partnership Agreement

To maximise the benefits of your partnership agreement, consider the following best practices:

• Schedule Regular Reviews:
  Establish an annual or bi-annual review process to ensure that the agreement remains relevant and effective.
• Consult with Experts:
  Engage legal and financial professionals who specialise in healthcare to review and update the agreement. Their insights can help address any gaps and ensure compliance with current regulations.
• Foster Open Communication:
  Regular discussions among partners about the agreement’s terms encourage transparency and pre-emptively address potential concerns before they escalate.
• Document All Changes:
  Keep a detailed record of any amendments or updates. Formal documentation helps track the evolution of your partnership and ensures that all partners are aware of current terms.

Conclusion

A comprehensive and current GP partnership agreement is essential for mitigating risks, fostering operational stability, and supporting strategic growth. By understanding the dangers of operating without a clear agreement and embracing the benefits that a well-structured document provides, GP partners can create a solid foundation for their practice. Regular reviews, expert consultations, and open communication are key to ensuring that your partnership agreement continues to serve as a robust framework in today’s dynamic healthcare environment.

Disclaimer: This article is intended for informational purposes only and does not constitute legal or professional advice. GP partners should consult with legal and financial professionals to tailor their partnership agreements to their specific circumstances.

LMC Partnership Webinars

The following LMC Webinars are available for anyone considering becoming a Partner.

Becoming a Partner (1/4): Practice finance considerations (Link)

Becoming a Partner (2/4): Employment law & Partnership agreements (Link)

Becoming a Partner (3/4): Varying Partnership types (Link)

Becoming a Partner (4/4): Common Pitfalls (Link)