GP Practice in Crisis – What Are Our Options?

We are finally reaching the end of a long winter and some GP Practices, having weathered the worst of the winter months from a clinical perspective, will now be looking inward to address problems within their practices. 

Our previous healthcare article reflected on 2023 being a year of challenge for those involved in primary care, and considered what GP Practices can do to recalibrate at the start of 2024. It encouraged GPs to plan ahead and understand what issues need to be addressed urgently. Some of those issues might involve looking at problems within the partnership, and dynamics between partners.

Doctors under strain

All those involved in Primary Care are aware of the pressures facing GPs and other healthcare staff and the profession is under enormous strain. Doctors are still reeling from COVID with the enormous clinical pressures, costs and staff absences that brought. More and more GPs are off with stress and other mental health issues and whilst their wellbeing is of utmost importance, a breakdown in partnership relations can also put a strain on GP Practices as the other partners rally to maintain the business and treat patients. Pressure can also lead to unwelcome behaviours from some people as well as force a reappraisal of each person’s role and position in the business. So what options are available if relations with a partner have broken down or if the partnership is not sustainable in its current form?

Most important – is there a Partnership Agreement?

The options available to partnerships – whether they operate as a traditional partnership or a limited liability partnership – will hinge fundamentally on whether there is a written partnership agreement (or limited liability partnership / members’ agreement). We have written before about the importance of a written partnership agreement.  If there is no written agreement, the partnership’s affairs will be governed by the Partnership Act 1890, a piece of legislation that is largely unsuitable for modern businesses.  

Resignation / Retirement of a Partner

If the partners are not getting on, then a partner is free to resign or retire giving the appropriate notice to the other partners. Where there is no written agreement between the partners, there is no requirement to give notice, and a partner’s resignation will have the effect of terminating the partnership as between the other partners. This is a risky situation to be in, since the partnership would be in breach of its GMS/PMS contract, which the Health Board may then put out to tender. Any staff would be technically redundant, and the partnership would also likely be in breach of other contracts (e.g. cleaning) including any lease of the premises, which could have significant financial implications.

If there is a written agreement, that should dictate the period of notice to be given by a resigning/retiring partner. There may also be “last man standing” provisions to consider, for example a clause which says that no partner may resign/retire within 6 months of another partner.

Suspension

Suspension of a partner can be a useful option if the other partners feel that it’s not appropriate for that individual to be in the practice, perhaps while an investigation is carried out in relation to perceived or actual misdemeanours. There is no right to suspend under the Partnership Act 1890, so this option is only available if it’s contained in a written partnership agreement. The partners should also consider whether a partner who is suspended receives their normal drawings during the period of suspension, and this should be communicated to the suspended partner. The suspension should also not place a partner in breach of their ordinary NHS duties. Suspension is often (but not always) used as a pre-cursor to expulsion.

Mediation

The partners may find it useful to take part in a mediation process whereby a professional mediator would help the parties resolve the differences between them, to find a mutually agreeable way forward.  The mediation itself would not result in a binding agreement unless and until the parties record their agreement in a written contract.

Negotiated Exit

If partners feel that they are unable to continue in partnership together, it is within their power to negotiate the exit of a partner, without recourse to litigation or other dispute resolution methods such as arbitration or mediation. The terms of a partner’s exit might follow some of the provisions in a partnership agreement (e.g. in relation to the timetable for repayment of a partner’s capital) but they can also be entirely bespoke.  That, and the avoidance of stressful and expensive litigation, is the most obvious advantage of a negotiated exit. The parties are free to agree their own terms, which would usually be set out in a binding contract between them such as a Settlement Agreement.  Usually, this contract will include confidentiality provisions, and agreement of how the partner’s departure is communicated to patients and staff.  There is no stigma of expulsion and the partner is therefore free to explore working opportunities elsewhere.

Expulsion

If partners are unable to reach a negotiated settlement, then they might consider expelling a partner.  There is no power to expel a partner unless it is included in a partnership agreement.  Common reasons for expulsion might include gross misconduct, breaches of the partnership agreement, bankruptcy or prolonged mental or physical ill health. Partners must ensure that any decision to expel is made by the appropriate number of partners in accordance with the partnership agreement, and they must be mindful of the need to exercise good faith and ensure that a fair procedure is adopted. Expulsion is likely to be disputed by the expelled partner, particularly since it will likely affect their ability to work elsewhere. Partners should therefore be certain that they have acted properly at every step, as their actions may end up being examined in litigation proceedings raised by the expelled partner.

Dissolution

Without a partnership agreement, and therefore no right to expel, the partners may have no option but to dissolve the partnership.  This is a fairly nuclear option. As mentioned above, termination of the partnership will bring an end to the practice’s GMS/PMS contract and there is no guarantee that a new partnership formed by some of the former partners would be successful in bidding for the contract should the Health Board put it out to tender. In a dissolution / termination, the staff would be made redundant and the partnership would likely be in breach of other contracts. If the partners were considering dissolution, we would strongly advise taking legal advice so that you know what the consequences will be.  You may be able to take steps to mitigate any risk to the partners.

Conclusion

None of these options are to be taken lightly. At Davidson Chalmers Stewart we are adept in advising GP Practices and individual partners on all of these issues and helping to navigate a route to successful outcomes. For more advice, please contact me, Lisa Kitson, at lisa.kitson@dcslegal.com (0131 290 2812) or speak to another member of our specialist healthcare team.

Disclaimer 
The matter in this publication is based on our current understanding of the law.  The information provides only an overview of the law in force at the date hereof and has been produced for general information purposes only. Professional advice should always be sought before taking any action in reliance of the information. Accordingly, Davidson Chalmers Stewart LLP does not take any responsibility for losses incurred by any person through acting or failing to act on the basis of anything contained in this publication.