Could LLPs become a reality in general practice?

While there have been murmurings for some years at the possibility for GP practices to operate via a Limited Liability Partnership (LLP) model, it appears that this could be a real possibility within the term of the new government as part of the new GP contract negotiations. 

But what is the big deal? Could this really prove a transformational move. Well, the answer is yes, it could. 

In the first of two blogs, we explore how LLPs offer an alternative business model in general practice.

It has been widely publicised that the environment within which GP practices operate has changed substantially. Most notably, it has been reported that the number of GP partners has dropped. In England alone, it is recorded that there has been a drop of almost 25% of GP partners and more importantly that the number of GP partners aged under 40 has fallen significantly. 

This is against a backdrop where practice size has increased and the patient, contractual and operational demands have all grown. Understandably, this has caused concern particularly when it comes to the personal liabilities to which GP partners are exposed. Whether costs associated with staff, premises or otherwise, nervousness can occur and more worrying, changes of a type hoped for under the 10-year plan (in particular the planned shift from hospital to community) can be thwarted.

LLPs could certainly help, but what are they and why could they help? 

In short, LLPs are a business structure that combine the flexibility of a partnership with the limited protection that you see with a company. It allows partners (who under an LLP are called members) to share in the profits and manage their businesses with limited personal liability for debts and obligations for the LLP. This has the obvious advantage of preserving the look and feel of the partnership model (the importance of which has been repeatedly stated) whilst providing a backdrop that will undoubtedly prove more attractive to new and existing partners alike.     

If the LLP becomes a reality, we outline some of the key issues that will need to be addressed. While not an exhaustive list, they include:

1. Core contracts
   The NHS Act, all core contracts and all supporting regulations will need to be updated to reflect the fact that they can be held by LLPs. While the consent of the Integrated Care Board will be inevitable, they should formally allow for a novation to occur to LLPs.
   
   
2. NHS pensions
   While LLPs will, when they are legally able to hold a core NHS contract, be capable of accessing the pension scheme, the pension rules will need to be updated to enable members of an LLP to access the pension scheme.
   
   
3. Care Quality Commission
   An LLP will undoubtedly be considered a new registered provider and as such, and before an LLP can start to deliver regulated activities, they will need to secure a fresh CQC registration. Given the timeframes we see with CQC related applications, we would hope that a streamlined process could be adopted.
   
   
4. Business transfer
   The movement to an LLP will require a transfer of the business of the practice from the partnership into the LLP. This will cover, amongst other things, the TUPE transfer of staff, the transfer of assets and liabilities, the transfer of contracts and equipment, the apportionment of income and expenses and (assuming it is not handled as a separate transactional matter) the ultimate winding up and dissolution of the Partnership.
   
   
5. Premises
   This will undoubtedly prove one of the thornier issues but also one of the most important given that premises liabilities are notoriously cited as a key factor in the instability of GP partnerships. 

   Two possibilities clearly exist. 

   If a partnership leases its premises, it will need to ensure that it has the right to assign the lease to the LLP pursuant to the terms of that lease and follow the steps required by the lease. 

   If a partnership owns its premises, partnerships will need to check that it is capable of being transferred into the LLP, particularly if they have any subsisting borrowing and if so, identify the tax implications associated with such a transfer.
   
   

6. LLP incorporation, set up and filings
   Just as is the case with companies, LLPs will need to be incorporated with Companies House and will have annual and event driven filing requirements (including annual accounts, notification of a change in membership etc.). From setting up policies and procedures, to securing insurances, the LLP will need to prepare to be fully operational as a business.
   
   
7. Member Agreement
   Just as partnerships have a Partnership Agreement, it will be essential for members of an LLP to have a Members Agreement to document the rules that will govern their working relationship with one another. The split of profits, drawings, the duties/ obligations on members, retirement, expulsion rights, decision making and provisions relating to those members that will be considered as “Designated Members” (being those members, of which they must be a minimum of two, that have prescribed responsibilities and functions within the LLP under the Limited Liability Partnership Act) are all examples of the key areas that will need to be covered in the agreement. It will also be essential for those agreements to have regard to the intricacies of the rules and regulations applicable to general practice. 

It will be interesting to see how the discussions develop, but with significant system wide changes afoot and with a new GP contract up for negotiation, the ability for GP practices to operate via an LLP seems closer than ever before.

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