GPs – Succession planning
One of the key issues affecting GPs is succession planning. A lack of planning in this area can result in the strongest of practices being at risk of failure in the not too distant future.
The principles of succession planning are similar in a number of different formats. These cover introducing new partners, practice mergers, “take over” by a third party (NHS Trust / local hospital) or a super partnership (“coming together” of numerous GP practices).
The following key financial issues require consideration:
Partners’ capital and current account contribution. Whilst the capital account financing is fairly straight forward to understand, the current account funding and value is often overlooked and can create problems after succession date.
Income – share of profits should be estimated – essential information for an incoming partner (a salaried GP would not agree an employment contract without being aware of the salary offer!).
Drawings (method of being paid on account of profits) should be calculated – this figure will be affected by NHS pension and practice finance requirements.
Income Tax – tax estimates should never be overlooked, critical to future financial planning.
At BHP we deal with one of the largest Healthcare portfolios in the North and Midlands. This comprises around 100 GP practices, approximately 400 Locum GPs, numerous retired GPs and we present Finance Courses to final year trainee GPs in 12 different geographical locations.
The depth of knowledge required to deal with this size of portfolio requires a team of 25, comprising highly qualified accountants and numerous trainee accountants. The team is led by Jenny Hurst and myself, both Chartered Accountants, with a manager allocated to each client, to ensure that the personal contact is maintained with all clients.
Specialist professional advice should be sought; BHP are advising a number of clients on the above topics at present and well positioned to deal with all the issues arising for GPs.