Succession planning and emergency exits – advice for GP partners

In GP practices the intersection of clinical responsibilities and business operations demands careful succession and emergency exit planning. This ensures continuity of care, financial stability, and compliance with legal regulations. These transitions become even more complicated when the practice’s premises, whether owned or leased, significantly contribute to its value.

This article offers a comprehensive guide for GP practices on effectively planning for succession and emergency exits, with practical examples relating to the practice premises.

Understanding succession planning

Succession planning involves preparing for the transfer of ownership or leadership in a practice, typically due to retirement, sale, or unforeseen circumstances such as illness or death. Succession planning is essential for several reasons:

• Continuity of patient care: Patients often build long-term relationships with their doctors, particularly in specialist fields. A sudden departure without a succession plan will disrupt care, potentially harming patients and damaging the practice’s reputation.
• Maintaining business value: The reputation of the practice often underpins the business’s financial success. A well-crafted succession plan helps retain the value of the practice by facilitating a smooth transition of leadership and minimising potential revenue loss.
• Regulatory and legal compliance: Health regulations require medical practices to ensure continuity of care and proper management of patient records. A clear succession plan helps avoid legal complications and ensures compliance with relevant healthcare laws.
• Premises and property considerations: Location significantly impacts a practice’s value. Whether the property is leased or owned, the succession plan must address future management or ownership of the premises.

Key components of a succession plan

Identifying and training successors
The remaining partners should look to the partnership deed to check what terms are in place for succession planning. If the partnership decides to take on a new partner, then this new partner should undergo a training period to understand the business aspects of the practice.

Legal and financial arrangements
Another important aspect of succession planning involves preparing the necessary legal and financial documentation.

Ownership and equity transfer 
For practices owned by the partnership, ownership transfer might involve preparing sale agreements, partnership agreements, and other ancillary documents specifying how shares or assets will be distributed or sold to the successor or remaining partners

Property considerations
A practice should decide early whether to sell, retain, lease, or merge its owned premises. For leased premises, review the lease agreement early to ensure a smooth transition.

Emergency exit strategies

While succession planning covers long-term transitions, emergency exit strategies address sudden, unforeseen events such as the death or incapacitation of partner, an emergency exit plan ensures the practice continues operating, patients remain cared for, and the practice survives.

Sudden events such as illness, death, or a personal emergency, will leave a practice in disarray if there are no contingency plans in place. Service gaps have serious consequences for patients. A robust emergency exit plan ensures patient care continues in the event of an unexpected departure.

For rented premises, provisions should ensure that lease agreements are transferred or temporarily managed to enable the practice to remain in occupation. This avoids any legal issues with the landlord and ensures the premises remain available for continued operations.

An emergency exit strategy should designate a temporary leader, such as a remaining partner or practice manager, to oversee operations until a permanent solution is found.

For owned premises, it may be beneficial to create a clear property management plan, including for temporarily leasing the space or assigning lease obligations to the temporary leader.

Property aspects in succession and emergency planning

Whether the premises of a medical practice are owned or leased significantly affects the succession and emergency exit planning process.

Valuation of the property
For practices that own their premises, the property’s valuation is crucial. The property’s location, condition, and market value may either enhance or detract from the practice’s appeal during a transition or sale.

Properties in high-demand areas may add significant value, while those in less desirable locations or requiring substantial maintenance may decrease the overall value. Additionally, over time, properties often appreciate, providing a financial cushion for retiring partners.

Owned vs. leased premises
The question of whether the premises are owned or leased plays a crucial role in planning.

For practices that own their property, the building becomes a significant asset. Retiring GPs may choose to retain ownership of the premises as an investment and lease the premises to the remaining partners. Alternatively, they might sell the property with the business, but buyers will need to secure financing for the purchase of both the property and the business.

A sale-leaseback arrangement allows the consultant to sell the property to a third party while continuing to lease it for practice use. This provides liquidity while maintaining operational continuity.

For rented premises, lease terms are crucial. Succession plans must determine if the lease can be assigned to a new owner or subleased. Lease agreements may contain restrictive covenants that could impede leadership transitions.

Mergers and acquisitions
In some cases, practices may choose to merge with another practice. Property considerations are a key part of a merger.

Practices that own their premises provide additional leverage in a merger. The acquiring entity may value the property for expansion or for its prime location.

In contrast, if the practice leases its premises, the acquiring party must review the lease terms carefully. A long-term lease in a prime location may add value, while restrictive lease clauses may complicate the merger.

Ensuring stability

Succession and emergency exit planning are crucial for ensuring the stability of GP practices. Addressing long-term transitions and unexpected events protects patients, staff, and the practice. Whether the premises are owned or leased, property considerations must be incorporated into these plans to preserve the value of the practice and ensure smooth leadership transitions.

Effective planning with specific terms in your partnership agreement will help secure the practice’s legacy, maintain patient care, and guarantee operational continuity for years to come.

First published in GP Business in March 2025