What you need to know about new partner incentive payments
First published in Association of Independent Specialist Medical Accountants (AISMA) Doctor Newsline in Autumn 2020 issue
The NHS New to Partnership Payment Scheme (N2PP) provides funding to encourage clinicians to take on partnership roles in GP practices. In this article, Alison Oliver (a partner at Hempsons) runs through the main features of N2PP and summarises some key considerations for both the practice and for a new partner joining a practice.
New to Partnership Payment Scheme
N2PP is a new commitment, the overall aim of which is to grow the number of partners working in general practice in order to stabilise the partnership model. It also aims to increase clinicians’ participation levels so that primary medical care and the patients it serves have access to the workforce they need. The incoming partner should not have been a partner in a GP practice before and the partnership agreement should be signed on or after 1 April 2020 and before the scheme closes.
N2PP provides a sum of up to £20,000 plus a contribution towards tax and National Insurance payments, as well as up to £3,000 to develop non-clinical partnership skills. There are several eligibility criteria, one of which requires the incoming partner to deliver a minimum of two clinical sessions per week in their partnership practice throughout the five-year period of the current national GP contract. If a partner leaves within five years the payment will have to be repaid either in whole or in part according to a sliding scale, with new partners leaving within a year having to repay the full amount and those leaving in year 5 having to repay 20%.
Further guidance about the scheme can be found here.
The nature of partnership
A partnership consists of two or more persons who run the practice together, trading together with a view to making a profit, though a profit does not actually have to be made. The partnership is not a legal entity in its own right and it is therefore the individual partners who enter contracts, own partnership property and bear the liabilities of the partnership.
Individuals should therefore be mindful of who they enter into partnership with as they will be jointly and severally liable with those people for the partnership’s obligations.
It is prudent to carry out due diligence on your prospective partners to ensure that they are solvent, of good standing and that they are people you feel you trust and can work with effectively.
It is also vital that there is a valid and up-to-date partnership agreement in place which all the current partners at any given time have agreed to be bound by: if this is not the case the partnership will be a partnership “at will”: a fragile business structure which can be dissolved on notice by any partner and which will be fertile ground for disputes about the rights and obligations of partners.
My article for Newsline in February 2020 explored some key issues regarding medical partnerships. Read the article here.
Considerations for new partners
If you are becoming a partner for the first time, you need to be aware that there are important differences between being a partner compared to being a locum or employee in a practice. The key difference is that you take on responsibility for the management and financing of the practice. Unless you are fixed share partner, you will enjoy a share in the profits of the practice – whatever they may be – but will also be liable for losses if the practice is not profitable.
If you are currently an employee, you will relinquish your contractual and statutory employment rights (aside from the right not to be discriminated against on the basis of a protected characteristic such as disability, age or sex) and will be taxed as a self-employed person.
Before accepting an offer of partnership, you should carry out due diligence on the other partners and the practice as a whole to check that it is financially sound, well run, that the premises and facilities are fit for purpose and that the working environment and culture are right for you.
You should consider carefully the terms of the offer of partnership. Key terms to consider include:
- What sessions will you be expected to work?
- What will your share of profits be?
- Will you be expected to take on roles and responsibilities outside of your clinical sessions?
- If you have interests and occupations, will you be allowed to continue with these?
- Are there any expenses relating to your role as partner that you will be expected to meet yourself, such as locum insurance costs?
- Will you be expected to contribute capital? If so, how will you fund this?
- What are the practice’s premises arrangements? Will you be expected to sign up to a lease of the practice premises or share liability under a lease held by other partners on behalf of the practice? If so, you should check the lease terms to ensure you are comfortable with your obligations under the lease. If the practice owns premises, will you be expected to buy in? If so, how will you fund this? The premises should be professionally valued and you should carry out due diligence on the property as you would if you were purchasing a house.
- What are your entitlements to leave for holiday, study, sickness, maternity etc, and will you continue to be entitled to your usual drawings during these periods of leave? Who is responsible for locum cover costs if you are absent (to the extent not reimbursed or covered by insurance)?
- Will you be subject to a probationary period and, if so, what terms apply during that period and what is the process for confirming your satisfactory completion of probation?
Your rights, entitlements and obligations – and those of your partners – should be set out in a partnership deed. When you receive an offer of partnership you should request a copy of the partnership deed and check that your rights and entitlements are properly reflected in it before you agree to the terms of the deed – if you sign a partnership deed (or a deed of adherence to a deed) that contradicts the terms of an earlier offer letter, the deed will almost certainly take precedence over the earlier offer. Where the practice owns premises, ownership arrangements are often set out in a separate declaration of trust and you should also obtain a copy of this. You should seek advice on the terms of the partnership deed and any declaration of trust or lease (if applicable) as they are important legal documents.
It is important to ensure that you satisfy yourselves that any prospective partner is properly qualified and of good character. A probationary period is a useful method of assessing that the partnership works well for both the existing partners and the joining partner. Even if the prospective partner is a current employee or locum at the practice, they might be an excellent salaried healthcare professional but may not have the necessary capacity and commitment to be an effective partner. It is prudent to make clear in the partnership deed any restrictions on a partner’s authority and entitlements while they are serving their probationary period. For example, it would be usual to provide that a probationary partner is excluded from acquiring an interest in partnership property and their voting rights might be restricted.
It is also vital that the new partner agrees in writing to be bound by the practice’s partnership deed – if this is not done the deed will not be effective and the partnership will operate as a partnership at will. When a new partner joins, the new partner should either sign a deed of adherence and variation to the existing deed or a new partnership deed should be entered into which reflects the admission of the new partner and the terms applicable to them.
When making an offer to a prospective partner, you should make clear that the offer is subject to satisfactory due diligence checks and references and the partner agreeing to be bound by the partnership deed.
Taking advantage of the N2PP scheme
The N2PP scheme will certainly be advantageous to some practices keen to recruit new partners at a time when it has been difficult to recruit partners. However, while the scheme might be an attractive incentive for individuals who have been contemplating partnership, it is unlikely to be sufficient in itself to persuade people to take on partnership who are otherwise reluctant. The funding available for developing non-clinical partnership skills is certainly a helpful addition to the scheme to assist partners who have no previous management experience.
Alison Oliver is a partner at Hempsons.
Her article for AISMA Doctor Newsline in
February 2020 explored some key issues
regarding medical partnerships. Ask
your AISMA accountant for a copy.