GP Surveyors explore the key areas to consider when beginning GP practice succession planning; how to avoid common costly pitfalls and how a robust succession plan can even help alleviate partnership recruitment problems.
When you consider that 19% of the total GP workforce is within three years of the average retirement age of 58, putting a succession plan in place has never been so important, so here goes.
GP Practice Succession Planning – Top Tips
Put the surgeries Partnership Agreements in order
Firstly; existing Partnership Agreements including the property ownership and or lease should be up-to-date and signed by all partners.
If a partner is selling to another GP who will become a property-owning partner, you must ensure that you consult a solicitor. It’s also important to speak to the surgeries mortgage company in order to release the outgoing partner from the mortgage.
Pre-empt recruitment problems
For many years it has been common practice for a partnership to seek new, younger partners to replace those who are retiring. However, in recent times this has become increasingly difficult owing to a number of factors. Many younger GP’s simply lack the capital to buy into the property, feel little incentive to take on the added responsibilities and perceived risk of a partnership.
Sale and Leaseback has become an increasingly attractive option for practices to alleviate these partnership recruitment problems, but one that many are unaware of.
Consider Sale & Leaseback
Put simply – Sale and Leaseback is where the GP premises is sold to an investor and a lease is granted back to the practice partners and the partners continue to occupy the building and provide contracted medical services.
Major advantages of the Sale & Leaseback option include; partners being able to retire later and without the complications of selling their share, partnership recruitment becomes easier as substantial funds are not required to buy into the practice, which younger doctors seem to prefer.
With Sale and Leaseback a standard lease would usually be 15 years. This provides partners with the option of practicing to the end of the lease term or retiring beforehand. GP’s taking early retirement, leave a shorter time remaining on the lease, which should make it easier to find a new partner as there is less of a commitment.
When the lease finishes there is also greater flexibility as the partners have a protected right to put a fresh lease in place or take steps towards the end of the lease to secure funding and approvals for an alternate building.
Obtain a Market Valuation
At whatever time the partner/s make a decision to sell the premises, it’s of paramount importance to ensure that the property is accurately valued by a specialises primary care surveyor. This is key as the valuation of primary care properties is different from the valuation of any other commercial premises. The surveyor must possess a substantial number of comparable valuations and investment transactions to ascertain a true market valuation.
We hope the above guide has provided you with some invaluable tips to help you to begin your GP Practice succession planning.
If you would like any advice regarding GP Practice succession planning and the topics covered here please contact our team of experts and we’ll be happy to help.