Partnership in the Healthcare Sector – Best Practice for General Practitioners

November 12, 2012

Following my recent articles in the Irish Medical News, a number of G.P.s have been in touch with me enquiring about putting partnership insurance in place.  This also brought out many questions about how to effect a partnership agreement.  The following article has been provided to me by Alan Wallace of Mangan O’Beirne Solicitors.  Please contact Alan directly with any queries or if you would like him to organise an agreement for your own partnership.

 

 

The legal definition of a Partnership is to be found in Section 1 (1) of the 1890 Partnership Act whereby it states as follows:-

“Partnership is the relation which subsists between persons carrying on a business in common with a view of profit”

A written Partnership agreement is essential to the carrying on of any business in the format of a Partnership. The necessity for a written Partnership agreement is highlighted by the fact that the Partnership Act, 1890 introduces terms which apply to every Partnership if they are not expressly excluded with a written partnership agreement. Importantly, for General Practitioners (GPs), lack of knowledge regarding the implications of the Partnership Act, 1890 is no defence.

All GPs conducting their business as a Partnership should be aware of the terms which are implied by the Partnership Act 1890 and to determine which are appropriate or require modification by a written Partnership agreement.

The following are some examples of terms that apply in the absence of a written Partnership agreement under the terms of the Partnership Act, 1890 to demonstrate the above:-

  • There is no right to expel a Partner.
  • Any Partner may dissolve the Partnership by simply calling a meeting and giving notice orally that the Partnership is dissolved
  • Upon the death of a Partner the Partnership will automatically dissolve under the terms of Section 33 of the 1890 Partnership Act and may be wound up at the wish of any one Partner.
  • There is no general power to retire.

 

It is essential that detailed legal and expert advice is sought prior to entering a Partnership, creating a Partnership or modifying a Partnership.

An examination of all aspects of the Partnership arrangement is required and should be committed to writing with careful consideration of all possible future consequences. A carefully drafted Partnership agreement with legal advice will ensure a medical practice and its Partners can evolve and adapt, as and when the need arises.

Typical areas requiring consideration are: income, profit sharing, leave, serious illness, retirement, goodwill, termination, property, taxation, management, decision making processes, insurance, drawings, patient allocation and death provisions inclusive of buy / sell provisions for existing partners at market value utilising agreed formulae.

If you have any queries in respect of this article please do not hesitate to contact Alan Wallace, a partner whom practices exclusively in the Healthcare sector at

 

Mangan O’Beirne Solicitors

31, Morehampton Road,

Dublin 4.

T: 01-6684333

E: alanwallace@manganobeirne.ie

W: http://www.manganobeirne.ie