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Why independent contractor practices should not be privately owned

I was at a GP partnership client last week, a good GP practice with healthy finances and great sandwiches (more about the Ramsay Brown Client Sandwich Guide in a later blog). One of the partners asked me about the 'corporatisation' of general practice.

When I asked him what he meant by this, he explained his concern for  the flattening of the payment structure which he thought made it easier for non GP-owned businesses to move into the world traditionally monopolised by GPs. I agreed with him, and I also pointed out that you don't get the same drive for excellence where the business is owned by outside investors.

My evidence comes from two sources, firstly, the difficult discussions I have had with clients in the last year where I have advised  them that their ability to provide an excellent service has been undermined by reduced funding, and we discuss what cuts need to be made. Their distress and discomfort is apparent. Secondly, I act for some GP practices owned by third parties, and while they are not bad practices, the profit motive is dominant, and the desire for excellence is just not as strong.

Having seen this client, I returned to my office, and was looking at my emails when one from accountingweb caught me eye.

Now to explain, RSM Tenon is a large top 10 accountancy firm, which in fact has a heathcare division looking after GPs. Unlike most accountancy firms that operate as partnerships (as most GPs do), RSM Tenon is a public limited company which has raised some of its capital from investors, and whose shares are quoted on the stock market. The article explains that RSM Tenon's share price has fallen dramatically since the end of last year, has had to cut employee numbers by 10% and made a significant loss. The fire sale is a reference to selling parts of the business as part of a restructuring. Now I know a few of the people at RSM Tenon, they are ‘good eggs’ but they have to please their shareholders, something that partners in partnerships don't have to worry about, and evidently, some of the shareholders are not happy.

Perhaps there is a lesson here which our political masters should heed, with health, just as with accountancy or any other business, different parties with different interests will expect different rewards, whether it is profit, excellence or satisfaction and care needs to be taken in opening up access to parties with differing interests, and in my opinion, professional practices with partners working and owning are a model that's hard to beat.

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