Private Practice or General Practice?

Dr Paul Charlson recently has done an excellent article in Pulse on setting up non-NHS services. In this article, Dr Charlson presents ‘private practice’ as possible “sunny uplands” for both the doctor and the patient, and this of course should be welcomed in principle (being rather generous though my preference is for a completely socialist NHS!)

However, the substantive points in this article certainly do merit further attention in my view, and actually I’m not entirely convinced that many GPs are dying to embrace private practice, when they’re literally so busy and devoted in their dayjob on the front line of the NHS.

A GP when he (or she) proposes a new treatment for a patient should ideally give a clear description of the pros and cons of that treatment for his/her own patient. Therefore, a GP should not ideally only give the proposed benefits of a statin to lower cholesterol – ideally, there has to be mention of some side effects however relatively uncommon (such as muscle weakness). The idea is to give the patient enough information such that they can make the decision with informed consent. In fairness to Dr Paul Charlson, his advice is front-loaded with this bit of important advice: “Non-NHS services are easier to set up than NHS services, but they can cost a significant amount to set up because there are often training and advertising costs involved. There can also be conflicts of interest, as GPs are not allowed to provide many private services directly to their patients. You need to be careful in this regard, but there are ways to separate the partnership from other businesses, such as setting up a limited company.”

Precautions advised by the BMA which Dr Charlson has not mentioned

I do not think that Dr Charlson has deliberately missed out these details to be mischievous. I think Dr Charlson covered as many points as he could, given the constraints of the length of the article. However, the BMA gives further advice about what services can be set up by GPs acting privately in this way  (link).

“There are some services that are not available on the NHS, or only in very limited circumstances, for instance cosmetic procedures, some advanced dermatology procedures and osteopathy. GPs can set up private practice to provide these services, although they must not be treating their practices’ registered patients. Where GPs wish to start such a private practice, and they are aware that some of their own patients have requested the service, we would advise that they write to the Director of Primary Care Services in their Primary Care Trust to seek agreement to provide the service to any patient as it is not available on the NHS.”

“The Codes of Conduct for private practice in England, Scotland and Wales explicitly state that consultants should not, in the course of their NHS duties, initiate discussions about providing private services for NHS patients. It is not acceptable, therefore, for doctors to suggest to patients who are placed on a waiting list for NHS treatment that the treatment could be provided quicker on a private basis. It is also inappropriate for consultants to raise the issue of private practice obliquely, for example by handing the patient a business card containing the address of both the NHS hospital and the doctor’s private consulting rooms or adding the private clinic address to the NHS letterhead.”

Potential conflict between patient care and maximisation of shareholder dividend under English law

Therefore, Dr Paul Charlson could perhaps be less coy about the precautions a NHS GP should ideally take in setting up private services. Dr Charlson correctly identifies the private limited company as an appropriate vehicle for running this private business entity, “that the directors need not be the same as the GP partnership – the profits and losses are dealt with separately, it is a completely independent organisation – and it is even better if this company operates from different premises”. The main advantage from the business sense is that the members of the practice cannot be sued individually; only the private limited company can be sued, and critically they have limited liability. Under section 172 Companies Act, the purpose obligated under law is for directors to promote “success” of the company, i.e. to maximise shareholder dividend for the company; there is a strong academic argument that the General Medical Council needs to ensure that decisions are made for the patient’s benefit clinically and not for the shareholder’s benefit financially. I suspect that the GP scenario is not going to be as difficult to regulate as referrals made by Circle Plc to Healthcare Plc (taking examples at-random), to ensure that referrals are made on the basis of clinical need not financial benefit for the companies involved.

The burden of setting up a private limited company

Dr Charlson should ideally say something at this point about the fact that incorporation of a company in English law does require production of a basic constitution of that company for it to be incorporated, and to be approved by Companies House. Whilst it is relatively easy to do this, especially with the help of bespoke company formation companies who can do much of this virtually automatically, without the need to invoke big legal fees, you are actually advised by Business Link to seek advice as to whether incorporation is ‘right for you’. This is  because, to maintain an entity on the Companies House register, subsequent filings are required, and if these are not maintained, there can be hefty fines, or Companies House can force the company to be dissolved. Dr Charlson’s failure to mention this is not as severe as failing to mention a potential side-effect in a hysterectomy operation, such as accidental damage to local organs, but these  considerations are certainly worth bearing in mind for a GP wishing to set up an independent private limited company. Finally, a critical aspect of running any successful business, ranging from a small/medium enterprise to a large international multinational, is that a chief accounting officer or accountant should decide upon “the correct allocation of resources“; how much time, energy and money does a GP wish to devote to this, or should he or she invest in a business manager to do this? Business managers of course cost money in themselves.

 Alternative business ‘media’

The article in Pulse is further confusing in that Dr Charlson does not explain why a private limited company is the best vehicle for the business entity compared to a limited liability partnership, for example; in English law, you have to avoid becoming a partnership under the 1890 Partnership Act, and here clients will be subject to unlimited liability. The Partnership Act sets up a default code for partners with a mutual interest in business, but interestingly partnerships can be set up in the absence of an explicit partnership agreement. Under s.24(1), partners are entitled to share equally in the profits of the business, so therefore, in the absence of incorporation particularly, legal advice might be most welcome to ensure that these private GPs have not inadvertently set up a partnership in law. As an analogy, to extend my example earlier, an ideal GP would advise his patient about the possible ‘alternatives’ to his proposed statin, and briefly mention their risks and advantages (e.g. healthy diet – also contains nutrients and vitamins, with risk of severe side effects of statins such as rhabdomyolysis.)

Client care, the client letter and costs

Finally, the Solicitors Regulation Authority, for example, gives very clear guidance to solicitors in their chapter on ‘client care’, and there are similarities to the advice given to the BMA’s guidance regarding principles to consider when drafting a contract for private patients. A contract or letter of engagement for private patients should clarify:  (a) what the fees are and exactly what they cover, (b) who will be involved in patient care i.e. any other doctors and health professionals, (c) Whether the patient (or their insurer) will be billed separately for their services, or as part of an overall package. If the patient is paying through a third-party insurer, the contract should state that insurers do not always cover 100% of the fees and that the patient will be liable to pay any shortfall, (d) Terms of business, such as payment methods, when payment is required, interest charges on late payments (for example, where payment is not made within two months), and the clinic’s cancellation policy. Solicitors are advised to keep communication channels open, which might impact on costs for the client in a legal case. You can see the exact relevance to this for a private GP and his/her patient, when unforeseen events occurs in a management plan of a doctor, and the GP has to change course (but only after discussion with the patient).

I overall feel that it is good that GPs are being introduced to ‘market forces’, but, if they feel they are not being renumerated on the NHS adequately, or the NHS is not the right vehicle for them to further their career aspirations, or simply because this Government is forcing them to, these GPs who wish to go into the private limited company world, they need to learn ‘how to play with the big boys’.