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  • By RMT
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  • Posted Monday June 11, 2018

Choosing the right option for primary care refinancing

With the primary care sector evolving at an ever-increasing pace, we've seen significant growth in the number of GP practices looking to reorganise their finances for many different reasons.

It might be to meet a practice's financial obligations when a partner retires or resigns, to fund improvements to existing facilities, to manage aspects of a merger process, or to simply get a better deal in place for the future financial needs of a particular practice.

As with all major practice decisions, the starting point must be to get everyone to sing from the same hymn sheet.  Clearly establishing and agreeing what it is you're looking to achieve is essential if you're going to have the best chance of avoiding issues.

With primary care being such a highly regulated sector, you also need to fully comprehend any regulations relating to the financial structures your practice can adopt. You also need to consider whether there's a need to let NHS England and/or your local Clinical Commissioning Group (CCG) know about your plans.

This places extra emphasis on taking expert advice as early as possible. While you may have a firm idea of what you want to achieve, you may not have a handle on all the options available for reaching your goal, or the additional benefits that could be achieved in the process.

For example, refinancing a practice loan enables longer-serving partners who aren’t retiring yet to extract their equity out of the business. At the same time, new partners joining won’t face having to finance themselves but instead join onto the new refinanced practice loan, creating a more favourable proposition for new partners entering the GP world.

When it comes to talking to financial institutions, there are now a huge range of different providers on the market that you can turn to, from traditional banks and specialist finance houses, to the new challenger banks that have entered the market recently and are looking to build up their business customer bases. A stable patient base, and the investment that partners have in a practice’s long-term success, combine to create desirable clients for these institutions.

Not all of these providers have specialist knowledge and understanding about the sector, or the idiosyncrasies of NHS income. It is important to work with experienced specialists who will create a comprehensive financial plan and can facilitate it by negotiating with relevant providers to obtain the best deal on the market for your circumstances.

Regularly reviewing your financial arrangements, interrogating the management data you receive about them and taking independent advice on any areas where improvements might be made should be high up on the agenda for any practice's strategy and planning meetings.

Richard Humphreys is director at RMT Healthcare, the specialist medical division of Newcastle-based RMT Accountants & Business Advisors. For further information on RMT Accountants & Business Advisors, please visit www.r-m-t.co.uk.


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