The Rise of the LLP in Private Healthcare: A New Chapter in Practice Structuring

The Limited Liability Partnership (LLP) has rapidly become, and remains, a very popular structure of choice for professionals in traditional partnership environments, such as accountants, solicitors, and consultants. In recent years, however, we have seen a notable shift in its adoption by a newer class of users: private medical practitioners.

At Leathes Prior, we have acted on a number of recent instructions involving groups of clinicians coming together to form LLPs. It is part of a broader trend that appears to be accelerating. Indeed, structuring private practice through an LLP offers real advantages to practitioners looking to future-proof their operations in an increasingly competitive and cost-sensitive market.

Why LLPs?

The core motivation behind the decision for groups of clinicians to incorporate is collaboration. By grouping together under a single LLP vehicle, individual clinicians and/or their service companies have the benefit of:

• Enhanced bargaining power: A single entity holding more market share has more leverage in negotiations with insurers, hospitals, and suppliers;
• Economies of scale: Centralising costs (including admin, insurance, premises, and/or staff) leads to more efficient resource allocation;
• Professionalised management: LLPs often appoint a practice manager or similar operational lead to coordinate the day-to-day running of multiple practices, freeing up clinicians to focus on patient care; and
• Consistent branding and pricing: A unified model enables more transparent and predictable pricing structures, which helps in both commercial and compliance contexts.

In short, the LLP provides a platform for cooperation, cost-efficiency, and professionalism, while still allowing for a level of clinical autonomy within the group.

Cartel or Collaboration?

One of the early questions facing those setting up LLPs in this space was whether such arrangements might fall foul of competition law. After all, if multiple practitioners join forces and begin to operate under one umbrella, particularly with standardised pricing, does that not amount to a cartel?

Fortunately, the regulatory landscape has begun to offer some clarity.

The Competition and Markets Authority (CMA) has indicated that while independent providers coordinating their pricing may raise concerns under competition law, those concerns are mitigated where the practitioners in question are acting through a ‘single economic entity’, such as an LLP. In effect, once clinicians become members of an LLP and carry on business through it, the LLP is the decision-making unit, and its internal allocation of income or pricing structure is a matter of internal governance, not external market manipulation.

This principle is consistent with broader competition law. It would make little sense to say that a company is breaching competition rules simply by operating in a unified way.

Still, caution should be taken when drafting the LLP Agreement, particularly in ensuring that exclusivity and pricing provisions reflect the legitimate operation of the LLP rather than any attempt to control the broader market.

Making It Work

Of course, the LLP structure is only as strong as the internal rules assigned to it. A well-intentioned collaboration can quickly run into trouble without a clear and robust LLP Agreement. From our experience, three key areas deserve particular attention:

• Indemnity Provisions
  Clinical negligence risks don’t disappear just because practitioners are operating as a substructure. The LLP Agreement should make clear that members are not liable for each other’s malpractice, typically through the inclusion of mutual indemnity clauses.
• Restrictive Covenants
  To protect the integrity and reputation of the LLP, members should be restricted from setting up in competition with the LLP or soliciting patients outside of its framework. These non-compete and non-solicit clauses should be carefully calibrated to be enforceable and proportionate.
• Profit Sharing Mechanisms
  A clear, fair, and transparent profit-sharing formula is essential. Revenue is often pooled centrally, with agreed deductions for shared overheads (staffing, management, premises, etc), before profits are then distributed, either equally or based on output, seniority, or another bespoke formula. The key is consensus, followed by clarity.

A New Era of Medical Practice?

As independent healthcare becomes more commercially sophisticated, we expect the LLP to become an increasingly popular model for collaborative practice structures. It allows clinicians to retain autonomy, benefit from scale, and operate under a professionally managed umbrella, all while staying on the right side of regulatory rules.

At Leathes Prior, we’re already supporting clients in structuring, launching, and operating LLPs in the healthcare space. If you’re considering a move to this model, whether as an individual practitioner, a small group, or a growing network, we’d be pleased to guide you through the process. Contact our Corporate Team via info@leathesprior.co.uk or call 01603 610911.