All together now?

11 January 2013

In times of international uncertainty nations sometimes seek the security of alliances.

With organisational and financial flux in the NHS, should GP practices be seeking safety under the umbrella offered by federation with neighbouring practices?  Are there any other options? Should practices be federating, merging or developing provider entities – associations or companies set up to provide services.

Practices will be looking to make savings and increase income. Federation could help with both as well as opening up new avenues for peer support, expertise and improvements in practice working.

Federation could:

• Reduce costs
• Raise standards of management – having a single management team can allow practices to grow business development skills
• Provide the critical mass to allow GPs to concentrate on different priorities and develop service and clinical specialties
• Support the provision of a wider range of services from hospital setting and the sustainable provision of high quality services.

With some of those benefits potentially opening up new income streams, federated practices could find it easier to bid for contracts and become provider entities.

Primary Care Commissioning (PCC) and Lockharts Solicitors have been running awareness sessions on the considerations for practices in the new NHS where  Andrew Lockhart-Mirams  outlines four levels of federation - each likely to require different types of agreement to address different levels of risk.

1) Sharing backroom functions, such as payroll services – typically involving just two or three practices. A letter between practices outlining arrangements and responsibilities is likely to be adequate.

2) Sharing staff - again probably involving just two or three practices but as this is likely to involve secondment of staff much more attention should be paid to a formal agreement. Lockhart-Mirams says practices should agree procedures to avoid “nasty problems” around issues such as l leave and disciplinary matters or complaints against partners or other staff.

3) Sharing clinical services – possibly involving between six and ten practices. Practices entering such arrangements should definitely have a formal agreement in place and ensure that prospective partners all have, for example, fully paid-up medical defence organisation cover.

4) More formal federation under the terms of a specifically tailored agreement where associations or companies are formed for the specific purpose of tendering for and providing a range of commissioned services.

Lockhart-Mirams cautions: “If you are sharing clinical services you have to make sure people have their house in order. You could end up with a federation made up of three solid bricks and three clay bricks.”

There are many considerations for practices when looking at the possibilities of formal federating. There needs to clear vision on the aim of federating and at what level the federation if formed. Is it a stepping stone to much closer working? What risks are being mitigated through federating?  Does every practice have the same aims and objectives?

Lockhart-Mirams makes the case for federations and the potential pitfalls to avoid when forging arrangements with local counterparts. The key is that all potential members are clear about the aims and objectives for the federation. 

It could also allow practices to test the water, retaining their independence while assessing the benefits of full practice mergers.
“The trust develops through federation and over time you may move to a merger. We have seen some very big practices grow out of federated working but you keep your independence for the moment,”.

The success of any federation will be determined by the clarity of the purpose of the federation and how it supports the strategic aims of individual practices. What kind of practices do they want to be? What role do individual GPs want to have: business director, medical director or clinician?

The clarity of the aims will support the sound foundations of the federation.

The other consideration is the constitution of the members. The federation will only be as strong as the weakest partnership. It is vital that all members have a partnership deed that is appropriate, relevant and agreed. 

According to PCC adviser Bill May dissolving partnerships is a big issue for practices. “We are regularly asked for advice about relationship breakdowns in practices. It always surprises me how many GP businesses are based solely on the wish of partners to continue. Partnership disputes can cost many, many times the cost of drawing up a robust partnership agreement. If this is a problem for individual practices, it is even more important that federated models are built on a robust platform.”

Lockhart-Mirams notes that perceived wisdom is that only half of practices have a partnership deed – and that only 70% of those are considered well-drafted. This, he cautioned, has implications for federating practices.

“That is an awful lot of practices – 65% – that may not have an effective arrangement and this, he cautioned, has implications for federating practices. Practices should really put their own house in order before going into federations”.

For details of PCC workshops on issues covered in the article contact bill.may@pcc.nhs.uk.

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