Andrew Lockhart Mirams presentation from the General Practice Management event. Nottingham. 04/06/2015

1. Federation Forming
and Alliances
General Practice Management
4th June 2015
Nottingham
Andrew Lockhart-Mirams, Senior Partner
Lockharts Solicitors
© Lockharts 2015 1

2. What is a Federation?
All sorts of things to different people!
GP Federations
GP Provider Companies
Super Partnerships
2© Lockharts 2015 2

3. Federations
• The collaboration of practices who wish to work together
and share services
• Assumes varying levels and ranges from a small degree
(i.e. a shared bookkeeper) to a large degree of
federation (i.e. a walk-in centre)
• The level of complexity is dependant upon the level of
federation desired
• Essential to identify the aims, the steps required and the
potential obstacles that practices may face when
choosing to federate
3© Lockharts 2015 3

4. Why have a federation?
• Benefits
• Increases co-ordination (economies of scale)
• Increases capability (specialisation)
• Risks
• Adds little or no value (increases costs/overheads)
• Increases bureaucracy/interference
• Key objectives?
• Financially self-sustaining (profitable?)
• Reduce administrative burden on general practice
© Lockharts 2015 26

5. Federating – The Key
Points
• Purpose
• The correct structure
• Liabilities of members
• The mechanics
• A rule book
5© Lockharts 2015 4

6. Federating - The Purpose
• What can be achieved
• Protection – Replacement
• Profits
• Patients
• Population
• Back room
• Sharing staff
• Clinical services
• Premises
6© Lockharts 2015 5

7. Size
• The nature of federation alters based on size and
purpose
• 50-60k patients
• 100k patients
• ???
7© Lockharts 2015 6

8. Wide range of developing
legal entities
• Loose associations - X
• Partnerships - X
• Companies limited by shares - Y
• Companies limited by shares as CICs – probably X
• Companies limited by guarantee - X
• LLPs - X
8© Lockharts 2015 7

9. Companies Limited by
Shares
• Companies Act 2006
• Regulated by Registrar of Companies
• Liability of shareholders limited to unpaid contributions
on share price
• Articles filed at Companies House
• Corporate tax regime (speak to your accountant)
• Can be an NHS Pensions Employing Authority where
conditions are satisfied
9© Lockharts 2015 8

10. • Two tier structure – shareholders (the owners) and
directors (the managers)
• Can be for profit/not for profit
• Directors take on significant risk and owe statutory and
fiduciary duties to the company
• Consider directors’ liability insurance
10© Lockharts 2015 9
Companies Limited by
Shares

11. CICs
• Limited company structure & governance
• Overseen by CIC Regulator
• Must satisfy “community interest test”
• Initial statement
• Annual community interest report
• Can be an NHS Pensions Employing Authority but must
satisfy conditions
• Downsides
• Statutory cap on dividends
• Asset lock
• Cannot convert back to an “ordinary” company
11© Lockharts 2015 10

12. How providers function as
share companies
• Shareholders own
• Directors execute
• Either directly
or
• By delegation
• Directors are employees - ? service contracts
• If directors perform - ? subcontracts
12© Lockharts 2015 11

13. The majority of work is
“drop-through”
• Commissioner
• Provider
• Performer
13© Lockharts 2015 12

14. How do performers
interface with CCGs?
• Almost always indirectly – in contractual terms
• But there is bound to be a lot of discussion
14© Lockharts 2015 13

15. Sub-Contracting
• “Drop-through” work subcontracted to practices
• Will adopt all main terms
• And add specific provisions and possibly more KPIs
• Almost always needs consent
15© Lockharts 2015 14

16. Employment –
contractual changes
• Consent/Agreement essential
• No agreement = a breach of contract, save where
statute requires a change
16© Lockharts 2015 15

17. Alliance Working
17
• A strategic alliance is an agreement between two or
more parties to pursue a set of agreed upon objectives
needed, whilst remaining independent organisations
• Mostly used for alliances between Hospitals, GPs and
Social Care
• Data sharing!
• Not really a MCP
© Lockharts 2015 16

18. Collaborative Working
• Collaboration also brings enormous challenges which
should not be ignored
18© Lockharts 2015 17

19. Big gains
• Policies
• Manuals
• High calibre management
• Internal referrals
• Employment of specialists
• Critical mass – but practices retain independence
19© Lockharts 2015 18

20. But with all federating a key issue
is…
Liability
20© Lockharts 2015 19

21. Other key issues - 1
• Directors and shareholders – differences
• Types of share – ? redeemable
• Share funding
• Share valuation
• Exeter list
 Profit
 Not-for-profit
21© Lockharts 2015 20

22. • Pensions
• The “Classic” APMS Scheme – person eligibility
• The Independent Provider Scheme – contract eligibility
22© Lockharts 2015 21
Other key issues - 2

23. Other key issues
• CQC registration
• Fit and Proper Person Requirements for Directors
• Registration for VAT?
• Depends on services provided – do they fall under
the health exemption for medical services?
‘The primary purpose of the services is the
protection, maintenance or restoration of the
health of the person concerned’
23© Lockharts 2015 23

24. • VAT on provision
• If services are provided by an organisation separate
from the practice, this may be a VAT-able supply unless
the arrangement is purely expense sharing. Needs
accountancy advice.
24© Lockharts 2015 24
Other key issues

25. Declarations of Trust
• For each shareholder
or
• Partnership Agreement
25© Lockharts 2015 22

26. Documentation for
Federation
• Documentation to form a group – support for emerging
leaders
• Articles of association
• Shareholders Agreement
• Minutes and resolutions
26© Lockharts 2015 25

27. • Over 30 years experience helping general practitioners
• Full service” healthcare team for providers covering all
aspects of partnership, surgery premises, employment
contract work and contentious issues
• Extensive understanding of general practice issues and
ambitions and detailed knowledge of regulation, policy,
funding and contracts
• Accredited mediators helping with facilitation
• Structural advice and implementation of mergers and
acquisitions
• Only acts for providers and never for commissioners
27
How Lockharts can help you
© Lockharts 2015 27

28. The Boring Legal bit!
28
The content of this presentation is intended only as
information and should not be considered or relied
upon as legal advice. Lockharts cannot be held liable
for any loss caused by any act or omission as a
result of the information in this presentation.
This presentation, in which Lockharts is the exclusive
copyright owner, is also confidential to those
attending today’s event and must not be disclosed to
or shared with any other firm, individual or
organisation.
© Lockharts 2015 28

29. Contact Details
Lockharts Solicitors
Andrew Lockhart-Mirams
Senior Partner
E: alm@lockharts.co.uk
T: 020 7383 7111
www.lockharts.co.uk
29© Lockharts 2015 29

30. Connect with us
30© Lockharts 2015 30