GP Practice Mergers

 

The push towards being part of a larger clinical entity is showing no sign of abating – and we are no longer talking in terms of a “large” practice constituting 10-15k patients; we are now talking in terms of list sizes – and Contracts – governing 30-50k patients!

And whilst mergers may initially have been regarded as providing an escape route for retiring GPs, they are increasingly being seen as the only way forward for those who intend to remain in practice. In fact, far from being viewed as representing a failure on the part of one of the merger partners, it is now the case, that it is the strongest practices, which are the ones forging ahead together to create practices, which increasingly resemble superpartnerships. And far from the partners in those practices fearing they will lose their identity, they are only too keen to embrace the new “all-singing/all-dancing brand” of which they become a part. In fact, they recognise it to be a far safer place from which to practice on the basis they are too big to be allowed to fail!

Against this background, we have seen a huge increase in the number of GP practices across the country wishing to merge their practice, not only with another from their locality but also with others further afield.

However, a merger should never be regarded as something which can be “sorted” whilst having a chat over a cup of coffee, as there are significant legal steps surrounding it, which you may ignore at your peril!

So what are the issues to be considered?

Early advice

It is assumed the partners from each practice will already have sat down together and discussed the key principles to govern the new arrangement.

Before even contemplating proceeding further, each side should then seek early advice from its Practice Accountants to ensure the proposal makes good financial sense. There is no point in investing your time and money in taking this forward unless you are fully aware of the implications of doing so.

If the financial advice is generally positive, the next step is to run it past both Practice Solicitors to ensure there are no legal impediments to your particular arrangements which might later throw a spanner in the works. NHSE should be your next port of call, to ensure they are not likely to voice any objection, based on service delivery under the proposed new arrangement. Whilst it might theoretically be possible under GMS to present the merger to NHSE as a fait accompli (see below), it would be a brave practice which choses to do so!

Once these preliminary steps are out of the way, you can start to put your plans into action – so who should you talk to – and when?

The Process

Many practices believe the steps required are mostly practical in nature and that in terms of the legal arrangements, only a new Partnership Agreement is required to document the terms of the merger. However, this is only one aspect of the merger – and the same legal principles that apply to commercial mergers apply equally to GP practice mergers.

Stages to follow

In summary, the “best practice” format to follow is as follows:

• Stage 1: Identify and agree those matters which are governed by principles/legal/tax issues which may be regarded as being other than entirely straightforward; “formally” exchange information about your respective businesses by way of a “due diligence” exercise (which will amount to a “legal representation” which may later be relied upon); negotiate the Business Transfer Agreement (BTA)

• Stage 2: Exchange the BTA (the equivalent of exchanging contracts on a house sale/purchase – where you are committed to proceed but have not yet completed)

• Stage 3A: Line up the remaining more straightforward) issues in preparation for completion

• Stage 3B: Actually complete those issues which are legally required to be in place at the time of completion

• Stage 4: Completion of the merger

• Stage 5: Deal with post completion matters

Conclusion

There is a great deal to do when initially contemplating, and then implementing the procedure to enable a merger to take place. Partners may find the process daunting and outside their comfort zone – but provided they have the right support and guidance throughout the process by engaging specialist solicitors, accountants, valuers – and perhaps a project manager to oversee the merger – it can present a positive solution to help overcome the challenges being faced by the primary care community today.

Articles from the Newsbrief: Five Year Forward View – next steps for primary care , Updated GMC Guidance on Confidentiality 2017 – what you need to know, Lease repairs for surgery premises – tackling and managing the risks, Retirement of a GP – checklist, Lease overheads in GP Practices – reducing service charge liabilities, Lies and ignorance – dangerous bedfellows.

Click here to read the Spring/Summer edition of Hempsons’ Practitioners Newsbrief in full.