andrew lockhart mirams federation forming and alliances

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

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Page 1: Andrew Lockhart Mirams Federation Forming and Alliances

Federation Forming and Alliances

General Practice Management

4th June 2015

Nottingham

Andrew Lockhart-Mirams, Senior Partner

Lockharts Solicitors

© Lockharts 2015 1

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What is a Federation?

All sorts of things to different people!

GP FederationsGP Provider CompaniesSuper Partnerships

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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

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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

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Federating – The Key Points

• Purpose• The correct structure• Liabilities of members• The mechanics• A rule book

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Federating - The Purpose

• What can be achieved• Protection – Replacement• Profits• Patients• Population

• Back room• Sharing staff• Clinical services• Premises

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Size• The nature of federation alters based on size and

purpose• 50-60k patients• 100k patients• ???

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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

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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

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• 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

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Companies Limited by Shares

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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

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How providers function as share companies

• Shareholders own• Directors execute

• Either directly or

• By delegation• Directors are employees - ? service contracts• If directors perform - ? subcontracts

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The majority of work is “drop-through”

• Commissioner

• Provider

• Performer

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How do performers interface with CCGs?

• Almost always indirectly – in contractual terms• But there is bound to be a lot of discussion

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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

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Employment – contractual changes

• Consent/Agreement essential

• No agreement = a breach of contract, save where statute requires a change

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Alliance Working

• 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

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Collaborative Working

• Collaboration also brings enormous challenges which should not be ignored

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Big gains

• Policies• Manuals• High calibre management• Internal referrals• Employment of specialists• Critical mass – but practices retain independence

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But with all federating a key issue is…

Liability

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Other key issues - 1• Directors and shareholders – differences• Types of share – ? redeemable• Share funding• Share valuation• Exeter list

Profit Not-for-profit

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• Pensions

• The “Classic” APMS Scheme – person eligibility

• The Independent Provider Scheme – contract eligibility

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Other key issues - 2

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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’

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• 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.

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Other key issues

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Declarations of Trust

• For each shareholder

or

• Partnership Agreement

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Documentation for Federation

• Documentation to form a group – support for emerging leaders• Articles of association• Shareholders Agreement• Minutes and resolutions

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• 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

How Lockharts can help you

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The Boring Legal bit!

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.

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Contact Details

Lockharts SolicitorsAndrew Lockhart-MiramsSenior Partner

E: [email protected]: 020 7383 7111www.lockharts.co.uk

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Connect with us

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