The consolidation of GP practices is gathering pace, with research showing the rate of mergers doubling in the first half of this year. David Filmer examines the opportunities and pitfalls of a GP practice merger.
Fresh research shows that one in eight GP practices have merged with other practices in the last year, or are planning to undergo a merger in the next 12 months.
The GPonline survey also suggests that more and more GP practices are working together to scale up service delivery. Another key finding is that 60 per cent of practices are part of a collaborative working system, for example a so-called ‘super-practice’ or federation.
The GPonline figures are underscored by numbers released by NHS England that reveal 93 practices merged in the first five months of the current financial year, while an extra 76 are in the pipeline. This contrasts with just 80 mergers in the whole of 2013/14.
The meaning of merging
A merger involves the coming together of two or more commercial entities. Sometimes this is accomplished by one practice continuing to trade while the other stops and its partners join the ongoing practice.
In some situations, it makes sense for GP practices to merge for the delivery of general medical services (GMS) while leaving one practice to provide a specialist service outside the merged activity.
The benefits of joining forces
Practices merge to maximise a number of benefits, such as reducing staff and operating costs, enhancing their ability to meet NHS targets, generate fresh work, and develop a broader service offer.
In addition, a greater number of partners are often able to distribute the workload more evenly, while specialist expertise can be brought under one roof and regulatory requirements can be better managed by harnessing economies of scale.
Mergers also mitigate the risk of GMS contracts and/or personal medical services (PMS) agreements being ended if a contract holder exits the practice because the merged practice will include a number of individual contractors.
Considering the disadvantages
If all parties are not comfortable with the merger arrangement, divisions can develop that can damage relationships and ultimately destabilise the operation of the enlarged practice. Moreover, the income of individuals can be hit as a result of integrating with a bigger organisation.
In addition, mergers require substantial and sustained energy, commitment and motivation to build and develop larger organisations. Sometimes GPs feel disempowered and remote from the decision making process of a large partnership.
Managing relationships during the merger talks
These issues can often be resolved – or better still avoided – by thorough and sensitive preparation. In this way, nothing comes as an unpleasant surprise and an inclusive culture can be fostered that makes all GPs feel valued.
Relationships in GP partnerships are key if a merger is to succeed. Of course this isn’t to say all the partners must be close friends, but they should get on tolerably well and be ready to commit to a plan for collaborative working.
The procedure for negotiating a partnership agreement allows you to assess how effectively individual partners can work together to deliver the merger. A clear warning sign is discord during the negotiations. If this happens, it may be necessary to revisit the thinking behind the merger. However, if the discussion proceeds productively, the outlook for the merged practice is likely to be bright.
David Filmer heads up the mergers and acquisitions team at Harrison Drury. For further advice on merging a GP practices, or any other legal matter relating to healthcare professionals, email David or call him on 01772 258321.
Harrison Drury also has a dedicated healthcare sector team advising GPs, doctors, dentists and other healthcare professionals on a wide range of business and legal matters. Our healthcare solicitors team is headed up by David Edwards, who can be contacted on 01772 258321.