Our Services

Practice Mergers

At GPS we acknowledge that change is never easy, and this is most certainly the case when organisations undergo a merger and/or restructuring exercise. We assist merging parties with all happenings to ensure that everything goes smoothly and to plan.

In an increasingly challenging environment, many GP practices consider merging to be one of the best options to help their businesses thrive. We have therefore documented a high-level overview of some of the key legal issues we will assist you with throughout your merger journey. 

 

Mergers in primary care

Whilst the term ‘merger’ is used to cover a very broad range of transactions between providers in primary care, it is generally used to cover a situation where two or more practices come together under common ownership.

This common ownership model may take several different forms. For instance, in a situation where two practices are merging (Practice A and Practice B):

• The owners of Practice A may take over the ownership and operation of Practice B with the owners of Practice B falling away.
• The owners of Practice A and Practice B may join to jointly operate both practices.

Whichever model applies, we will help you weigh up the potential benefits as well as disadvantages to determine whether it is the right decision for all parties.

 

Benefits that come from working at scale

There are several potential advantages of merging, depending on the circumstances they may include:

• Creating greater stability as a practice or group of practices (this is usually achieved through the creation of a larger partnership owning and operating the practices or through the practices falling within a larger existing organisation).
• Creating a greater opportunity to establish broad multi-disciplinary teams that enable an effective output to proper triage.
• Creating the ability to offer increased or extended patient access.
• Reducing costs by bulk buying supplies across multiple sites/practices.
• Creating the opportunity to reduce the base line costs through the sharing of functions, facilities, and premises.
• Creating the ability to reduce workload pressures and the over reliance on temporary staff by establishing a broader more permanent practice team.
• The potential to gain greater clinical expertise and skills.

 

Potential pitfalls of a merger and mitigation strategies for success

If the merger is not planned and prepared properly, it can lead to strains within the partnership and cause a breakdown in relationships.

It is important that all the parties communicate effectively throughout the merger to ensure it is successful. We will act as an intermediary and meet with the main stakeholders regularly to discuss the combined ethos, the shared operational functions and ultimately the progress of the merger.

We will help you prepare a business plan which identifies:

• The business proposal.
• The shared objectives, aims and vision.
• Background of practice A.
• Background of practice B.
• The business plan for year 1, 5 and 10.
• Reasons and benefits of merging.
• Communication and consultation strategy with staff, patients, and commissioners.
• Potential timeline.

 

We will help you identify specific liabilities, costs and income which pre-date the merger 

In connection with liabilities, we will take action to mitigate the liabilities or to ring-fence them as part of the terms applying to the merger, so it is clear which practice / party is responsible for which liabilities. In addition, we ensure there is greater visibility on the likely recurring costs that may be borne by the owners of the merged practice, parties may look to articulate clearly which contracts (commercial contracts) will form part of the merger and those that won’t.

 In terms of income and costs, we will help you be clear (and document) how income and costs up to and including the date of merger will be apportioned. We usually complete this on a time basis, so those attributable to a specific practice for the period pre-merger will be borne to the party/ parties that operated/owned that practice.

 

We will assist you to determine decision making processes

This is difficult to mitigate against since the aim of the merger is to create a larger partnership or ownership by an existing larger entity/organisation.

However, we ensure decision making is very clearly set out in the newly drafted partnership agreement (if the merger is between partnerships) or other working arrangements so there is clarity on (i) what is expected from all parties post-merger (ii) how much influence each party will have and (iii) how decisions will be taken.

With partnerships, various possibilities exist. We may advise on and if agreed, help create an executive team with representation from all practices, creating a list of reserved decisions that require the consent of all or a set majority of partners etc.

Each practice may end up sacrificing an element of their independence post-merger. We will ensure that all parties have a shared aim or ethos. Discussions will be facilitated during the very early stages to ensure that all parties are working towards achieving the same objectives and are aware of each other’s expectations.

 

We will commandeer the patient consultancy process 

We will ensure the proposed merger is communicated with patients and that there is a clear plan to merge the operations of the practices involved. A plan for comms and for the merger of operations is established ahead of completion.

 

We will advise on cost and time constraints during the infancy of a merger 

We will ensure you are realistic with timescales. From experience, we know that a rushed process (particularly when it comes to determining the ethos, operational and legal terms governing the practice, or its owner’s post-merger) the more likely you are to create a period of instability and uncertainty at the outset of the merger. 

We will create a timeline as a reference point and to ensure deadlines are met to avoid any unnecessary delays. A cost analysis of the merger will also be established to understand the financial implications of the merger and our accountants will provide impartial financial advice to all parties. The parties will be advised on profitability, expenses, capital contributions, operating funds, tax, core contract value, assets, and redundancy payments.

 

Other legal, regulatory, and operational matters

• We arrange all the necessary paperwork for NHS England, Integrated Care Board and CQC approval.
• We commandeer the whole process of IT infrastructure and the technical merger processes.
• We ensure all due diligence is undertaken at key milestones.
• We liaise with PCSE and NHS Pensions.

 

Premises 

We facilitate discussions and create a plan for premises and how best to utilise them. There are several options available including operating from separate premises, operating from one of the current premises (albeit the approval from the ICB will likely be needed, as this will represent a variation to the core NHS contract that stipulates the need to provide services from the locality that is being dropped), or investing in a new purpose-built surgery premises. 

We will consider how the premises are owned, whether they are leased or owned and if the latter, whether the premises are owned as a partnership asset or a personal asset – and how they will be handled on completion of the merger (i.e., will there be a sale and leaseback, will they be acquired by the continuing partners/ owners etc). 

We will advise parties on any tax consequences that may arise from the proposed handling of premises (whether CGT, SDLT or otherwise) will be considered early and borne in mind.

 

Retiring partners

It may be agreed that some partners will retire either before or after the merger. Where this is the case, we will ensure the terms of the partner’s retirement is agreed and documented. If they are to continue in a salaried role, we’ll establish the terms applicable to their employment and ensure they are agreed and documented.

 

Employment and TUPE

We will facilitate discussion on whether there is a need to take measures in connection with the staff, because of the merger. For example, issues concerning duplication in roles, inconsistencies in duties or differences in salary and leave entitlements may arise. 

Depending on the structure of the merger, we may need to assist with the requirement to inform and consult with staff in accordance with TUPE regulations.

 

Key takeaway

The above brief provides a high-level summary of our merger services and by no means exhaustive.

If you have any further questions, please contact us and a friendly member of our team will be happy to assist.

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