United We Stand – Explaining GP Federations
GP Federations are becoming a solution to help doctors cope with increasing demands on their services.
Last year, worrying research was released showing that GPs are seeing on average 80 extra patients a week, a situation which is worsening in part due to the UK’s aging population.
- What is a GP federation?
- How do they work?
- When did the law introduce GP federations?
- What are their advantages?
- Are there disadvantages?
- What kind of legal structures can they be formed as?
- What are super-federations?
Last year, worrying research was released showing that GPs were seeing on average approximately 80 extra patients each week, a situation which is worsening in part due to the UK’s aging population.
A recent study, based on an analysis of more than 100 million GPs and nurses across 398 general practices in England, found that the number of weekly consultations per practice had risen from 902 consultations in 2007 to 984 in 2014.
With life expectancy continuing to rise, GPs are embracing innovative solutions to help them cope with a future society that will require more medical attention but with less public money to pay for it. From seeing patients remotely using Skype, to utilising developments in artificial intelligence, GP practices are investing time and money so they can meet the needs of the next generation and beyond.
Beyond this, another way GPs can access the resources and talent they need to meet new challenges, embrace opportunities and deliver the quality care that drove them to be a doctor in the first place, is to collaborate with others by forming a GP Federation.
Many heads are better than one
GP Federations go by many names, including networks, joint ventures, and alliances, but at their heart, collaboration is the main goal.
Before setting up a GP Federation, clear goals should be established. This is a fundamental requirement for any organisation entering into a joint venture. Whether you are looking to combine capital to purchase equipment, share facilities or use the Federation’s combined talent and size to bid for larger service contracts, it is imperative that the aims and objectives of the venture are discussed and documented within a business plan.
Factors to consider when setting up a GP Federation
What is each member practice bringing into the Federation?
To realise the strengths of its members, an inventory needs to be made of the capital and assets that each member of the Federation can bring.
Each practice should provide information about its:
- patients (size, age, gender)
- premises (space, size, owner-occupier/leasehold, services delivered)
- service delivery (opening hours, clinical sessions, non-GP services delivered)
- practice workforce (skills of employees, age and succession planning)
- IT infrastructure
A decision will need to be made as to what legal structure the GP Federation will adopt. Options include:
- Company Limited By Shares (CLS) – this is the limited liability model that is used in private enterprise but can be adapted for a social venture. Shareholders would own the Federation and their liability would be limited. In a CLS, profits are shared amongst the shareholders. The Federation would be run by directors who have various statutory duties to act in the best interests of the CLS and are ultimately answerable to the shareholders.
- Company Limited By Guarantee (CLG) – operated in the same way as a CLS, the Federation is owned by members whose liability is limited by the amount of their guarantee (usually £1). This type of company can also be registered as a Community Interest Company (CIC) or a charity provided it can demonstrate a charitable purpose and comply with strict regulations governed by the Charities Commission.
- Community Interest Company (CIC) – a structure designed for social interest organisations who redistribute profits to benefit a social cause. It is set up as a CLS or CLG and is regulated by the CIC Regulator. Member liability is limited and if set up under the CLS model, the ability to pay dividends can attract external investors.
- Charitable Incorporated Organisations (CIOs) – CIOs are relatively new legal structures which allow GP Federations to register just once with the Charity Commission as an incorporated form of charity (which is not a company). This cuts down the need to report to Companies House and significantly reduces the administrative burden associated with a CLS. Another advantage is that a CIO is a legal entity that can enter into contracts in its own right, thereby limiting the liability of its trustees / members.
- Industrial and Provident Society (IPS) – allows the Federation to operate as a co-operative or for the benefit of the community. Rather than distribute equity shares, as in the case of a CLS, par value shares are issued which can be redeemed at face value. Therefore, the profits and losses of the IPS are the common property of all members. An IPS is run by a management committee which is responsible to the wider membership.
- Limited Liability Partnership – a LLP structure limits the liability of the federation partners while providing the flexibility of a traditional partnership – which is familiar to GPs. Each partner is taxed on their share of the profits.
- Charity – the main advantage of forming a charity is the tax benefits gained. Charity status is difficult to obtain as profits must be driven back into the community. A CLG is a classic example of a charitable vehicle and is subject to regulation by company and charity law.
Getting the framework and governance right
It is important to ensure that the Federation comprises of members that share the same aspirations and objectives. Without this, the Federation is likely to quickly fall apart and diminish goodwill of its members. The size of the Federation should also be a key consideration together with costs.
A business plan then needs to be generated to ascertain the feasibility of the Federation and identify any likely obstacles. This will then allow a Federation to establish a legal structure.
Once a legal structure has been agreed, it is crucial to set out how the Federation will be governed. Although the legal structure will dictate this to some extent, matters such as establishing the values, goals, and aims of the Federation along with the team’s responsibilities and accountability are important. It is also important to establish a clear dispute resolution process at the outset to ensure disagreements are dealt with swiftly.
Why consider a GP Federation
There are many benefits of being part of a GP Federation and these tie in with their overall objectives to provider better access to GP healthcare. They allow standardisation of services and allows GPs to achieve economies of scale that would ultimate allow for greater gains.
If Federations is set up properly and members continue to operate within it in the manner envisaged by it, improvement in training / development, sustainability of its services to patients and improved patient experience are all key benefits.
GP Federations provide a vehicle to encourage creative, entrepreneurial behaviour amongst GPs. They also allow for increased job satisfaction and support among doctors, nurses and other staff, who feel that belonging to a GP Federation provides the resources and support they require to do their job proficiently and make a difference in the community. We can assist you in the process.
Saracens Solicitors is a multi-service law firm based in London’s West End. We have dedicated and highly experienced healthcare law specialists who can assist you with forming a GP Federation. For more information, please call our office on 020 3588 3500.
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