Funding changes in the NHS mean more and more practices are looking at merging with neighbouring practices as the way forward

There are interesting times ahead for GP Practices operating locally and elsewhere throughout the UK. Several clients have already discussed with us strategies and opportunities as regards mergers and we are assisting them with the process.

The article below from one of our AISMA colleagues makes interesting reading for those considering merger now or in the near future.

Nick Cooper
Barringtons Chartered Accountants

Make your merger fit for purpose

Funding changes in the NHS mean more and more practices are looking at merging with neighbouring practices as the way forward. Andrew Pow* advises on some areas to consider.

If you want your merger to be successful then, generally, it must be for a reason rather than just to create a bigger practice.

Good reasons include:

  • Moving to a new building allowing reconfiguration of services
  • A fall in income streams which may force a reduction in costs through either reconfiguring clinical staff or reducing the cost of back office functions
  • Difficulties in recruitment of key staff following resignation or retirement
  • Allowing single handed GPs to access their NHS pensions and return to work
  • Creating a larger practice which may be better placed to provide commissioned services moving from secondary care to primary care

Know your aims

The starting point for any merger is to identify the aims of the newly merged practice.

You then need to look at how the newly configured practice will meet those aims. Ask:

  • Does the skill mix of the staff allow the practice to perform the services it wants to? For example is there a GP trainer that can lead on training of registrars and medical students?
  • Do the premises allow a reconfiguration of services? For instance, if the practice is moving to a new building then can a common reception be easily set up?
  • Do clinical systems allow ease of merger?

Winners and losers

The next step is to look at the viability of the merger from a financial perspective. Some of the areas to be considered include:

  • What will be the profits of the new practice taking into account losses of income from NHS changes, such as MPIG, and possible new income streams? There will be winners and losers so these need to be identified at an early stage
  • What cost savings can be achieved from merging and reconfiguring staff? For example, do you need to replace a leaving GP partner like for like? If there are recruitment issues then what will you do?
  • Are there any issues to do with property ownership and loan structures that need to be reconfigured?

Practicalities

Prior to any merger practical aspects need to be looked at including:

  • Liaising with your local NHS authorities and, if in England, your CCG to arrange for approval of the practice merger
  • Staff will need to be informed and compliance with employment legislation will need to be adhered to
  • A budget will need to be available to deal with the costs of merging the practice
  • New bank accounts and financial systems will need to be set up
  • The newly created practice will need to be rebranded
  • Setting up new PAYE schemes and NHS pension details for the staff
  • Equipment and premises leases will need to be reviewed
  • Suppliers will need to be informed and credit terms agreed
  • Working capital will need to be provided to the new practice
  • Preparation of superannuable income forecasts will need to be prepared for the GP partners so that pension contributions can be taken at the correct level
  • The old practices will need to take advice on how to close down the old businesses
  • The practices will need to allow for a period of consultation with the patients and should seek advice from NHS England on the consultation process.

Good advice

Having good advisors on board at an early stage can assist in avoiding some of the pitfalls of merging.

Andrew Pow is a director at Hall Liddy Ltd

This article first appeared in the Summer 2015 issue of AISMA Doctor Newsline, the newsletter of the Association of Independent Specialist Medical Accountants.