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How to set up a successful GP federation

GP federations are a way for practices to work together, with shared responsibility for delivering high quality and patient-centric services to the local community.

Their popularity is on the rise and with most CCGs supporting the concept, many practices are being encouraged to consider going down this route. But before doing so, there are some key issues that need to be addressed. The most important of which, is why do it?

To be successful, you firstly need to understand what the purpose of the federation is going to be. For most, it will be to provide services on a scale that a single practice could never achieve.  For example, covering a wider geographical area, or larger population. Often one practice alone will not have the skills set or resources needed to deliver this or to afford the investment it may require.

Once you have established the federation’s purpose, you need to find a group of like-minded practices, who share your vision and will be a good ‘fit’ to work with. 

The business model your federation will follow is another key issue to address. Many of the federations we work with, choose to create a limited company with shareholders.  The reason being that it offers a lot of flexibility is well understood and they will benefit from limited liability.  In addition, if it has been structured correctly then the limited company will be able to hold GMS and PMS contracts, and provide NHS pensions to its staff and officers.

A main alternative route would be to set up a limited company as a regulated social enterprise (such as a Community Interest Company). For more advice on these two options and what the implications may be, see our blog The Benefits of a Social Enterprise versus Profit making Company

Organisational structure

The usual structure followed by a GP federation will be for shares in the limited company to be held on trust for the member partnerships, by one partner from each practice.  It’s important that this relationship is documented in the partnership arrangements of each member practice.

Typically, the capital contributions, dividends and the value of each share will be linked to the size of the practice list.  Other models are available, such as the number of partners, but are far less common. Voting rights may also depend on list size, but more typically they will work on a vote per practice, or follow a weighted voting structure.

Directors of a federation

Directors needed to be appointed who will act on behalf of the federation – not solely in the interests of their own member practice.  These directors should be chosen by the shareholding practices. For smaller federations, there will often be one per member practice, but in larger federations, this isn’t normally advisable as it can become unmanageable.

Most directors will be drawn from the partners in the member practices, but this does not need to be the case.  Some of the more successful federations look externally to hire in experienced directors, with the aim of helping to drive the federation forward.  This does, however, come at a cost.

Rules and rights

It’s important to draft a shareholder’s agreement which will set out all the rules for any important matters, such as joining and leaving the federation, valuation of shares, voting rights and processes, restrictive covenants and delegation of responsibilities to directors.

Another aspect that needs documenting is the relationship between the member practices and the federation. Usually, the federation will hold the contracts with the commissioning body (such as the CCG, local authority, or trust). These contracts will then be delivered by the member practices.  One benefit of this is that the federation will have no need for employed staff and if it isn’t providing the services itself, it won’t require CQC registration.

A disadvantage is that the relationship between the practices and the federation will be quite complex, because you need to think ahead and plan for any potential problems that may arise. The commissioning body would look to the federation if there is a problem with delivery, who in turn would look to the practice. This means there needs to be a documented sub-contract relationship and any contract held by the federation needs to permit this.

It can also cause problems for pensions from the associated income being passed through the federation, so you need to take specialist advice in this area. Additionally, it is important to think about who needs to hold professional indemnity insurance.

The secret of success will always come down to thorough planning and having the right professional advice to ensure you navigate the complexities of the process and protect your interests.

For more information about forming a GP federation, or for any other enquiries, then please contact Daphne Robertson on 01483 511555 or email d.robertson@drsolicitors.com