Mergers, Federation & Succession

Transcription

1 Mergers, Federation & Succession Oliver Pool Introduction Three types of change will be affecting all to some extent Succession. Mergers. Federations. My role in this You can t always see it coming. Illness/disability? Dispute? Insanity? = sudden need for: a) capital to pay out, b) recruitment/locums etc. Not to mention disruption! Unplanned retirement Need succession plans in place. 1

2 Partner notification to the Practice Practice notification to NHSE When to retire? Year end? Succession accounts. Bank hols?! Multiple retirements slowing down the car crash But you can t make people stay. Maximum time period useful. The process of retirement Liability of outgoing partner Liability does not end on retirement Specific releases NHSE. Bank? Proper deed means no need for Deed of Retirement The London Gazette Liability The flip side recruitment! The flip side of retirement recruitment! Is a new partner the answer? Salaried GP? How will it affect the balance of the Partnership and decision making? What skills do you need to replace? How to pay out capital if no replacement partner? Loan, or reduced drawings? Need to update partnerships deed if new partner taken on! Obligation to buy in? Partnerships at will Probationary periods use them! 2

3 Retirement/succession property issues New partners to buy into property? Retired partners to sell their share? Sale and Leaseback? It s important! Decide in advance (to the extent you can), Be clear during recruitment Document it properly Issues re partners not buying in/refusing to buy out big subject! Mergers Mergers Legal underpinning of a merger Partnership not legal entities of themselves Relationship not a thing Easy and difficult to merge partnerships Dissolution 3

4 Dissolution Dissolution can have negative consequences: - PMS/GMS contract can be put out to tender - Loss of MPIG etc - Bank may take opportunity to renegotiate favourable loan deals (depends on what loan terms say) - Staff become entitled to redundancy payments, even if offered reemployment Conversations with NHSE and bank needed early on. How to avoid a dissolution if you really have to There is another way More legal and accounting fees though! Staff have to have joint contracts with all - Legally tricky, and cross charging complicated Think about VAT sharing schemes (e.g. VATHLT 2520 for dentists) Early steps The pre-nup Mostly non-binding Commitment to share costs while discussions are ongoing Confidentiality should be binding (patients, staff, suppliers) If you talk without obligations of confidentiality, there s little to stop people passing things on. Importance of controlling flow of information One person to manage the message avoid conflicting information within the business 4

5 Communication Communication between the partners is essential at an early stage What is in it for everyone? Be clear about your reasons for doing it Discuss and set expectations Document your shared vision Organisational chart? Key issues for discussion Discuss at an early stage 1. Premises Do your due diligence - understand existing premises, who owns them, valuation and liabilities. Freehold covenants and restrictions Leasehold rent and rent review, alienation (Landlord s consent), dilapidations etc. Existing borrowing. Rates and redemption penalties. Is everyone going to own? Other options Separate property company Key issues for discussion Discuss at an early stage 2. Equalisation of profits Can t carry on with one set of partners earning more goodwill rules BMA guidance 3 years to parity Does it stack up if profits are equalised? Ask Ann! 5

6 Discuss at an early stage 3. Are all partners on board? Partnership culture How different are the existing partnership deeds? Key issues for discussion 4. Are all partners on board? Is a minority resisting change? Howe strongly do the others feel? Manage out? Green socks? Need unanimity among the others. Parts of the Process 1. Pre-nup 2. Notifications to LAT and CCG kick things off (They may not be the quickest to reply!) 3. Negotiation of partnership deed [can pull out up to this point!] 4. Signature of partnership deed 5. TUPE consultation (agenda for change?) Redundancies? Don t put it in the business case! Aim to incur as few costs as possible (premises etc) until partnership deed signed. Remember it can be signed in advance with a future effective date. Joint and several liability Worth worrying about! Liabilities 2 approaches: - A full due diligence exercise on other practice to find the nasties - Cross indemnities 6

7 Working at scale Working at scale Various legal structures possible Working at scale - Partnership of partnerships - Company limited by shares - Company limited by guarantee - LLP - Collaboration on a shake hands basis Separate entities. Creating a monster? Servant model Talking shop Lots of engagement Lots of vetos No dedicated driver Ultimately unsuccessful So make sure you set out the rules! Master model Organisation with funded management Little control by members Develops own agenda Gets things done Do you like what you ve created? 7

8 Contracts Whatever the structure, contracts are going to be important. Partnerships aside, how do you get income from federation to individual doing the work? Must have a contract Federations don t have much appetite for contracting. But if they don t use contracts they are buying risk. Commissioner Federation Provider Obligations?? No contract = buying risk! BMA Guidance: on Collaborative GP Networks Contracts For example, a network may bid to provide a LES commissioned by the local CCG. Provision of the service could then be distributed between the separate practices, allowing those with capacity to provide it, whilst protecting those without capacity. A network system can also allow practices to offer direct support to each other if, for example, some members are experiencing short or long term clinical staffing issues. Collaboration Collaboration between practices. Why? To improve local service integration; To develop training and education capacity; To make efficiency savings/economies of scale (i.e. back office functionality, IT, or the procurement of practice services); To strengthen the capacity of both practices to develop new services in the community; To strengthen clinical governance and improve the quality/safety of services; To enhance our capacity to compete with external private sector companies in the future BUT not a merger? 8

9 Collaboration aims Take advantage of skill mix share staff and partner expertise Provide specialist services to each other and to patients Share systems/processes Share knowledge, learning, protocols, policies, best practice etc Economies of scale joint purchasing, staff career structure. All more easily achievable through a merger but it means loss of control! Merger simple, because everything is dealt with by the new partnership s governance/decision making process Collaboration need a meaty contract! No vote/right to direct third party means only control is contractual. Can collaborate on a shake hands basis. Little remedy if things go wrong, or if other party backs out More reliant you are on other party, more a contract is required. VAT issues of sharing staff and back office services etc Are there really economies of scale? Oliver Pool opool@vwv.co.uk