Planning for change: GP practice mergers

You do not have to look too far back in the literature to find the following observations:

“It is important to stress that the move to mergers is still in its infancy”

“Mergers of practices of similar sizes are uncommon.”    

(First Practice Management)

However, in recent years external drivers for change have overturned these observations and both vertical and horizontal integration of GP practices has become commonplace. The 5 Year Forward View (5YFV) confirmed the need for practices to come together to explore innovative ways of delivering Primary Care to scale.

Smaller practices have become more vulnerable to marginal reductions in income.  Staff and partner succession issues and disputes have threatened continuity in patient care. Small practices have often struggled to respond to the ever increasing demands of clinical, administrative and regulatory requirements.

On the other hand, successfully merged practices benefit from the traditional list of positive merger outcomes which includes:

  • better equipped premises
  • greater clinical expertise
  • economies of scale from shared workload and backroom services
  • increased patient list size
  • increased partner income per session
  • multiple contract holders.

Since October 2014 and the publication of the 5YFV, merged organisations are in a stronger position to exploit opportunities and respond to challenges arising from the new plan for Primary Care.

How then should a practice embark upon this complex process of change?  Any successful change management project must involve in-depth planning, sensitive implementation and above all consultation with all parties involved.

A successful merger is likely to have been based on the following:

  • a ‘shared vision’ for the merged organisation and a view on how primary care services will be delivered and improved upon in the future.
  • a feasibility study to define benchmarks for measuring successful clinical outcomes, to define opportunities and risks, a cost: benefit analysis to assess the financial viability of the merged organisation and the likely time scales involved.
  • a focus on short to medium term objectives rather than looking too far into the future.
  • a consideration of the barriers to success and an understanding of the red lines across which individual participants are not prepared to go.
  • full consultation with all parties involved and agreement on contentious issues, covering partners’ income sharing arrangements and working practices, staff working arrangements and organisational structures.
  • consensus on financial and administrative policies for the merged organisation.
  • consideration of property related matters and property ownership which might include opportunities to occupy new premises and dispose of existing property, all of which require full understanding of the financial and legal issues involved.
  • a full appreciation of NHS contractual arrangements and other regulatory issues including if relevant, the impact on dispensary services.
  • an assessment of the impact of the merged organisation on the locality and consideration of new clinical opportunities available to the larger merger organisation.
  •  an evaluation of the resources, advice and guidance necessary from internal and external financial, legal, HR and clinical advisors to achieve the merger.

Moore and Smalley’s healthcare and taxation specialists will support your team in every step of the merger process; facilitating initial planning meetings and feasibility studies, assisting with business plans and financial projections and providing advice on property, VAT and taxation issues.