Increasing numbers of practices are becoming part of a federation. But if your practice is going to reap the benefits of federating it is important to understand how your federation can help your business – and how you can influence the decisions your federation makes.
New sources of income
A federation of GP practices is well placed to win pan-CCG opportunities to deliver community-based services which can then be delivered either within primary care (generating rental yields for practices) or by primary care (generating clinical service income for practices).
Depending on the legal status of a federation, GP practices may also benefit from any dividends paid by successful federations or by generating capital gains arising from growth in the value of their shares in a federation. For many GPs, realising benefits via capital gains will be more tax efficient than receiving dividends.
Back office efficiencies
Federations are also well placed to coordinate the delivery of back office services that can be shared by GP practices without losing autonomy. The list of potential efficiencies is long and can include anything from negotiating discounts on bulk purchasing, providing payroll and HR support through to centralising practice management, QOF reporting and financial reporting.
While back office efficiencies can be significant they are not generally sufficient to justify, in their own right, the creation of a federation. Beware the business plan that lists bulk buying of flu vaccine as its main initiative.
Resourcing new primary care initiatives
Practice resources are already being stretched to the limit and yet GPs continue to be asked to undertake more initiatives such as new care models and extended primary care access initiatives.
Whilst the winners of the vanguard bids and those receiving money from the Prime Minister’s Challenge Fund will no doubt have initially celebrated their success, many of them will now be considering where the resource will come from to implement these initiatives. Federations can be a way for practices to deliver on these changes.
How can GP practices influence a federation?
GP practices that are part owners of a federation should consider carefully whether they want to be involved in its day-to-day operations or whether, as in most cases, they would prefer to delegate this responsibility to an elected board of directors and a management team.
Even where practices decide to delegate this responsibility a federation’s constitution (articles and memorandum of association and any shareholder agreements) can be structured in such a way to ensure they can exert influence.
Some federations require approval of an annual business plans at an annual general meeting, offer GP practices regular updates as to progress, provide for them to attend regular meetings with the board of directors and enable them to appoint or remove directors.
Each federation can set out its constitution as it wishes but in my experience all of them are rightly focused on retaining GP practice involvement and engagement.
There is a real opportunity to create federations that make a huge difference to patient care and deliver benefits to GP practices and their teams. However, it is important to remember that federations are operating in a challenging environment and they will need to take a commercial approach if they are to succeed - see my other article for more on this.
- Roger Tweedale is director of Blue Kite Consultants, a specialist healthcare consultancy that provides strategic, commercial and operational support to CCGs, GP Federations, Hospitals and other healthcare organisations nationally. Email: firstname.lastname@example.org