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Guide to practice mergers: Steps to take before you merge

Dr Jonathan Cope and Claire Oatway explain the key issues practices should address before they even start the merger process.

You need shared agreed values before you enter into the merger process (Picture: iStock)
You need shared agreed values before you enter into the merger process (Picture: iStock)

How do you work out if your practices are a good fit?

Geography and ethos are both really important in identifying would-be partners. There are a lot of synergies often with neighbouring practices – similar patient base, similar partners, and importantly the ability to move around staff if needed. Ideally, we would recommend that you stay within commissioning boundaries. This isn’t essential but a lot of your direction is shaped by other factors and spenders/relationships with your CCG.

When we merged we already knew of each other. The three practices were neighbouring training practices; that was already a common thread that connected us all. There is a certain set of values that training practices have in common – a desire to develop staff and a willingness to invest energies for more altruistic gains for example.

You need to have shared agreed values before you can really enter into the merger process.

From a business perspective you definitely need to have the same ambition and recognise the same threats and opportunities. Similarly, you have to have similar styles around attitudes to investment and where you sit on the growth/efficiency continuum.

Fit is such an important quality, and often isn’t a logical or rational area.  A merger is, after all, a fairly permanent change and you have to feel fairly certain that it’s a decision for all of you.

What should the partners be doing before they start the formal process of merging?

When we were first starting out on ‘Project X’ we were meeting once a month as a broader group. Of course, it is important to keep the dialogue going within individual practices, so that as a group you are fully understanding what is on the table. A small group of individuals was then sent off into the other practices to find out more.

When everyone had answered those initial questions about compatibility and we had a better understanding of winners and losers then we had to decide whether to jump in. We decided to proceed in November and launched the new practice in April.

Who do you need to talk to before you begin the formal process of merging?

In practical terms, our first steps included a non-disclosure agreement and a fighting fund for an initial feasibility study, which paid for time and advice to compare accounts, QOF attainments, practice agreements and conduct HR due diligence. In this stage we would recommend external advice on financial issues, HR, performance, property, and due diligence.

Legal advice around the partnership agreement is also essential. This is such an important document for sustainability and will be an area of focus when you register with the CQC.

We spent quite a bit of time comparing existing partnership agreements and getting partners to agree common ground. We developed a spreadsheet for what we considered the 20 most contentious areas and areas of difference. Exploring those within the group told us a lot about our individual and collective values.

NHS England also need to be involved early because you are talking about a change in practice so timing and co-operation is essential. They have also been really useful in terms of understanding cash flow – such a large proportion of income comes from NHS England so it is important that cash flow is managed. Similarly, changes can affect calculations such as your Cahill scoring – and NHS England can really help churn the figures.

The CCG was also a valuable supporter. For us, they wrote and supported our application to merge. We’ve also been able to understand their commissioning intentions and that has helped us to shape our strategy.

Practices should also speak with other local practices who have merged or undergone similar processes, if possible.

Is it worth employing a management consultant?

Yes. Finding the capacity to manage change is nearly impossible. From our experience, get the consultant properly engaged a month before you merge. There’s probably not enough to do before that. However, talk to them early enough so that they can understand the culture as it's emerging.

A consultant can help you develop a view that is informed by current cultures, vision or ambition, but not shaped by any one organisation. That is really important in developing a sense of a new team, a new partnership and a new organisation. Having a strong sense of direction will help lead you through the learning phase when the various cultures start to rub up against each other.

Do you have any final tips?

Don’t underestimate culture. It is often unstated and deep seated within many individuals in the new organisation. It won’t be easy to describe but will be present in attitudes and decisions – whether conscious or unconsciously.

Get core systems and processes in as quickly as you can.

Finally, go for a quick win project – we were able to drawn down cash from the Prime Ministers Challenge Fund. That helped to bind us together and demonstrate how we can work differently together.

  • Dr Jonathan Cope is a partner and Claire Oatway is chief operating officer at the Beacon Medical Group

Read a case study about how the Beacon Medical Group formed.

Guide to Practice Mergers

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