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Guide to practice mergers: Practical issues involved with a merger

There are many practical issues to consider when merging. Dee Lynes looks at what should be addressed early on in the process.

Focus on aligning your clinical IT system first (Picture: iStock)
Focus on aligning your clinical IT system first (Picture: iStock)

If you are considering a merger then you are probably already concentrating on the growing list of tasks that you need to complete – and it is a long list.

Financial and legal advice should be one of your first ports of call. It is essential to complete a thorough due diligence exercise before you commit to a merger. Do not take any shortcuts with this.

Get this information at the beginning so you can make properly informed decisions about whether to proceed. Invest in high quality advice about the impact of the merger on partners’ drawing levels and tax liabilities, and be particularly mindful of the consequences for any partners considering retirement.

Invest in a business transfer agreement, which details how the practices and their assets will be brought together. This should be underwritten by comprehensive warranties and indemnities schedules. This document and its supporting schedules are an extremely important ‘insurance policy’ – see the legal process of merging for more details.

After you have done this, the following tips will help you to identify what else you need to address early on in the merger.

1. Be clear on costs

Mergers are an investment in your future and as such come at a cost. They involve a significant amount of extra work for partners and staff, so be realistic about the time you need to complete this work and the cost.

Be clear at the beginning which costs you will jointly share (and in what proportion) and how these costs will be paid for. Ideally produce a report each month to monitor these joint costs closely.

2. Align IT systems and clinical policies

Discuss your IT requirements with your CSU at an early stage. Large scale changes may be needed in terms of server capacity/location or even a practice migrating to a different clinical IT system.

If the IT systems at each practice are different they will need to be consolidated into one provider, which may take some time, so contact your suppliers early. Other considerations, like making sure email and online services are not disrupted, will also need to be addressed.

There is always variation in the clinical procedures and policies used between practices and one of the benefits of a merger is being able to share best practice. However, it can be difficult to know where to start when creating a new set of policies and procedures.

It’s a good idea to focus on aligning your clinical IT system first. You will need to do this anyway to make sure that the IT migration goes smoothly, but by focusing on the clinical IT system initially other ‘off-line’ variations will quickly come to light.  

Clinical alignment is a complex exercise because how each area of the IT system is configured and used will need to be compared and a joint decision taken about what the new practice will do. Once you have made these decisions then try to introduce the changes ahead of the transfer date at a pace that your staff can cope with.

By the time your IT merges you should have mirror images of each other’s systems to minimise disruption to partners, staff and patients on the day of the merger.

Your local CSU may provide a project team to help you with this exercise. However, be aware that TUPE legislation does protect ‘ways of working’ as well as staff terms and conditions of employment so you need to be mindful of this when discussing changes with staff.

Finally, you will need to pre-book a date for merging your IT systems and this date may not be the same as when your businesses merge, which can create other challenges to plan for too.

3. Agree your decision-making process

The number, range and complexity of decisions that you will be asked to make during a merger process are vast. Often when two partnerships come together they bring with them different decision-making cultures. Agree how joint decisions will be made at the outset. A well-defined, lean decision making framework, underpinned by a strong ‘task and complete’ ethos is essential to delivering a successful merger.

Successful mergers are based on good clear communication between all partners, attitudes of respect, the ability to have direct conversations about important matters and dealing with concerns sensitively and promptly.

Plan events for partners to relax together. Although such events may seem like a luxury, they amount to an investment in the merger process itself and the development of your future partnership.

4. Informing suppliers and other organisations

Whether you have decided on a merger or an acquisition as your preferred model, at least one practice will cease to trade as a business. For this practice, there will be many organisations to inform, each having their own time-consuming processes to follow.

You will also need to notify all of your suppliers (as well as any organisations for whom you provide services or accommodation). In many cases when local practices merge their suppliers are very similar so you may just need to rationalise these from the transfer date.

However, review suppliers at an early stage to better manage any early redemption fees that may apply, especially in relation to telephone contracts where these fees can be significant.

5. CQC registration

Your CQC registration details may need changing (if you have new partners or you are changing your ‘trading as’ name) and all closing practices will need to deregister. It’s a good idea to contact the CQC about what you need to do early in the process.

Guide to Practice Mergers

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