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The pros and cons of practice federations

How do federations of practices work and what are the advantages and pitfalls of working more closely with other surgeries?

The Health Act may lead to more practices federating (Picture: iStock)
The Health Act may lead to more practices federating (Picture: iStock)

The concept of groups of practices working together as federations was first discussed by the RCGP in 2007. Since then the college has produced a toolkit to help practices navigate what for some is still an unfamiliar concept.

The RCGP toolkit, called Putting Patients First, describes a federation as a group of practices and primary care teams working together, sharing responsibility for developing and delivering high quality, patient-focussed services for their local communities.

Federations can provide a number of benefits to patients, the RCGP document says. These included better access to GP services, tailored services designed for local need and greater continuity of care.

Better services for patients
RCGP federations lead Dr Maureen Baker says the underlying reason for practices coming together as a federation is almost always the same.

‘We think most practices federate specifically to get better patient services. It’s born from a desire to do things better for patients,’ she says. 

However a federation can take a number of forms, ranging from a group of practices meeting informally to a legal entity such as a social enterprise. Dr Baker says the form a federation takes should be based on what it aims to achieve.

One of the most common aims of federations, Dr Baker says, is to reduce costs and consolidate back office functions. Others may join up to address local deprivation or provide out-of-hours services.

Integrated care
By working together practices could also help to deliver the Health and Social Care Act’s plans for more integrated care. When the NHS Future Forum delivered its second report on the future of the NHS earlier this year, it said federated practices would be able to play a 'much greater part' in delivering integrated care.

The report cited evidence that groups covering populations between 40,000 and 70,000 are best placed to offer a wider range of services and improved access. NHS Future Forum chairman Professor Steve Field said that practices working together in a more federated and integrated model was 'the way forward'.

Bidding for contracts
One further advantage of becoming part of a federation is a greater ability to bid for contracts that are likely to be put out for tender by clinical commissioning groups (CCGs).

Dr Baker says federations may be better placed to bid for this work than individual practices because they are larger and represent a smaller conflict of interest.

However, if federations are going to consider bidding for work they need to be conscious of the legal consequences, warns Justin Cumberlege healthcare partner at solicitors Carter Lemon Camerons.

‘A federation is not in itself a legal entity – there are different ways of federating,’ he explains.

Federations therefore need to decide whether they wish to become a legal entity, such as a company or a social enterprise, before they start working. ‘If you want to employ somebody or enter into any legal contracts it is best to be a legal entity,’ Mr Cumberlege says. 

There are also other pitfalls for federations who do not become a legal entites, he warns.‘If you don’t create a corporate entity, potentially you would be seen as a partnership and therefore any one partner is liable for another partner’s actions,’ Mr Cumberlege says.

‘For example if you bid for a contract and one GP or practice breaches that contract, all partners would be liable for that breach.’

Other concerns
GPC deputy chairman Dr Richard Vautrey warns that when joining a federation, practices should also be wary of becoming part of a ‘chain’ - with one large practice owning or merging with a number of other practices.

Dr Vautrey says that under this model individual practices could lose their independence. ‘There is a risk of going down the model where you end up with practices effectively being taken over by a large practice,’ he warns.

Dr Vautrey fears that if general practice goes down this route, it could end up like independent pharmacy where a small number of corporate bodies ‘are effectively running most pharmacies’.

However, as long as practices are able to work together as federations without losing their independence, federating could be a good way for GPs to ensure that they retain work that could otherwise be taken on my private companies, Dr Vautrey says. 

He says federating would be ‘a very sensible approach’ for GPs to use as a vehicle to bid against larger private companies.

As time goes on, and the ramifications of the Health and Social Care Act become clearer, Dr Baker predicts that more practices will see the advantage of working together and more federations will appear.

‘The time is right for practices to look again, or look for the first time, to see if federating will work for them,’ she says.

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