Collaborative Working. Legal Aspects of Collaborative Working. Mergers & Federations Presented by: Rob Day, Senior Lawyer, BMA Law bmalaw.co.uk

Topic 1 Mergers & Federations – what’s the difference? bmalaw.co.uk

What’s the difference? Merger (inc. super-partnership): Federation: A very broad phrase but covers “two or more practices coming together to form a single practice.” In essence there is generally a loss of independence albeit the degree depends on the structure (centralized or de centralized partnership) The partnership model is generally retained “joint and several liability” Federation: Where “two or more practices agree to work together, usually via a separate legal entity, whilst retaining their own independence.” In essence independence is retained. The separate legal entity usually has “limited liability” status. bmalaw.co.uk

Topic 2 Core Considerations: Mergers (super partnerships) bmalaw.co.uk

Core considerations: Merger Heads of Terms (non binding) Structure Business Transfer Agreement Core contracts Partnership Agreement CQC Premises TUPE Pensions Due diligence bmalaw.co.uk

Structure Core considerations: Merger A A 1. B C A 2. 3. C B A B bmalaw.co.uk

Core considerations: Merger Partnership Agreement Business Transfer Agreement Decision making (all centralised, part centralised?) Assets being transferred Holiday & leave entitlement Contracts being transferred Sessional commitment & profit share Sums paid (for stock, fixtures & fittings etc.) Retirement provisions * Terms of employment (retiring partners) Accounts Warranties & indemnities Liabilities (shared/ ring fenced etc.) Premises (at merger) Premises (post merger) Staff/ TUPE * Possibly introduce a grace period restricting voluntary retirements so as to ensure stability. TUPE: inform & consult affected employees long enough before the transfer for them to effectively consult. If there are more than 10 employees then additional hoops will need to be navigated. SPEAK WITH THE BMA’s EMPLOYMENT ADVISORY SERVICE!! bmalaw.co.uk

Core considerations: Mergers Premises. What is the intention with all practice premises? Lease or owned? If leased - can it be freely assigned to the merged practice? If owned - what is to happen? Retained by the practice / or transferred If retained:- Will there be a lease back and if so on what terms? Will there bean option to acquire at a later date and if so on what terms? If transferred:- At what price? [uniformity as to how premises are valued] Is borrowing needed? Is there any borrowing already in existence which needs to be repaid? bmalaw.co.uk

Core considerations: Mergers Regulatory CQC They must approve the merger before it happens. Type of application depends on structure of the merger. A and B merge to form C. C must be registered as a new provider providing regulated activities. A joins B A needs to terminate it’s registration and B needs to apply to vary theirs. Processing times are currently 8 – 10 weeks Pensions Wholly depends on the handling of the core contracts. Each contractor (i.e. one holding a core contract) is regarded an EA bmalaw.co.uk

Core considerations: Mergers Keeping all contracts Keeping one Core Contract Taking a new one Contract variations: Adding /removing partners - 28 days under the PMS/GMS Regs. New contracts: Beware of the possibility of re procurement. Contract termination: 6 mths – PMS 6 mths –GMS(Partnership) 3 mths – GMS (sole contractor) bmalaw.co.uk

Core considerations: Mergers Due diligence. Raising queries. Reviewing documentation. Understanding the differences. Sessional swap? Leases Staff Others Break clauses Contracts of employment Core contract breaches Dilapidations Roles Variations to core contract Rents tracking reimbursement Pay Other contracts (IT/Phone) Service charges Length of service Patient records/ systems Assignment provisions Disciplinary/ grievances bmalaw.co.uk

Preliminary discussions Process: Mergers Preliminary discussions Early engagement Project team Heads of Terms Regulatory approvals Due diligence Clear documentation Staff consultation Completion bmalaw.co.uk

Topic 2 Core considerations: Federations bmalaw.co.uk

Core considerations: Federations Structure Local Authority NHS Commissioners 8 9 JV Partner 6 7 5 4 3 GP Federation 1 2 GP Practices bmalaw.co.uk

Core considerations: Federations Legal documentation Shareholders Agreement Articles Deed of Trust Sub contract/service agreement Lease/licenses JV Agreements bmalaw.co.uk

Core considerations: Mergers Ownership Board Who can be involved? Min & Max? How will ownership be split? Equality Inequality (based on patient lists etc.) Who can sit on the board? Max no. from each practice? Direct representatives Others? Drawing up Heads of Terms/ Memorandum of Understanding. Overarching points Decision making Share transfers Purpose! Shareholder decisions On retirement of a partner, merger etc. Name Director decisions Good leaver/ Bad leaver Service provision Restrictions Resources Sub contracting Non compete How will initial resources be provided? Service Agreement Non solicitation Capital injections / loans etc.? bmalaw.co.uk

Core considerations: Federations Some important points… Flexibility & engagement Consider a management document to identify:- The remits on authority The process for engagement with practices’ Conflicts policy Dispute resolution process Pensions Check the pension implications of any proposed structure. In sub contract models income is pensionable only where the contract follows the NHS std sub contract. CARE NEEDED does this blow open liability. bmalaw.co.uk

Core considerations: Federations Some important points… Consider the tax implications of the proposed structure (particularly VAT implications) CQC (useful guidance on their website) Ask who is/ will be providing the service(s)? If the member practices by way of a subcontract then no need to register the federation. If the federation itself (whether wholly or partially) then it must be registered as a new provider. Insurance Employers’ Liability Insurance. Additional cover for provision of services likely to be required as per any contract. bmalaw.co.uk

Thank you. Rob Day r.day@bmalaw.co.uk 02073836125 bmalaw.co.uk