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

2. Topic 1
Mergers & Federations – what’s the difference?
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3. 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.
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4. Topic 2
Core Considerations: Mergers (super partnerships)
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5. Core considerations: Merger
Heads of Terms (non binding)
Structure
Business Transfer Agreement
Core contracts
Partnership Agreement
CQC
Premises
TUPE
Pensions
Due diligence
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6. Structure Core considerations: Merger A A 1. B C A 2. 3. C B A B
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7. 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!!
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8. 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?
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9. 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
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10. 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)
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11. 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
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12. Preliminary discussions
Process: Mergers
Preliminary discussions
Early engagement
Project team
Heads of Terms
Regulatory approvals
Due diligence
Clear documentation
Staff consultation
Completion
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13. Topic 2
Core considerations: Federations
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14. Core considerations: Federations
Structure
Local Authority
NHS Commissioners 8 9
JV Partner 6 7 5 4 3
GP Federation 1 2
GP Practices
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15. Core considerations: Federations
Legal documentation
Shareholders Agreement
Articles
Deed of Trust
Sub contract/service agreement
Lease/licenses
JV Agreements
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16. 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.?
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17. 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.
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18. 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.
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19. Thank you.
Rob Day
bmalaw.co.uk