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Getting your GP model off the starting blocks

Business strategist Mo Girach gives 10 steps to follow to get your GP-led model off the ground and avoid potential pitfalls along the way

Business strategist Mo Girach gives 10 steps to follow to get your GP-led model off the ground and avoid potential pitfalls along the way

GPs are already familiar with many aspects of running a business, but setting up a GP-led provider unit requires a very different way of working. For GPs used to working in practices, running a corporate unit will present many potential pitfalls along with the new challenges.

Step one: Build trust and learn corporate working

It is vital to establish these from the very beginning. Working as a corporate unit with 20 or 30 others is a very different proposition to the usual practice model and requires a different mindset. Some of the new challenges this presents are summarised at the bottom of this article.

How do you establish trust between the members? The issue should be raised and discussed openly, but you will also have to take a risk.

Make sure everyone is clear about these issues at the outset.

Step two: Identify who will be involved

One way to start is by like-minded GPs getting together to thrash out the principles of working together, perhaps on an away day.

Start by identifying the number of GPs who are interested and whether you will include other disciplines such as consultants or nurses.

You may decide to involve the other disciplines from the start, or you may find it better to bring them in later, but it is important to agree on how you will manage the other professionals.

Step three: Agree the amount each of the investors or partners will invest

The investment and share policy should be made clear from the start. Will GPs bring their own money or will it be borrowed? How much will each person invest? You may decide you want to put a ceiling on this.

Will shares be allocated equivalent to the investment – that is, the more you invest the more shares you have?

Some of the financial questions you need to consider are summarised at the bottom of this article.

If this is not all made clear from the outset then problems can arise when the time comes to share profits. One partner may not understand why someone else is getting more if it had not been made clear at the beginning that a smaller investment would mean a smaller share of the profits.

Misunderstandings can cause huge problems within the dynamics of the group so it is vital to involve and seek professional advice and guidance from a lawyer and/or an accountant.

Step four: Get a signed written commitment

All the investors need to sign a commitment to going ahead, with perhaps a non-returnable deposit to set up the company.

This need only be a brief agreement between the consortium and the individual GP members, but it will guard against the possibility of someone changing their mind and pulling out or wanting to change their share. If this happens once the business plan has been set up, but before the contract is signed, it will cause huge problems for those left in the lurch.

Step five: Know your marketplace

Be clear about the purpose of your health provider organisation. It may be your passion or hobby, but will it appeal to your consumers and is it a viable business proposition?

It is fundamental to carry out as much market research as possible. Three things that you seriously need to consider are:

• who your competitors are

• the size of the market

• the demand.

You may decide it is worth employing someone to do this market research for you, or you may do it yourself (with help from the internet!).

GPs involved in PBC will already have a good idea of the market as they are commissioning in it.

It is vital to know who your competitors are. Again, GPs involved in commissioning will already know a lot about who else is out there but you cannot do too much ground work here. If a large organisation is willing to go into competition against you with a loss leader you are unlikely to be able to compete.

Step six : Check you have the right skills and knowledge

Do you have all the necessary skills to turn the proposition into a thriving business?

These include:

• general management

• operational management

• financial management

• corporate management

• PR and marketing.

What is the vision of what you want your business to achieve? Where do you want to go and how are you going to get there?

Step seven : Ensure the legal structure of the business is sound

It is vital to get good legal advice from the outset so you understand the structure of starting a thriving business. It will also help you understand the roles and responsibilities of the directors, company secretary and chairman, such as due diligence, duty of care and statutory responsibility.

You will also need to understand the different types of company. Should you set up a limited company by guarantee, or a company by shares? You will also need a constitution (Memorandum and Article of Association).

It is also important to be clear about what responsibilities are set for providing healthcare services; for example, is your business in line with and meeting all the Healthcare Commission requirements?

Step eight : Have robust guidance and support

It is a good idea to have one person as a coach or mentor to look step by step at the business and provide leadership. Either the lead GP or someone you employ with substantial management experience should be able to step back and take an overview of your business and be able to guide and advise you at every step.

When you start to recruit, think about the skills you require? How will you manage and run the organisation?

Make sure you have the right people to cover all the skills and knowledge needed, but be careful as the more people you employ, the higher the cost of running your business and overheads! Don't be tempted to employ managers, deputies, assistants and so on. You can always add more people later on as your business grows.

You may want to seek appropriate HR support as employment law has changed so much under the new EC regulations to include employment contracts, staff pensions and so on. Staff will not be entitled to NHS pensions, unless employed by a practice and seconded to the business.

Step nine : Get the communication right and choose your premises

The communication infrastructure needs

to be right from the outset. It will cause real problems if you have to change things after a short period of time. Think about what you will need now and in the future.

• Agree the name for the company as early as possible. This will give you a focus and an identity. Keep it simple and memorable.

• Consider formal and informal communication, including a website.

• Think about your needs for fax, telephone and answering services.

• Decide on a business registration address. You could use a practice address or even your accountant's address to begin with.

Step ten : Identify where and how to secure business

Your work in commissioning will help here. Setting up your business involves agreeing

a strategy and a robust and clear business plan, which all members need to be involved in contributing to from the start.

An outline business plan can be formulated, and taken to an away day involving all interested parties, to be agreed in principle and in context , so that it is owned by all members of the company – this business plan will be key to identifying potential expenditure and income as part of securing new business.

You may want to form a strategic alliance with a larger well-established health company or enter into a limited liability partnership, another common model for GP providers. There are a few companies who have already established a number of these with groups of GPs.

Mo Girach is an independent business strategist specialising in PBC, social enterprise and the setting up of GP provider units

Financial questions to consider

Here you will need to take advice from your accountant – though there are some questions to consider first:

• Do you need a loan or grant as well

as equity?

• How much does each person invest?

• Do you want each investor to invest the same?

• What happens when the time comes

to sell the company?

• What happens if one person decides

to leave after a year?

Specific challenges that will need addressing

All the following may be outside GPs' normal experience and could present specific challenges

• Clinical governance Put in place clear and easy-to-understand policies and procedures to include clinical supervision, complaints procedures and clinical audit

• Performance management You will have to manage staff, contracts, directors of the company and so on

• Information sharing between partners Put systems in place to ensure there is good communication between the members and the board of directors at all times

• Making it work for patients Create

a seamless and connected service

• Lack of track record of delivery The business will be new to the market with

no track record of delivering services. With so many big health providers entering the health market it may be difficult for newcomers

• Little experience of multiple provider behaviour in long chains Running a GP practice and running a company with

a number of GP members are completely different ball games

• Leadership qualities Ensure you have excellent leadership skills and qualities, including business acumen and all

relevant skills

• Corporate governance Relations with Companies House, formulation of the company constitution, AGM, elections of directors, formulations of job descriptions

of directors, company secretary and chair, formulation of annual accounts and so on

• Managing networks You will need to network well with the local health economy, and beyond

• Partnership and whole system approach You may wish to form strategic alliances with other similar businesses or perhaps

a larger health provider, but make sure you are clear about what your objectives are at the outset

• Thinking outside the box You must be real entrepreneurs, creative and innovative

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