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GP practices face £20,000 losses as federation goes bust

A GP federation providing APMS services for 37,000 patients has gone into administration after running into financial difficulties leaving local GPs thousands of pounds out of pocket.

Danum Medical Services Ltd (DMSL) is a private limited company set up in Doncaster by the 23 local shareholding practices - which DMSL’s website says ’equates to 63 individual shareholding GPs’ - which holds APMS contracts for six practices in the Midlands and Yorkshire.

The company previously held major contracts for an extended hours hub and GP out-of-hours services in Doncaster, but hadn’t managed to secure them again when the contracts expired and went out to competitive tender last year.

As a result, one shareholding practice told Pulse they were facing losses in the region of £20,000.

Doncaster LMC warned other practices, who are increasingly encouraged to federate and deliver services at scale, should be made aware of the liabilities they might be taking on.

LMC medical secretary Dr Dean Eggitt - who is the nominated spokesperson for Danum - told Pulse: ‘DMSL had six APMS contracts, and prior to that ran a number of other services including our 8-8 centre, and our out-of-hours service.

‘In the last year it lost those two large contracts, at the end of the contract it went out to competitive tender.

‘The loss of those contracts increased the financial instability of DMSL, which meant that those APMS contracts, which we know can be tight financially anyway, became difficult to manage within a tight financial envelope.’

Pulse spoke to one GP from Doncaster who wished to remain anonymous but explained their practice was facing losses in the region of £20,000.

They told Pulse: ‘The liabilities practices are taking on are an issue, our practice alone has lost thousands of pounds, I think about £18,000… this is a big blow to the federating of practices, and vanguards etc. It’s quite a hot potato. It needs to be highlighted not all federations are successful, particularly when there’s no support.’

He said: ‘DMSL were not the sort of company to strip services to the bone to make a profit, they were in to provide high quality services. And because they continued providing a high quality service, at a cost, they went bankrupt before they could pull out of their contracts with NHS England.

‘Those six APMS contracts, 37,000 patients, are now being looked after by other providers.

‘I think DMSL’s problem was the same one we all have nationally, you’re not paid enough to deliver care for patients… The reason they have failed is they have tried to provide high quality care on a budget where it is impossible to do so.’

DMSL - whose medical director, Dr Kevin Lee, is also chair of the LMC - has now completed its notice period on its APMS services in Lincoln, Worksop, Redcar, Sheffield, and Leicester and NHS England confirmed it was securing services across the region.

A spokesperson for NHS England (Yorkshire and the Humber) told Pulse: ‘We are aware of the financial difficulties experienced by Danum Medical Services Ltd (DMSL) and we can confirm that contracts they hold to provide GP services in Yorkshire and the Humber have been terminated.

‘NHS England in Yorkshire and the Humber has worked with DMSL and the practices involved to ensure new GP service providers are in place at those practices which means patients can continue to have access to high quality GP services.’

This story was edited at 11:04, on 14 March 2016 to include numbers of individual shareholding GPs, reported practice losses would include several shareholder GPs.

The move towards federations

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Handshake - online

Practices have increasingly been turning to federations as a way of enabling them to share resources and provide a united voice for local health decisions. It also allows practices to retain enhanced service contracts, by allowing federation provider companies to put a single bid and compete for enhanced service contracts against non-NHS providers.

But the GPC has shown that current workload is a barrier to federating for more than two-thirds of practices, and called on NHS leaders to provide extra support for practices to begin working together.

Last year, NHS England and the RCGP surveyed practices again to see what support was needed and produce guidance on best practice for moving to federations. GP federations were among the provider groups appointed by NHS England to run struggling practices, and could potentially step in where a practice is shut-down by the CQC.


Readers' comments (21)

  • Lots of questions unanswered here team:
    - If it was a limited company, why are they facing losses of £20k?
    - Is that £20k/practice, or total?
    - Is that loss of income or capital charges?

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  • Working at scale the BMAs great idea to preserve GP land!

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  • 'DMSL were not the sort of company to strip services to the bone to make a profit, they were in to provide high quality services.'

    And that is why they failed. You have to be utterly ruthless or not bother. Look at how The Practice plc hand back contracts.

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  • GP, public service or business. At scale means cannot be both

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  • So to lose £18,000 a member practice would have had to invest that amount. Had a quick look on Companies House and no shareholder had 18,000 £1 shares.

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  • Nigel: what have we done to verify this story before going to press? If its not at company house, how have they made this loss? Have you seen accounts or details to back this at all? Sounds like a loss of income on 2 major contracts, rather than a capital loss.

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  • or it could be they are a creditor for services provided??? doesn't have to be direct investment

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  • Not the first or the last to struggle...This is the start of a domino effect after 'kicking the can down the road' !!!

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  • The whole thing is absurd, when some practices get 500, others 100 pounds per patient year for providing virtually identical services. It is time to resign en masse from this mayhem.
    This problem has been highlighted years ago, but nobody does anything.
    To add insult to injury, jeopardy to jeopardy = apart from going bankrupt, anxiety and depression, burnout working harder and harder, along comes CQC and says how poor your services are [ at 100/pt compares to 500/pt] !!!
    What a mad mad system. Utterly despicable and discriminatory !The sooner it comes crashing down the better.

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  • I agree there is a lot of detail missing in this story - it may be that they have lost £20K of income having hired staff to do it.

    As a GP who helps run 3 GP federations - i think this story highlights that GP land is protected and safe and although we think of ourselves as independent contractors a GP practice is a relatively safe bet commercially (albeit not as good as it was!) however when you start bidding for services and tenders you are getting into the commercial realities of running real companies for real money. If you want to make profit you have to be prepared to loose money.

    We advise our practices to federate in a not for profit model - use member practices where possible to do work (being careful what additional resources you take on) and not setup a separate expensive infrastructure - reinvest all income into more services and do everything you can to limit liability. Partnering with others with experience and skills is also very useful.

    I also believe that federations should be looking internally - improving their member practices quality, efficiency, robustness and generally improving the service to their patients not rushing into running other services.

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