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How to manage your cashflow when the PCT closes

Daphne Robertson of DR Solicitors identifies some of the cashflow issues that may arise when the PCT closes next year.

The current PCT functions and responsibilities will not simply be transferred en bloc to CCGs by 2013 and practices which fail to plan adequately for PCT closure could be in for a nasty surprise. There are five key ways to protect your practice income from the knock-on risks:

·         Gather evidence of current  arrangements and agreements with your PCT

·         Re-evaluate your cashflow plans for surgery funding

·         Identify and understand your new business relationships

·         Consider potential conflicts of interest and develop your transparency policy

·         Ensure the occupation of your surgery is fully documented

 

Gather evidence:

‘What have the PCT ever done for us?' is a not uncommon refrain. Whilst the PCT may not have been as industrious as Monty Python's Romans, most GPs will, when pressed, acknowledge that the PCTs do provide them with useful services such as IT, administration, premises, clinical support services and more. Many of these services have been delivered through long-standing undocumented arrangements, often without any payments being made by the practice. When the PCT is abolished who, if anyone, will provide these services to you?

Also, given the pressure on every aspect of the NHS budget, how can you be confident about the future pricing of these services?

The first step for every practice when preparing for 2013, is to complete a comprehensive schedule of all the services currently received from the PCT. For many practices the most significant item on this list will be the surgery building, but you should consider all aspects of the practice including clinical and non-clinical services. For each item on your schedule you should decide whether it is important to the practice and then identify whether it is:

·         fully documented in a legally binding contract

·         paid for at market rates

Where the answer to either of these question is ‘no' , you should gather evidence of payment or reimbursement where applicable and any evidence you can find about the frequency and quality of service.  For the most critical services, you should urgently consider seeking to agree a legally binding contract with the PCT which can be novated (transferred) to a new provider in 2013.

Re-evaluation of cashflow

Practices are often not charged for services provided by the PCT, since there was little point in paying reimbursement monies to practices for these monies to be paid directly back to the PCT. In future however, GMS/PMS contracts and associated funding will be held by the NHS Board, whilst the services will be provided (if at all) by the local CCG, Trust, the new NHS property company, or another third party.

This means monies will have to flow in new directions.  What previously passed between the PCT and your practice (or not if a paper exercise) may in future flow from the NHSB to the practice and then onwards to the CCG or other service provider entity.  Key issues for you to consider are whether receipts will cover all likely outgoings (will currently discounted services be priced at market rates by new providers?) and whether reimbursement monies will be received before the expense falls payable.

Identify your new relationships

Your business relationships will in future be more complicated.  This will be a particular burden on smaller practices who operate from PCT owned buildings and who receive most of their support services from the PCT.

You will belong to a consortium with its own constitution and rules, your GMS/PMS contract will be with the NHS Board and your surgery could be owned by the new NHS Property Comany, a Trust or a private Landlord. All of these relationships are likely to be managed at arms length on a commercial basis. 

Understanding the possible permutations in relation to your own practice now, will assist you in planning for a successful transition. You will then be able to identify any special circumstances pertaining to your practice, and perhaps influence who provides these services in future and at what price. Bear in mind that the scale of the change ahead means that some things will inevitably be overlooked or dealt with incorrectly, so don't let it be services critical to your practice.

Manage your conflicts of interest

Conflicts of interest have always existed in the NHS, but in the past they have usually been on a small scale. This is changing as CCGs take responsibility for large commissioning budgets whilst at the same time private providers are encouraged to provide additional services and more integrated care in community settings. GPs will have to choose whether they want to play a role in commissioning care, or whether they want to provide clinical services in addition to their core GMS/PMS contract. 

Where a practice wants to do more than provide core services, we recommend that the partners agree whether they want the practice to be an active commissioner or provider. If the practice wants to do both, we recommend that responsibility is split by partner, and that those partners involved in commissioning do not benefit financially from provider services and vice versa.

The best way to address any perceived conflict of interest issues is through transparency. So long as you don't believe your commissioning or providing activities present you with a conflict of interest, why not simply publish all of these interests on the surgery website and on the notice board in reception?

Occupation of the surgery premises

If your practice operates from a building owned by the PCT, then in all likelihood the building will be transferred to either a Trust or to the new NHS Property company.  Do you have a lease in place clearly documenting your occupation of the premises?  If not, then it is strongly suggested that you take legal advice immediately to ensure that a lease is put in place before the changes are effected.  It is important to understand the liabilities that you will face as an occupier when the ownership of the building changes.  For example many PCT owned buildings are in  a poor state of repair and at some point somebody will have to spend a lot of money on repairs and renewals. If you have a lease, the new owner will be bound by those terms.  If there is no lease, you will be in a poorer position to negotiate your terms and you new landlord may well argue that such liabilities belong to you.

If your practice is sited in a non-PCT owned building, has the PCT underwritten any lease for you or given any guarantees to the property owner?  Who will pick up such liabilities when a PCT is no longer in place, and does such a transfer of responsibilities require consent of, say, a mortgagor?

In summary, the abolition of the PCTs may well open a legal and commercial minefield for practices. These matters can be time consuming to deal with and we would stress the importance of looking at your current situation as soon as possible. Practices would be well advised to seek to clarify and document the position with their current contacts at the PCT, as the new service providers are likely to take a much more commercial and legalistic approach to their relationships. As ever, you should seek specialist legal advice before signing any documents, and specialist accounting advice to help understand the implications of the revised cash flows.

Daphne Robertson is the managing director of DR Solicitors, who provide specialist legal advice to medical practitioners.

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