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A faulty production line

Investigation: Competition leads practices to seek new alliances

As millions of pounds of enhanced services are put out to tender, practices need strength in numbers to lock horns with the private sector, finds Alisdair Stirling

Bigger is definitely better in the new ‘marketised’ NHS. GPs across the country are waking up to the potential threat from the NHS reforms and are seeking to band together to protect their practices.

Pulse has found at least a fifth (22%) of practices across England have already decided to take on the competition by bidding for enhanced services as part of an alliance or federation that can offer commissioners economies of scale when services go out to tender.

As experts caution that practices are being overlooked in favour of larger providers in the bidding process, the DIY spirit that led to the formation of GP out-of-hours co-operatives in the mid-1990s is being revived.

Pulse revealed last month that millions of pounds worth of enhanced services are due to be put out to competition from April by CCGs and local authorities, and LMCs have warned practices that time is running out to prepare for the stringent requirements that some commissioners are demanding under AQP or full tender.

A Pulse survey of 462 GPs confirms that more than a quarter (27%) are aware that enhanced services are being put out to competition by their own CCG from April. Worryingly for practice income, 24% of those say their practice has decided not to bid to run the services. But of the 30% who say they will bid, three-quarters intend to collaborate with other practices to do so.

Dr Martin Thornton: Joining a large-scale national federation

Dr Martin Thornton - online

Like most practices considering joining together with others, we saw a number of threats and opportunities on the horizon.

The threats arose from having to compete with other external GP providers and dwindling NHS resources. The major opportunity lay in the fact that, as a practice that prides ourselves on the quality of care we provide, we would have the chance to join the Quality Practice Federation, a national body that shares the same aims.

Now, the federation can bid for contracts on a national level on our behalf. We just wouldn’t have been able to bid for things like occupational health or Ministry of Defence contracts if we had joined a local federation. We also liked the idea of being able to tap into national expertise using the federation’s intranet platform.

We hope that as the federation expands, that will benefit us as a practice. We’re very happy with our local reputation but the ability to be more widely known – to be part of a bigger brand – will be a benefit nationally.


Some GPs are ahead of the curve. Dr Nigel Watson, chief executive of Wessex LMCs and the GPC’s lead on commissioning, says his practice in Hampshire has already federated with two others.

Dr Watson says: ‘This enables us to have a single practice manager between the three and to some extent share premises and back-office functions. We’ve also formed a provider company across the whole of the New Forest with 17 practices. This is because CCGs want bids to cover whole localities.’

He cites the example of the Whitstable Medical Practice in Kent – a so-called super-partnership providing specialist services such as physiotherapy and radiography in the community – as the way he’d like to see things go locally.

He says: ‘I’d like to merge our three practices. Then we’d be big enough to offer wrap-around mental health services and separate out long-term care, bid to open seven days a week and take on out-of-hospital care. That’s the model where you can really start getting influence and economies of scale.’

Economies of scale seem to be what commissioners are looking for. In Newham, east London, GP practices were told recently that they would lose out on enhanced services contracts if they did not form alliances.

Newham CCG chair Dr Zuhair Zarifa said: ‘We are being asked to commission extended primary care services and that cannot be sustained by a small practice. That really has to be supplied by a bigger organisation… if you do not federate you can carry on but you will be doing so within a shrinking resource and your financial situation will keep going down.’

Practices outgunned

Tendering consultant Janet Roberts, director of Tendering for Care, also predicts individual practices will struggle. She cites a recent council tender for an alcohol misuse service LES, for which two practices bid. ‘Neither was successful. There were over 80 bids, two from international companies, three from national companies and one from a charity.

‘[The practices] did not know what is required to tender. Local authorities won’t take the risk with GP practices unless they can prove they can do the job.’

The Suffolk GP Federation is often cited as an example of how a federation should work. It includes 63 practices, covering more than 600,000 patients, and recently won a £10m contract to manage adult diabetes services across north-east Essex.

Chief executive David Pannell agrees that a certain size is needed for a federation to be economically viable.

He says: ‘My worry with a lot of federations coming together to bid for LESs is that they just won’t be large enough. They will have to take a large-ish slice of the LES income just to cover their costs. It may not be viable.

‘The reason we could take on a single contract for LESs across all our practices – if that’s what our CCGs want – is we have other contracts that make us sustainable.’

Mr Pannell adds: ‘I think what’s happening now with federations starting up too small is you could end up with a lot of sub-scale organisations which end up just being a legal shell, like in the early days of practice-based commissioning. It’s quite possible many will have to merge.’

But other powerful GP federations are springing up. Nicky Collins, a partner with solicitors Browne Jacobson, has been involved in setting up two large federations in the Greater Manchester area, including the South Manchester GP Federation, comprising more than 20 practices.

He says: ‘In some cases GPs have collaborated as a defensive measure. But other groups, including the South Manchester Federation, have recognised that the opening up of the market potentially creates new opportunities.

‘The changing landscape should now be an incentive for GPs to collaborate on a more extensive scale.’

Future flexibility

And the possibility of a lucrative sell-off in the future should not be ignored, Mr Collins says. ‘There are a number of collaboration options open to GPs. A social enterprise company may be appropriate for non-profit-making activities, but my advice is usually to establish a structure, such as a limited company, which offers GPs the flexibility to take advantage of opportunities to bid for services more widely later on.

‘This also gives the GPs the option to sell their organisation to another healthcare provider or work in partnership with other commercial organisations in the future.’

Dr Phil Yates is a GP and chair of the GPCare provider organisation, a federation of 100 practices in Bristol.

Dr Yates says: ‘I don’t think it will be possible for individual practices to bid for and win CCG-wide contracts. There’s a danger we will lose out to pharmaceutical companies and even supermarkets.’

He says the ‘unremitting workload’ faced by individual practices means they need to work together. ‘A federation can take care of procedures and administration, leaving them free to concentrate on doing the best for patients.’


But there are concerns large federations could lose their local focus. Professor Clare Gerada, who as immediate past chair of the RCGP was a key proponent of GP federations, is worried about the non-geographical model of some.

She says: ‘As budgets decrease they will inevitably cherry-pick both patients and practices and then you’ll be left with sink practices, sink patients and sink estates to deal with. The beauty of general practice has always been that it is for everyone in an area.’

Professor Gerada, who is also a partner in the Hurley Group – a rapidly expanding chain of 17 London GP practices and walk-in-centres, particularly targeted at deprived communities – advises GPs to begin by talking to one another.

‘Start by talking to your neighbours, then seek resources. Look at what you want to achieve. Don’t be afraid to think big. Start with an umbrella organisation and use the RCGP toolkit to help you.”

Practice alliances: what are your options?


What is it? The RCGP defines a GP federation as practices ‘working together to share resources, expertise and services’. It can be anything from an informal association of practices to a full-blown ‘super-partnership’.

Pros Strengthens capacity of practices to develop and compete and tender for services. Allows greater efficiencies and economies of scale.

Cons Management costs – but the larger the federation, the lower the unit cost per practice.

GP provider organisation

What is it? An organisation enabling a group of GPs to bid for contracts for clinical services. Can take legal forms ranging from an informal association to a social enterprise or limited liability company.

Pros: Sharing expertise helps practices win contracts and generate new income streams. They can also share resources and costs, with possible cost savings and reductions in tax liability.

Cons: Potentially liable for variable quality of care at other practices.

Social enterprise

What is it? An organisation with primarily social objectives and with restrictions on the reinvestment of profits. There is no single legal model for social enterprise; they include companies limited by guarantee, industrial and provident societies, and companies limited by shares. Some organisations are unincorporated associations and others are registered charities.

Pros: Flexible and can support innovative ways to achieve a social purpose.

Cons: Since social enterprises are businesses, they can of course fail if the market changes or an idea doesn’t work out.

Community interest company

What is it? A new type of company, designed for social enterprises that want to use their profits and assets for the public good.

Pros: Easy to set up, with all the flexibility and certainty of a limited company form.

Cons: As above – restrictions on the distribution of any profits.

Limited company

What is it? A company owned by shareholders. A legal body in its own right with an existence that is separate in law from its owners. The company can thus be sued and sue in its own name.

Pros: Limited liability offers business protection for shareholders.

Cons: Banks require personal guarantees from directors. Greater administration and accountancy fees, and less privacy as accounts are public records.


What is it? A full amalgamation or merger of GP practices.

Pros: It is an extension of the GP partnership idea and therefore easier to run, while still allowing delivery at scale.

Cons: Mergers can stall as a result of  insurmountable financial or personal goals of potential partners.

Readers' comments (3)

  • Vinci Ho

    (1) Life goes in full circle. What it used to be GP Co-operative is just coming back. The difference is you have all these enhanced services floating around for you to catch plus the '7 days open' issue.
    (2) There is a difference between every GP practice open 7 days(obviously what politicians wish) and only one or two sites in the 'GP federation ' being open in out of hours. That is not something the public has understood.
    (3) Then it is the bidding process for enhanced services: to ensure that you , an AQP, will be selected in the final interview, you have to be big , really big in size with guaranteed financial stability . Thanks to section 75, CCGs are obliged to let everybody come in to bid . And you know the score , of course.
    (4) The irony is when you are big and have got 60+ local practices in the federation , many of you will have members sitting in CCG . There comes the conflict of interest . You know then those private companies will come after you! Isn't life interesting ?
    (5) Partnership of 4-5 is already difficult to ensure everyone gels together , a super-partnership is a high mountain to climb unless certain independence is still preserved.
    (6) Yes, you can have a federation controlled by a few partners(big brothers and sisters ) and otherwise all salaried doctors (many many of them) but are they really happy with the way they have been treated by bosses?
    (7) The government ultimately does not care and just want to squeeze every single drop of juice out of general practice . No New Money--as the report from Institute of Fiscal Study (IFS) states:
    After adjusting for the fact that the NHS will be looking after an increasing number of older patients in the years ahead, the IFS has predicted that spending per person will fall by 9% between 2010-11 and 2018-19.(BBC news)
    (7) Sadly , our obsession to ' get it right' is well used by the government as a bait to fulfil their political agenda. We will not know when to stop and say 'enough is enough'..............well , in fact , some are more than happy to do 'everything' to please the politicians........

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  • Vinci Ho

    Read what Lord Robert Francis QC said today in BBC news about financial pressure hampering care to improve
    He criticised what he saw as the "oppressive reactions" of the system to hospitals that ran into trouble with budgets and hitting targets.
    He said hospital leaders (hence all bureaucrats, my opinion)needed to be "frank" about whether they could provide high-quality care with current levels of funding.

    Most importantly ,
    "It is unacceptable to pretend that all can be provided to an acceptable standard when that is not true," he added. Ladies and gentleman , we are talking about honesty here!

    How is the government and hence NHSE going to respond to this?

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  • Federations are nothing to do with 7 day opening. You don't need to be really big to win contracts. AQP does not involve interviews its all done via the internet!
    Larger partnerships are difficult to manage but federations offer the opportunity to retain small partnerships and cooperate when necessary.
    Lawyers and accountants have been through all of this years ago and they still have the partnership model

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