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GPs forming Big Society social enterprises ‘liable to fail’

GPs that transform their businesses into John Lewis-style social enterprises face a fight to survive in the more aggressively competitive NHS marketplace, according to a new report.

The report from think tank The King's Fund, says the Government's plans for a more competitive marketplace for healthcare providers, including short term contracts for emerging social enterprises, presented ‘significant risks for their survival', and said more robust business models were needed to ensure their viability.

A growing number of GP practices are transforming themselves into small-scale social enterprises in order to facilitate greater staff engagement, flexibility and autonomy, with practice staff being handed stakes in some business, and patients invited to sit on boards as practices look to align their working with the Government's Big Society agenda.

The report, Social enterprise in Health Care, quizzed a range of providers on their progress to date, noting that: ‘Social enterprises that have established themselves in healthcare range from a single GP practice or small centre for the homeless, through to entire PCT provider arms.'

But the study found that smaller social enterprises in particular would need extensive legal and financial support to develop, and urged NHS commissioners to offer longer-term contracts to enable providers to establish themselves in the increasingly competitive environment.

It concluded: ‘There are many practical challenges facing organisations making the transformation to becoming a social enterprise, including access to NHS pensions for new staff, and the vulnerability of smaller organisations to failure, particularly given the change in payment mechanisms from block contracts and grants to an "any qualified provider" model. Some will fail, or at best, become subcontractors for much larger businesses.'

It added: ‘A commitment to a supportive commissioning environment – particularly through long-term contracts – will provide social enterprises and other new entrants to the market with the stability they need to grow and embed themselves as viable providers.'

The report found some early evidence that healthcare providers that have adopted the social enterprise model have seen reductions in bureaucracy, faster decision-making and an effective motivator for staff by allowing the reinvestment of surplus funding.

But it said that while the Government had hoped for ‘the largest and most vibrant social enterprise sector in the world', the numbers of staff leaving the NHS to form new social enterprises had ‘not kept pace with this vision' to date.

Dr Rachael Addicott, senior research fellow at The King's Fund and author of the report said: ‘Even at this early stage in the development of the social enterprise sector, it's apparent that patients and taxpayers could really benefit. However, there is still a lot of work to be done by NHS commissioners, the Government, and aspiring social enterprises to turn the vision of a thriving social enterprise sector into reality.'