Like other sorts of social enterprise, a co-operative is an organisation set up to provide a response to a social, health, educational or other need, or to provide essential goods or services such as food or housing. Co-operatives operate according to certain internationally agreed principles based on over 160 years of experience. They are run for the benefit of their members, who are those who benefit from the co-operative's services.1
A key point to note is that co-operatives have members. The members may be individuals. They may be organisations, including external stakeholders. Or the membership may be a mix of individuals and organisations – there are no hard and fast rules, as long as the participating members agree them at the outset.
Most UK GPs are used to operating as independent contractors to the NHS. They already have a range of freedoms from centralised state control that their colleagues in many NHS trusts do not (although in the wake of changes to pensions and contracts, it may not always feel like that).
Nevertheless, operating as a co-operative gives certain freedoms – but also responsibilities to the members. It is very important that those who set up a co-operative understand their rights as well as their responsibilities.
The co-operative model is suitable for all sizes of organisation – for example, from the South East London Doctors' Co-operative (SELDOC), which serves two million patients, to a small co-operative based on an allotment that may supply a few families with food.
Case study: SEDLOC
SELDOC was set up to provide a solution to the need for the provision of quality out-of-hours general practice services to around two million patients in the Lambeth, Southwark and Lewisham areas of south London.
The impetus for the creation of SELDOC were two financial drivers: a reduction in the night-visit fees that indicated the government no longer wished to encourage GPs to look after patients on their own lists, but to co-operate together in some way; and the provision of funding from the local health authorities to pump-prime such an organisation and provide start-up costs and premises.
The GPs in the area were consulted and opted for a co-operative as the best solution to provide the services. SELDOC was set up using a standard set of legal documents such as a constitution, memorandum and articles of association, and these were later adapted to reflect the way SELDOC's working practices evolved in the first few years. SELDOC went ‘live' by testing its systems in providing a service to 5% of its member practices, then rolling the system out in full.
SELDOC served four stakeholders:
- its employees
- the doctors who were contracted to perform clinical and administrative work for it
- the doctors who paid it to provide out-of-hours services.
SELDOC has no investors and is not run to make a profit – although the fees payable by the doctors who used SELDOC were set in order to make a small profit to be re-invested in the organisation to make improvements.
Managing a co-operative
Small co-operatives can exist on a verbal ad hoc basis, but larger organisations need instruments of governance such as a constitution and management structure.
The rules of a co-operative apply to internal matters only. As a standalone organisation, it may have service level agreements (SLAs) with other organisations – for example, an out-of-hours GP co-operative may hold an SLA with health authorities that licence and buy services from the co-operative.
A medical co-operative closely models that of a traditional GP partnership, where the clinical, financial and legal responsibilities are co-located in the same persons. Such persons, clinicians by training, of course rely upon professionals in management, accountancy and human resources law to ensure correct and proper running. A co-operative is required to have directors who are legally registered by the relevant regulatory body – either at Companies House or the Financial Services Authority, depending on the particular legal structure opted for. With such assistance, co-operatives can be or grow to become very large organisations and possess economy of scale.
All those working for a co-operative will have a pre-determined salary rather than relying upon a share of profits, as is the case with the partners in a GP partnership. They don't all need to be paid the same – pay rates are determined by the co-operative, not by outside bodies, as long as they follow the relevant laws. A large co-operative would be well advised to set up a subcommittee of its board of directors or similar group to set employee and member remuneration.
The co-operative model will not appeal to those GPs who wish to maximise their income in the short term, but others may see the benefits of an organisation that is coded for organic growth – through re-investment of profits into the organisation – that could lead in the longer term to a better outcome for all parties.
Running co-operatives under commissioning
When PCTs close down next April, co-operatives – as standalone organisations, constituted to primarily provide a service – can make contracts with any government agency with a budget to spend on providing patient care, or indeed with the patients themselves.
A GP co-operative that is a provider of services is able to judge what it wants to provide itself and which services it prefers to purchase from another source in order to fulfil its SLA or other obligation.
Mo Girach was chief executive of SELDOC – one of the largest GP co-operatives in the UK with some 500 principal GP members. He is now a special adviser to the NHS Alliance on social enterprise, mutuals and co-operatives.
 Co-operatives UK. What is a co-operative? www.uk.coop/what-co-operative