Our View: Sonio Singh, partner in our corporate department discusses how GPs can be more entrepreneurial with the advent of The Health & Social Care Reform Bill

The controversial bill to reform the NHS giving GPs responsibility for the commissioning of services and abolishing Primary Care Trusts recently received royal assent to become The Health and Social Care Act 2012. The Bill has caused a lot of debate but at its core, GPs and Clinicians will be given far more responsibility for spending the NHS Budget in England whilst greater competition between the public and private sector will be actively encouraged.  There will now be a structure of National Boards, four Regional Hubs, 50 local officers of the Board and over 200 clinical commissioning groups under the Secretary of State for Health.  Responsibility for controlling spending will transfer from the existing Primary Care Trust to Clinical Commissioning Groups.

The Reform Bill has raised lengthy debate regarding ethical issues, windfalls for GPs and conflicts of interest.  Conversely, there are various entrepreneurial opportunities for GPs to consider.  Click read more to get a flavour of the matters at issue:

Opportunities/Legal Issues

  • Private Healthcare Firms – Whilst adhering to ethical standards at all times, GPs who previously formed private healthcare firms may benefit from the revamped NHS.  Given the opportunities that are available, GPs will require detailed advice regarding the structure of such provider firms (whether these are partnerships, limited liability partnerships or corporate entities).  Accordingly, partnership agreements and shareholders agreements are needed to ensure there are specific rules relating to (inter alia) profits, costs, information flows and retirement/exit policies.  Without a robust corporate governance document, any contracts of the legal entity may be at risk resulting in the failure of that practice.  Conversely, the growth in private healthcare firms of GPs may lead to interest from private  equity firms looking for opportunities. It is evident that the legal position of the GPs will therefore need to be protected.
  • Clinical Commissioning Groups – It is clear that GPs will need to be leaner and stronger both as commissioners and providers of legal services.  A substantial authorisation and establishment process complying with statutory guidance will need to be satisfied. The commissioning consortia themselves will need to be a type of legal entity in order to enter into binding contracts.   The relevant options primarily include the alternatives of a partnership, limited company or limited liability partnership. Whilst there is no substantial guidance as to which bodies are preferred, undoubtedly tax and legal considerations will determine the choice.  Primarily, a GP will want to ensure that he/she is not personally liable to the consortia.
  • TUPE concerns – Another issue remains the employment of staff by a GP practice and a relevant consortium. The Secretary of State may order staff transfers from PCTs to consortia or personnel of the existing GP practice may be utilised in a number of areas.   It is evident that there must be clarity as to who is the employer and, should the consortia need PCT staff, whether the application of the Transfer of Undertakings (Protection of Employment) 2006 provisions apply.
  • Ethics/Directors Duties – Regarding the expenditure of consortia, the NHS Commissioning Board will be contributing towards these costs.  It does appear that over performing consortia will receive additional payments thus providing them with an obvious financial incentive.  This may in turn invoke disclosure/conflict of interest and directors duty issues pursuant to the Companies Act 2006.

As The Health and Social Care Act 2012 unfolds, a number of opportunities – in a wide range of areas – will continue to arise.  The above summary provides some relevant examples for GPs but it’s going to be a complex ride so our advice is to seek professional support and guidance as soon as possible.

If any of these issue are relevant to you then please do drop Sonio a line.

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