Governance arrangements for shadow GP consortia

Ross Clark advises on legal and other matters that shadow GP consortia need to consider now.

Shadow consortia need to address key governance questions, including membership, meetings, conflicts of interest and confidentiality (Photograph: Istock)
Shadow consortia need to address key governance questions, including membership, meetings, conflicts of interest and confidentiality (Photograph: Istock)

Following the three-month listening exercise, the NHS Future Forum has passed its recommendations for changes to the Health and Social Care Bill to the prime minister's office.

It is looking increasingly likely that the Bill's passage through parliament will be delayed by up to six months, but this does not necessarily mean shadow GP commissioning consortia can afford a more leisurely approach with their preparations for taking over from PCTs.

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Good reasons for not slackening the pace include the liabilities consortia may find themselves stuck with, what is happening at PCT level and sorting out governance issues.

Prime minister David Cameron signalled last week that consortia will only take over when they are ready, not necessarily by April 2013 as previously planned. However, it is important to understand that once the baton is handed over to consortia, they will have to hit the ground running, with procured services in place.

Many consortia, particularly the pathfinders, are now holding real money, as opposed to a delegated or nominal budget, and are incurring liabilities by entering into contracts or employing staff to carry out tasks on their behalf.

Wherever consortia are incurring liabilities for spending NHS funds, a ontract or agreement is required to ensure that all member practices in the consortium are committed to sharing those liabilities and contributing to any shortfall in fund, in proportion to their relevant size.

Perhaps the most pressing concern is for shadow consortia to respond to what PCTs are doing now as this may tie commissioners' hands after PCTs cease to exist. PCTs and the new PCT clusters are actively aligning their staff to commissioning support duties. This could be viewed as a generous and responsive means of providing consortia with the support they need and ensuring a smooth transition.

It could also be viewed as PCTs ensuring that as many of their staff as possible transfer to consortia, to minimise the number of employees that have to be made redundant.

In addition, PCTs are entering into contracts with service providers that could be inherited by consortia. This is necessary to ensure the continuity of NHS services after the handover to consortia, but shadow consortia input now could result in contracts producing better and more cost-effective services for patients.

If a consortium has concerns about the staff being aligned to support duties, now is the time for the GPs to address this matter directly with the PCT.

Being able to agree a list of commissioning support staff who will transfer to the consortium, with full knowledge of the terms and conditions of employment for those employees, would be ideal.

Models and structures
Although a number of shadow consortia have been set up, there is some confusion over the organisational models and structures available, especially because some PCTs have been directing the form that the consortium should take.

The options are many, but the principal choices are working group, PCT subcommittee, unincorporated association and corporate body (see box).

As well as deciding on the form the shadow consortium should take, there are some key questions concerning governance that will need to be addressed, including:

  • Eligibility, application for and termination of membership.
  • Executive committee.
  • Members' meetings and resolutions.
  • Conflicts of interest.
  • Confidentiality.
  • Ensuring that the consortium is not a partnership.

Eligibility and application for, and termination of, membership is a sensitive area because practices that have formed a consortium tend to want to draw tight rules around eligibility for membership.

New members of the consortium may be restricted to a list of specified practices, or to practices operating within a defined geographical area. Some consortia require the agreement of all members before they will admit a new practice.

For a consortium to operate effectively, it needs to delegate the management of day-to-day functions and objectives to an executive committee or board. Delegation should be to a relatively small committee (commonly this is an odd number between five and 11) to ensure decisions can be made swiftly.

The next key decision concerns the powers to be delegated to that committee. There are two broad extremes: outright delegation of all powers to the committee, or delegation of specified objects or powers.

However, neither of these tends to strike the correct balance and the most commonly adopted solution is a general delegation of powers to the executive committee, subject to certain 'members' reserved matters'.

Shadow consortia models

Working group
This is the most informal arrangement and exists when a number of GPs or practices come together to share information and data and develop plans to create a formal consortium.

Although at this stage, it is unlikely that practices are receiving funding or incurring liabilities, they will still be sharing information and data. At the very least, a confidentiality agreement should be put in place to enable them to do this without concern.

PCT subcommittee
Here, a special subcommittee of the PCT's board is created to form what is, in effect, the consortium.

The PCT will need to amend its standing order, scheme of delegation and, possibly, its standing financial Instructions to create the subcommittee and delegate powers to it. The key document will be the terms of reference from the board, which will define the powers and duties of the subcommittee. There is no legal requirement for a majority of the subcommittee to be members of the PCT's board or employees of the PCT.

However, the board remains responsible for its subcommittees, so the PCT will probably wish to retain overall control of the commissioning subcommittee.

Unincorporated association
This is where GPs or practices who have been working together on a largely informal basis form a consortium by adopting a constitution and each agreeing to be bound by its terms.

This could be a natural development from the working group, but normally there is a distinct break and a move to the adoption of a formal constitution to establish a consortium.

Corporate body
GPs are either sole practitioners or operate in traditional partnerships. The latter do not form a separate legal entity and accordingly, liabilities have to be incurred by individual partners of the practice entering into contracts. In addition, under the Partnership Act, the partners are jointly and severally liable for the actions of their fellow partners.

This means that GPs risk personal liability for their involvement in a consortium. This risk may be very low at the outset, but it will increase as the consortium incurs liabilities.

A corporate body is typically a company limited by shares or a company limited by guarantee. Both can be set up as a community interest company (a type of social enterprise) and are separate legal entities. Accordingly:

  • It is the company and not its individual members that contracts with, and is therefore liable to, other parties under that contract.
  • The shareholders or members have the benefit of limited liability. Their liability is limited to the amount payable on the shares they take or in terms of the guarantee they give to contribute a fixed sum. In both cases, this is usually £1.

Member meetings
Provisions need to be included to cover calling and participating in member meetings. Without doubt, the most crucial issue is each practice's voting rights.

There are a range of options but the two most common are one practice one vote (which tends to be favoured by smaller practices) and voting in proportion to list size (which tends to be favoured by larger practices).

Much has been made of the question of potential conflicts of interest and one of the major concerns regarding GP commissioning is that GPs could commission services from themselves.

So it is crucial that the constitution contains provisions to deal with such conflicts of interest (this is a requirement of Schedule 2 of the Bill).

Each consortium will wish to develop its own provisions but typically, these would require all members to declare potential conflicts (for example, membership of a provider organisation) and to ensure GPs who have a conflict of interest do not participate in deciding who is awarded the contract.

It is important to include a confidentiality clause, to ensure that each member keeps confidential any information it learns about other members.

The constitution should also make clear that the members are not coming together to form a separate partnership. Otherwise, the members could find themselves bound by the duties and obligations that the Partnership Act imposes.

  • Ross Clark is a partner at specialist medical solicitor Hempsons (, focusing on consortia

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