Viewpoint: Can GP federations protect practices in the new healthcare market?

As many CCGs encourage local practices to form provider federations, a founder of one of the first groups has given advice on the benefits and pitfalls of launching into a commercial world.

Bristol GP Dr Phil McCarthy was a director of GP Care in the Bristol area for seven years, after launching in 2006. He warned delegates at the Commissioning Primary Care conference that the harsh realities of the commercial healthcare market could prove a shock to GPs planning to set up their own federations.

‘GPs are minnows in the NHS market,’ said Dr McCarthy, ‘and the point of GP federations is to protect us and ensure we are not gobbled up by the sharks.’

Even with 100 practices as investors, GP Care had still struggled to establish itself and win contracts within the local NHS, and later had to request more funding from members.

GP federations need stamina to succeed

Dr McCarthy said GP Care now provided an expanding range of NHS and private services in the community, was developing and enhancing member practices, and delivering minor surgery and innovative IT services.

They recently developed an award-winning telephone advice link between GPs and hospital specialists, and successfully bid for £5m from the prime minister’s Challenge Fund to trial innovative ways of using technology to improve access to primary care.

Dr McCarthy said high quality management was essential to a federation’s survival: ‘You need help with the procurement process, evaluating your competitors, writing the bids and considering the costs and the risks.

‘Then there are the risks of winning. Once you have won the contract there are all sorts of risks involved with just carrying out the service, for example with the investment you have to make, who you are competing against, and how good you are at the job. So you might have to wait a very long time to get back to where you were financially at the start of the process.’

Many GP federations are now launching with the expectation that they will win local contracts but Dr McCarthy said that commissioners often had loyalties to existing providers and could be highly sensitive to potential conflicts of interest.

Choosing correct legal model is essential

Choosing the right legal model for a new group was also essential. GP Care launched as a limited liability partnership but later simplified the arrangement by becoming an ordinary company and embodying its social enterprise ethos in the articles of association.

‘We have to recognise that there is a global market developing in healthcare, particularly in Europe, and GPs need to think about becoming competitive organisations and to think more commercially, because that’s what it’s all about.

‘It’s absolutely necessary if you set up one of these companies that you become profitable. But for most of us that’s not a sufficient reason to motivate us - it has to be something more than that.’

  • Colin Cooper is Editorial Director of GPonline

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