NHS England confirmed the private provider would take control of the Sutherland Lodge Surgery, in Chelmsford, from July.
GP leaders fear the takeover by a commercial provider could be the first of many, as hundreds of PMS practices face huge pressure from sharp reductions in contract funding.
The Essex practice is among the 35% of GP surgeries in England that operate under PMS contracts, which have faced cuts worth more than £200m under a national review process carried out over the past two years.
GP funding cuts
A string of practices across England already have been forced to close after significant reductions in funding. In London, accountants say that cuts of up to six-figure sums - including one facing losses of around £650,000 - could force a further wave of closures.
Practices in parts of the country are considering legal challenges over failures to consult patients about the potential impact of cuts.
Partners at Sutherland Lodge say they were forced to resign their contract in the face of cuts that would have removed a third of the practice's income.
Practice manager Carol Sams told GPonline that a combined 112 years of GP experience would be lost as the partners stood down from July, along with her own 19 years' experience running the practice. They would be leaving Sutherland Lodge 'with very heavy hearts', she added, after what seemed extremely harsh reward for years of successful general practice.
'This year was our 19th year underspent in prescribing, our fifth year underspent in planned care, our extra services had saved the local economy nearly £750,000 over the years, our GP access was 6.9 appointment per patient per year for 12,200 patients and our CQC inspection last October gained us an ‘outstanding’ rating,' Ms Sams said.
'Despite all this we were told we were not value for money and a third of our income would be clawed back. We initially bid for £100,000, but the PMS premium to be clawed back was nearly £400,000. This is a third of our income and would be taken over two years. We were told this information just before Christmas and the four partners and I debated with extreme difficulty over this supposed "festive" time.
'Each avenue presented more and more problems as this amount of money is not losing a few backroom staff. We have always been innovative and as you can imagine this was quite a shock to us, our staff, but more importantly our patients. The partners felt they could not drop their working standards nor revert back to basic core services, therefore they felt they had no choice but to give notice on their contract.'
The practice gave notice that it would end its contract on 31 December 2015, and recently found out that Virgin Care had had a bid accepted to run the practice. She said that some staff had left amid the uncertainty and stress, and said she and the partners were 'humbled' by the loyal support of those who had remained.
GPC deputy chairman Dr Richard Vautrey said the NHS had yet to see PMS practices taken over by private providers in any significant numbers. But he said there was a risk that PMS practices forced to close by cuts could be taken over in the same way that practices run in-house by the NHS under PCTMS contracts were some years ago.
NHS England East locality director Simon Evans said: 'NHS England can confirm that Virgin Care Services Limited has been awarded an APMS contract to deliver services to patients in Chelmsford from the Sutherland Lodge Surgery from July 2016 following the decision by the current partners at Sutherland Lodge Surgery to terminate their PMS contract. NHS England are working with both organisations to ensure a smooth transition for patients.'
A spokesman for Virgin Care said: 'Virgin Care has a strong track record over the last decade of delivering NHS services like this one and we’re working closely with NHS England and the existing provider to ensure the transfer of Sutherland Lodge is as smooth as possible for patients.'