More and more GP practices are thinking about a merger with another practice. One example is retirement planning. We have come across several examples of smaller practices who find it hard to find successors, and a merger with a neighbouring practice offers both parties something positive. For a sole practitioner there is the knowledge that the patient list will be in good hands. For the merger partner they know that they should acquire the list when the sole practitioner retires. Sometimes, for the retiring partner, there is the added benefit of selling the practice premises with the benefit of the value of the ongoing notional rent rather than a bricks-and-mortar sale if the practice closes on retirement.
A merger can also offer longer term security for a two or three partner practice where one retires – especially where the age profile of the partners is such that there may be another retirement in the not-too-distant future. The last remaining partner will have to find a new partner or partners at some time in the future, and if there‘s a suitable merger partner, then this may be more attractive.
There is sometimes safety in numbers – a partnership of 7 or 8 is more likely to be able to manage the disruption of one or two partners leaving together than a partnership of 2 or 3. Other benefits might be:
- Economies of scale in overheads, space utilisation, purchasing
- Efficiencies in the management of the NHS contracts and in dealings with CCG, CQC and NHS England
- More flexibility to cover absences and staffing changes
- The potential to share the risks and rewards of the ownership of the practice premises over a larger number of partners
- The increased opportunities to respond CCG tenders
Although we are not a GP practice, we have many, many years’ experience of advising GP partnerships. We have advised GP practices who have merged and, indeed some that decided not to. We have also been through a series of partnership mergers in our own history, in each of our offices in Nottingham, Leicester and Derby. Most notably and ambitiously we merged with three other practices to set up our Leicester office with around 20 partners in the office within less than 6 months. This experience has given us first-hand experience of the process and issues in successful mergers.
Some key issues
Based on our experience here are some key issues:
- Don’t rush – get it right, for the consequences can live with you for a long time.
- Do the people fit? If they don’t/won’t there’s little point in wasting a lot of time exploring further.
- Due diligence – full and frank disclosure is essential if the merger has any prospects of getting underway. We are all sensitive about the running of our business, but, subject to appropriate obligations of confidentiality on both sides, is there real damage in disclosure to a potential merger partner?
- Staffing issues – will there be redundancies/changes of responsibilities? Managing the process and the timing of consultation is key to avoid protracted and sometimes inaccurate rumour mongering with consequential loss of morale
- Invest in good accountancy, legal and property advice.
Partner, Nelsons Solicitors