GP practices: The legal implications of external takeovers

With the appetite among GPs for running their own practices as partners declining, there has been a growth of alternative management structures allowing for external involvement.

We have recently advised on multiple Scottish medical practice takeovers. There are good options available, and our Healthcare & Life Sciences team have a wealth of experience in helping clients to navigate the regulations. Here are some central principles and lessons to learn:

Challenging times

The current strains on the NHS are well documented. Many of us will have seen some impact on GP practices first hand. Recruitment and retention figures are concerning, and this is the case with GP partners too. Cost increases have outstripped their income growth for much of the last 20 years, and the number of GP partners has dropped significantly over that period. As health boards are not ideally placed to step in and manage individual practices, who is left to run local GP services?

GP practices have long been run via an ‘independent contractor’ model. They are quasi-public, with GP partners managing the practice and the NHS overseeing matters such as pensions and salaries. Alternative arrangements became a possibility in 2004 with the introduction of new GP contracts. These put in place a contract between a GP practice and the NHS to provide medical services in the practice location. The main type of these contracts, the general medical services (“GMS”) contract, allows for the contract to be held by individuals, partnerships or companies – with certain safeguards to maximise the involvement of medical practitioners.

We have now provided advice to GP-led companies on entering into a number of GMS contracts in Scotland.

Concerns and pitfalls

In England, an additional alternative provider of medical services (“APMS”) contract was introduced and allows for ownership by private companies without a GMS level of GP involvement. In some cases, chains of practices owned by the same company have been established. This has brought criticism from some practitioners and the media, who argue that the model has pushed commerciality too far.

An understandable concern is that decisions based upon maximising profit may override the focus on the needs of patients. Chain practices may opt to employ fewer and lower-paid clinical staff, becoming reliant on remote support from elsewhere. Care may become disjointed and lack continuity both in terms of prior knowledge of the patient and ongoing support and follow-up. Company-run practices can also have general policies against prescribing certain medicines on cost or ethos grounds, threatening patient options. Additional charges for certain added services may balloon.

Scottish safeguards

Scotland has rejected the APMS model but remains supportive of the GMS approach. Before he left his role as health secretary to become first minister, I asked Humza Yousaf about his views on the involvement of private companies in GP practices. His response was that the Scottish Government remains committed to the independent contractor model for GP services, and that private companies are welcome to work alongside GPs so long as that involvement is appropriately limited. Patient care should be at the centre of all decisions – per the ethos of the NHS.

Statutory protections are set out in the National Health Service (Scotland) Act 1978, the National Health Service (General Medical Services Contracts) (Scotland) Regulations 2018 (the “Regulations”) and the provisions of the Scottish GMS form of contract itself.

Sufficient involvement in patient care

Regardless of the type of entity that holds the GMS contract, the primary safeguard to patients is that the contractor must ensure that every member of that partnership, limited liability partnership or company, as the case may be, has sufficient involvement in patient care for the duration of the contract. At least one partner/member must be a general medical practitioner.

The Regulations require all partners/shareholders meet this test by performing at least 10 hours a week of primary medical services in accordance with a GMS contract. Where a company holds the contract, individuals with sufficient involvement in patient care must be the only shareholders in that company. Any medical practitioner wishing to perform primary medical services must also be included in the primary medical services performers list for the relevant health board area.

As the ‘owners’ of the entity must satisfy these patient-facing criteria, amongst others, the key focus of the opportunity for private sector involvement is back office and management functions. Clinical services are distinct and subject to greater scrutiny on a number of fronts.

Developing Scottish market

Whilst some health boards such as NHS Grampian have opened their GMS contract procurements to include companies that satisfy the regulatory requirements, others have been reticent to offer similar opportunities.

Despite the Central Legal Office being able to provide consistency across Scotland in terms of regulatory requirements for GMS contract eligibility, health boards in Scotland retain a significant degree of autonomy and discretion in terms of their level of comfort with the model.

Our team is well placed to advise on the various requirements applicable across Scotland, including the differences in approach between health boards that will need to be understood by those considering involvement in a practice takeover.

Opportunities are certainly available to the private sector to reinforce troubled GP practices in Scotland. So long as the key elements of ensuring the provision of continuing healthcare from community GPs is respected, private groups that can help maintain and improve service delivery should be a welcome addition to the sector.