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NHS England Issues New Guidance on Incorporation of GP Practices

on Wednesday, 02 December 2020.

As part of continuing updates to its policy guidance manual ("PGM"), NHS England has now updated its guidance and application process in relation to GP practice incorporation.

Any decision to incorporate should only be taken once appropriate financial/tax and legal advice has been obtained, to ensure that a company vehicle would be appropriate (in many cases it may not be).  

GP practices wishing to incorporate need to follow the process set out in the PGM, which includes making a formal request to their Clinical Commissioning Group (CCG) to novate the primary care contract into a company vehicle.  The PGM had previously set out a number of considerations that CCGs needed to consider including procurement obligations as well as possible exemptions.  However, there was still a disparate approach around the country as to how this was applied locally.  The updated guidance now includes a Commissioner Assessment Framework ("CAF") for Commissioners to:

  • "undertake their due diligence in a structured and consistent way
  • reach an approval or rejection decision based on risk and to inform the contractor in an open and transparent basis, and
  • apply any approval conditions to mitigate identified risks"

The updated guidance and CAF now provide an indicative timeframe of three months to consider the request but note that more complex requests may take longer.  The CAF is stated to be in "draft" status and is intended to be tested and used as a tool to support commissioners with incorporation requests.  In addition to a more thorough application process, some of the key issues for prospective primary care companies include the commissioner agreeing an incorporation subject to the following:

  • placing parameters around a company's ability to take certain actions (or a need to obtain commissioners consent). This can include:

- notice/approval being needed in relation to change of control of the company (changing share ownership)

- prohibiting the company from entering into significant financial arrangements (such as high value loans)

- placing conditions on the company in relation to the distribution of dividends.

  • Including requirements designed to protect commissioners such as:

- additional actions to be taken by the provider on termination

- minimum working capital requirements to cover routine business running costs/liabilities.

  • Having greater transparency for provider health and performance monitoring such as including a requirement for the provider to report on matters including:

- the annual company business plan

- financial accounts

- management information

- staff pay

- dividend payments.

The CAF makes it clear that a risk-based approach will be taken as to which of the above need to be applied on a case by case basis. An Assessment Framework using a Red, Amber, Green "RAG" risk rating system has also been published as part of the suite of documents.  NHS England has also published a template novation agreement for use should an application to incorporate be approved.

Any providers who are considering incorporation of their primary care contract should have regard to the Guidance to better understand how their application might be considered and where possible to strengthen any application made. 

The Guidance, CAF, Assessment Framework and novation agreement can be found on NHS England's website:

 


If you require any assistance with incorporating your primary care contract please contact a member of our our Healthcare team, or complete the form below.

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