Sintons

GPs have been under increasing pressure for many years to work on a bigger scale. That message was reinforced in the NHS 10 year plan, published in July 2025, which made clear that neighbourhood and multi-neighbourhood level working will be a key component of the NHS going forward. Although the plan acknowledges that PCNs are a good starting point for neighbourhood working, it also makes clear that other providers may be considered. Where PCNs don’t win the single-neighbourhood contract for their network area, this could have a devastating effect on the revenue of practices. The 10 year plan also made it clear that the partnership model of general practice can only continue where it is working well, envisaging that where practices are struggling, new “multi-neighbourhood providers” could be asked to step in and take over provision. It has never been more important for practices to ensure that they are in a robust position to meet the challenges ahead. Practice mergers are one way in which practices can grow and can offer some significant benefits. However, the various considerations and processes are complex. In this article, Alison Oliver and Amanda McCabe outline some of the essential information that you need to consider. What benefits can mergers deliver? GP mergers can deliver significant benefits, which include: economies of scale; capacity to provide a wider range of services, at practice level and potentially on an even larger scale; a bigger workforce with more scope to allow partners and employees to specialise and enjoy more flexible working patterns, which in turn can improve recruitment and retention; increased surgery space and the additional flexibility that brings; and more resilience against partner retirement. We are increasingly asked to advise PCNs where practices are considering merging to form a single-practice PCN. This would put the single practice in a strong position to operate as a single-neighbourhood provider. Types of merger There are various different types of merger and you will need to consider which strategy is best for you and the other practices. Some mergers really amount to an acquisition. This might apply, for example, where a single-handed practitioner is approaching retirement. A neighbouring practice might take over the assets and liabilities of the single-hander’s practice, leaving that individual free to retire or perhaps to work in a salaried role at the “merged “ practice. Alternatively, two or more practices might decide to work together on a more equal footing, pooling their resources and effectively creating an entirely new organisation with its own policies and procedures bringing together the best elements of the original practices. There are various legal models for a merged practice, ranging from a full merger, where all the assets, income streams and decision-making are centralised, to more decentralised models, where the original practices might retain their own profits and losses and a degree of decentralised decision-making power. The decentralised model is a good option for larger mergers (such as those covering a whole PCN area) as it enables individual practices to retain a level of cultural and operational independence, while at the same time enjoying the benefits of a larger organisation, such as a larger and more flexible workforce and greater organisational resilience. NHS contract considerations The type of contract held by the practices involved in the merger (GMS contract, PMS agreement or APMS agreement) affects your options and the merger process and requirements. One decision that you will need to make is whether you want to merge the contracts and patient lists of the practices that are merging. This is only possible if the practices all hold the same type of contract and will always require the ICB’s consent. An alternative is for the merged organisation to continue to hold the original contracts separately, adding the partners of the different merging practices onto each other’s contracts. This might not bring all the benefits of a full merger, but can sometimes be a good “stepping stone” to a full merger: the practices can work together and enjoy the benefits of operating at a larger scale, but without committing to merging their contracts, which is difficult to unpick later if the relationship doesn’t work out for any reason. Due diligence You will need to undertake a due diligence exercise. Due diligence is the process of obtaining detailed information about the other practice or practices in order to identify any issues or concerns before legally committing to the merger. You should work with a specialist accountant who understands GP practice finances in order to satisfy yourself as to the financial viability of your potential merger partners. Legal due diligence involves reviewing matters such as the other practices’ commercial contracts, corporate structure, regulatory compliance, any legal proceedings to which they are party, intellectual property, employment and premises arrangements. The due diligence process might uncover issues that need to be resolved before the merger takes place or might even result in you deciding not to go ahead with the merger. It is important to flush these issues out early on rather than discovering them later when it might be too late to do anything about it. Premises You will need to agree a plan for meeting the premises needs of the merged practice. This might be a matter of utilising the existing premises of the practices that are merging, or might involve a move to new premises. Any change in the premises from which services are delivered will need ICB consent and a consultation exercise with patients. You will need to consider whether premises which are owned by partners in the merging practices will be brought into the merged practice as a partnership asset, retained as personal assets of the existing owners and leased to the merged partnership, or sold or developed for alternative use. Similarly, you will need to check the lease agreements for any rented premises and ascertain whether they can be assigned to the merged partnership or terminated if the premises are no longer required. You may need landlord consent to assign a lease and also need to consider the terms of any mortgage over premises which are owned by partners as bank consent might also be required. Staff You should identify the workforce needs of the merged practice alongside the available staff resources across the practices which are merging. Employment legislation protects the continuity of employment and terms and conditions of staff when practices merge. You will need to ensure that you comply with the applicable legislation and seek specialist support, particularly if you envisage making any changes to terms and conditions or if you think that any roles might become redundant. Contracts, registrations and licences Practices will hold various commercial contracts in connection with their business, such as insurance contracts and contracts with suppliers of goods and services. They will also hold various licences and registrations, such as CQC and ICO registrations. You will need to ensure that the merged practice holds all the contracts, licences and registrations that it needs and arrange to terminate those that are not needed. Some contracts carry penalties for early termination, which should be identified in the due diligence exercise. Legal documentation The legal documentation required varies according to the type of merger, but will generally include: Confidentiality agreement – the parties may enter into a confidentiality agreement at the start of their discussions to ensure that the merger discussions and any information provided in the course of due diligence are treated confidentially. Heads of terms – this is a summary of key terms agreed in principle at the outset of the transaction. These are generally not legally binding but provide a roadmap for detailed negotiations. Merger agreement – this is the main legal document setting out the terms of the merger. It will include provisions such as how rights and obligations of the practices will be apportioned before and after the merger, warranties provided by the practices to the other parties regarding their own practice and indemnities against liabilities relating to the period prior to the merger. Partnership agreement – this will set out the terms and conditions applicable to the merged partnership. It will include provisions relating to the rights and duties of partners and how decisions relating to the merged partnership will be made. NHS contract variations – whether merging the NHS contracts of the practices or retaining individual contracts but with partners from the other practices added as contractors, you will need to liaise with the ICB about the required contract variations. Premises documents – the documentation needed will depend on whether you are transferring freehold or leasehold premises and/or putting in place a new lease arrangement. Key considerations and steps in the process A merger will not be right for every practice so it is important that you consider carefully what you want to achieve as a practice, what opportunities there are for merging in your locality and whether this is a viable option for you. Once you have identified potential merger partners, you should have initial confidential discussions among the partners with a view to agreeing a common vision and strategy. If you do not have sufficient common ground, it is better to find that out early on in the process.