Taking over a failing practice

First published in Practice Management in August 2021

Kirsty Odell, an associate at healthcare specialist firm Hempsons, sets out some of the key stages in taking over a failing practice.

There are reasons why a failing practice is struggling, and due diligence is an important exercise to draw out information about the practice that has resulted in its failing. For example, to check patient complaints, compliance issues and employee disciplinary issues and grievances. Reading through information from the Care Quality Commission (CQC) and speaking to people at the clinical commissioning group is important too. This will enable you to consider what possible protections you might need in place, and how you might consider resolving the issues following your takeover.

This is perhaps one of the more arduous stages of a practice takeover and it may take some time, depending on how organised the administration of the practice was. However, investing time in the exercise to ensure that you have unearthed everything and have a thorough understanding of the issues, will help to avoid paying for problems which arise later, possibly taking years to resolve. You need to be certain that the advantage of taking over a patient list does not in fact result in pulling your existing practice under.

Regulatory matters

You need to decide whether to add the practice to your existing NHS Contract (GMS or PMS) or keep it separate, at least until it is stable. Either you will vary or novate the NHS Contract. NHS England is usually involved with a failing practice, which should make the process smoother for you. You will also need to vary your CQC registration to add the location of the practice premises to your existing registration, and consult with patients.

Sale documents

The key document to a takeover will be a business transfer agreement to provide for the assets to be transferred to you as part of the takeover (for example, contracts, staff and equipment). There may be some value attached to the fixtures and fittings, but payment for the practice’s NHS goodwill must not be made.

The business transfer agreement will also address, among other things, the following:

• Protections required as a result of matters arising from the due diligence; and
• Warranties and indemnities which are intended to protect you from certain liabilities that may arise post completion

Depending on the structure of the takeover, there may be property documentation to transfer an interest in the premises, employment/associate contracts where the partners of the failing practice are staying on, and supply contracts to terminate or assign.

Staff

Transfer of Undertakings (Protection of Employment) Regulations (TUPE) will usually apply, meaning the existing employees will transfer to you on their existing terms. You will also need to engage and possibly consult with the employees about your proposed takeover of the business. Obtain advice to guide you on the correct procedure and requirements under TUPE.