Planning for the future: federating or franchising?

Dr Simon Bradley explores the options for practices working more closely together, highlighting the services they could provide and where savings can be made.

Federating or becoming part of a franchise can help practices expand (Picture: iStock)
Federating or becoming part of a franchise can help practices expand (Picture: iStock)

Many practices now recognise the need to work together to ensure a vigorous future. Franchise and federation models are ways that practices can actually achieve this.

The average UK practice has around 6,800 patients. This size of practice is increasingly being challenged as to whether they can deliver what society requires from primary care.  

Over the last few years practices have increasingly started to grow by merger and acquisition. This has been accelerated particularly in inner city areas where super-practices have started to form, which tend to be owned by a small number of partners.  

Loose federations    

Larger practices often feel they have a lot to lose by merging and baulk at what can be initially an uncomfortable process. They have tended to work towards looser federations that unite a number of previously disparate practices.

They adopt a set of common rules that govern their behaviour together, in defined areas of activity. This has tended to be in the provision of non-core clinical services and can be the first step towards a formal merger.

Most of these have been structured as community interest companies or social enterprises rather than designed to generate profit for their members, but can do either.

The franchise model

Practices are less likely to be familiar with the franchise model, except as it applies to organisations like MacDonald’s.

In a franchise the franchisor usually takes on responsibility for product and service development, national promotion and PR, purchasing financial and administrative services, quality control, network communications and organisational governance.

It leaves individual business owners (franchisees) free to decide how they run their own operation.

Compared to a network of corporately-owned outlets, franchises generally require far fewer staff. Franchises use the investment of all the franchisees to help grow the business, making expansion much more cost effective.

The franchisees share the risk by paying a fee at start-up and for ongoing services.

Franchises require an identity that differentiates them from others within their industry, but they often expand at an impressive rate limited only by the ability to recruit, train and support franchisees.

Franchises are a new form for provision of primary care but offer the advantage of being part of a brand with a reputation and the support of a substantial corporate entity without losing individual flexibility and local identity: a model that might suit many practices.

Benefits of larger practices and groups

What functions can the scale of these larger practice forms provide?

Vertical integration
Practices have tended to grow organically by taking on new patients, but unless there is substantial regeneration, such growth is slow.

As activity is moved out of secondary care there is the opportunity for developing services in practices. It may be easier to develop such services as part of a federation or larger organisation.

Enhanced services and any qualified provider (AQP) services are the main sources of funding.  The latter are advertised on Supply2Health but now require completion of the NHS Community Contract a seventy-page document that is very time consuming and complex.  

Practices may need to consider buying in expertise to complete these contract bids and to be sure, before even starting, that their relatively low turnover does not preclude them from bidding.   

There is enormous opportunity to provide new services at a reduced cost for the NHS, while generating a significant income.

Vertical integration: New services practices could provide
  • Rheumatology
  • Dermatology
  • Orthopaedics
  • Immunology
  • Substance Misuse
  • Diagnostics: X-ray and ultrasound
  • ENT
  • Urology
  • Paediatrics
  • Gynaecology
  • Ophthalmology

Horizontal integration
Some practices have seen the opportunity to integrate primary care services into their surgery. This can maximise the use of their premises and the opportunities that having a large list of patients offers.

There is a wide range of services that practices can bring into their buildings to generate new revenue - either through providing the service themselves or by renting spare space.

Recent changes to the premises regulations have increased opportunities in this area. Good quality legal and professional support is essential in this area in particular.

Horizontal integration: Services practices can bring into their surgery
  • Community nursing
  • Mental health
  • Social/residential care
  • Primary care contractors
    • Optometry
    • Dentistry
    • Pharmacy
  • Allied health professionals
    • Physiotherapy
    • Acupuncture
    • Hypnotherapy

Shared services
Sharing back office services are one area where practices could save money by being part of a bigger entity. The usual area practices think about is group purchasing. But practices need to broaden the scope of their thinking if they are to derive significant value from the economies of scale that they are after.

Potential shared services
  • HR
  • Payroll
  • Group purchasing
  • Support for merger and acquisition
  • Tendering and bid support
  • Benchmarking
  • Telephone answering
  • Home visiting

Career development and recruitment

Recruitment is a growing problem for general practice in many areas. Being part of a larger structure allows practices to put in place a career development programme where doctors can gain experience in an extended range of clinical, management and leadership services.

This adds value to being employed in such an organisation and aids recruitment. This, I believe, is crucial for the future strength and development of primary care and is one of the strongest arguments for practices growing in scale.

Enormous opportunities

There is an enormous, almost daunting set of opportunities here, for practices that wish to turn the current turmoil within the NHS to the advantage of their practices and patients.

However, GPs and practice managers should not feel overwhelmed. You can start small; the minimum step is just to pick up the phone to any friendly neighbouring practice and ask them to talk about closer working - or to accelerate the opportunity, call someone who has done it before.

  • Simon Bradley is a GP in Bristol and the Founder and Medical Director of Quality Practice Ltd a new national franchise based, federation of high quality practices. He previously founded the award winning GP provider organisation GP Care (UK) Ltd.

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