PCNs were established at great speed in 2019. At first, they comprised a couple of shared ARRS resources and were seen as a relatively low risk way to bring additional funding into primary care and to encourage collaborative working. Fast forward a few years and PCNs have experienced rapid growth. There seems little doubt that they are here to stay, but PCNs are now finding it challenging to manage the risks associated with scale and are looking to find different, more sustainable ways of working.
Options include ‘incorporating’ the PCN, working with a GP Federation, or merging to form a PCN sized practice. It is important to understand what works for your PCN as there is no single ‘right’ answer.
DR Solicitors has been instrumental in designing PCN operating models, and were the only law firm cited in the 2019 GP Partnership Review. To date, we have advised over 300 PCNs on their structuring, legal documentation and management issues. We have an enviable reputation as a thought leader in the PCN field and our managing partner, Nils Christiansen, is frequently asked to speak and to contribute to media coverage on the topic.
Examples of recent work for our PCN clients includes:
- PCN agreements
- PCN incorporation
- Joining / leaving PCNs
- collaboration agreements
- workforce sharing agreements
- VAT cost sharing group establishment
- PCN DES subcontract (including framework agreements)
- ARRS subcontract agreements
- data sharing agreements
- employment advice
- dispute resolution
FAQs
- How can there be a VAT risk when our PCN delivers healthcare?
- What are the pros and cons of PCN incorporation
- What liability does a director of a PCN limited company pick up?
- GP Federations and PCNs: can they co-exist?
- How can there be a VAT risk when our PCN delivers healthcare?
Whilst it is true that there is a VAT healthcare exemption, the rules are strict and it is unlikely that all activity within a PCN meets the definition. The problem is that most PCNs create lots of different transactions between collaborating parties, and the nature of every transaction would need to be considered in order to determine whether or not it could benefit from the healthcare exemption. VAT is not something which can be considered ‘in the round’ and HMRC has certainly not granted an exemption for PCNs. At first most PCNs were probably small enough to benefit from a ‘de minimis’ exemption, but this is no longer generally the case. Reducing the risk of generating irrecoverable VAT has become one of several major issues pushing PCNs towards restructuring.
- What are the pros and cons of PCN incorporation
Some of the benefits of incorporation include:
- a limited company has its own legal personality and can enter into contracts directly
- all PCN staff and costs are moved from member practices into a shared company
- risks are largely contained within the limited company (and moved out of the unlimited liability partnerships)
- a VAT cost sharing group can be set up
Some of the disadvantages include:
- their are costs associated with setting up and running the structure
- you need to be confident that PCNs will still be around in a few years
- they are not a panacea and don’t solve all the issues with PCNs – though they do mitigate many
For more information on whether incorporation is right for our PCN, please see our blogs and videos. This video on the how and why of incorporation has proven very popular
- What liability does a director of a PCN limited company pick up?
By moving trading activity from a partnership of which you are a partner to a company of which you are a director, you are invariably significantly reducing your risk of personal liability. Bear in mind that if a typical GP partnership runs into financial difficulties it is the partners who lose out and who have to pay the creditors out of their personal assets. If the same business were trading in a limited company structure, it would be the creditors who lost out. Whilst it is possible, in certain circumstances, for directors to incur personal liability for a company’s debts, this generally only arises in situations which go beyond negligence and into the realms of recklessness or crime.
Read more about the liability of company Directors
- GP Federations and PCNs: can they co-exist?
PCNs and federations were both established as ways for primary care to work at scale. Federations have typically been around longer and most hold a number of APMS or NHS contracts, typically for delivering services at CCG (now Place or ICB) scale. PCNs were initially formed to deliver the PCN DES, which is (contrary to common understanding) a GP practice-level service contract. More recently PCNs have been asked to contract for additional services at PCN scale.
Because of their differing scale and purpose, there is often space for federations and PCNs to collaborate. All too often, however, they can end up competing with each other as they can both see themselves as the local voice for at-scale primary care. Whether there is room for both PCNs and federations is likely to differ in each neighbourhood/locality, but the answer will almost always depend on personalities and require collaboration.
We have written more about the different models for federations and PCNs in this blog
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