Transcript ALL IN PRESENTATION TITLE CAPS

Family Doctor Association National Conference
6th September 2014
Access to Finance & other Banking & Sector Issues
A presentation by
David Wood-Griffiths ACIB
Relationship Director, HealthCare
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Agenda
• Confidence Index
• Changes in the sector
• Federations
• Mergers and partner changes
• Banking issues
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Lloyds Bank Primary Care Confidence Index
10
0
2011B
2012A
2012B
2013A
2013B
-10
Dentist
-20
Pharmacist
-30
-40
Combined Average
-50
-60
GP
-70
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Lloyds Bank Primary Care Confidence Index
Are you expecting more practice mergers, co-locations and / or larger practices over the next 5 years?
60%
Key findings:
• The majority (91%) see more mergers as
inevitable (77% 2013)
53%
50%
40%
• Those now saying ‘definitely’ is also
hardening 38% v 25% 2013
38%
70%
60%
Probably
30%
50%
Definitely
40%
20%
30%
20%
10%
5%
0%
5%
0%
Definitely
Probably
Probably not Definitely not Don’t know
10%
0%
Wave 1
Wave 2
Wave 3
Wave 4
Wave 5
4
Lloyds Bank Primary Care Confidence Index
Are you currently or planning to bid to provide services under the new AQP (or similar) criteria?
40%
Key findings:
• The number answering ‘yes’ has been 37% for
last two surveys
34%
• Only move has been reduction in ‘no’s’ to 34%
(48% 2013)
29%
30%
• Suggests more are now in the ‘undecided’ camp
20%
20%
60%
50%
Not planning
to bid for any
contracts
40%
10%
10%
30%
7%
20%
10%
0%
Yes - part of a Yes as a
local service practice on
provider grp
our own
Yes some of Not planning
both of the to bid for any
above
contracts
Don’t know
0%
2012A
2012B
2013A
2013B
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Lloyds Bank Primary Care Confidence Index
Doctors
Pharmacist
Probably
38%
Yes mixed
10%
Yes on own
7%
Yes - part of
a group
20%
Definitely
56%
Key findings:
• There is clear and consistent evidence that pharmacists are more enthusiastic about taking on private work
• There is however some signs that GPs are beginning to recognise the potential benefits
6
Federations and Mergers – what’s driving change?
Income Squeeze (push):
• GMS/PMS >1% increase
• DES/LES and other elements under threat
• MPiG and Seniority Payments being phased out
New Income (pull):
• Potential of new income streams via joint working
• Potential to widen scope to more private work?
• Potential cost savings from economies of scale
Demographics (fact):
• Over 40% of GPs to retire within 10 years
• Some new GPs don’t want to be partners
• Demands for more work flexibility
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Look at the Business of Primary Care...
Demands Issue:
• Increasing demand from an increasing population
• Ageing population, more long term conditions
• Do not have the ‘pricing’ option
Options:
• Increase productivity – do more with same
• Increase resources – do more with more
• Re-engineer – find a new/better way of doing things
8
Look at the Business of Primary Care...
Re-engineering:
• Consolidate and benefit from economies of scale
• Make more use of technology; telehealth, internet self help
• Restructure workflows and refocus use of expensive resources
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Federations - do you see what others see..............
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Federations - do you see what others see..............
A friendly caring sharing group:
•Sharing back office admin etc to help cut costs
• A means of providing better services to patients
• Working together for the greater good!
A necessary evil to stop others:
• Get in quick to stop others invading your space
• United you stand.......
• Would prefer not to but......
An opportunity to make money:
• A unique (?) opportunity to expand services
• An opportunity to increase income/profits
• The start of a journey to consolidation
.........or a combination of the above?
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Federations – banking considerations
Objectives:
• Business plan; what are you trying to achieve; are all parties aligned?
• Run as a business not a practice – not all costs are covered!
• Procurement rules include financial viability – can you prove it?
Structure:
• Partnership, Club, Limited Company, CIC
• Seedcorn capital; directors, ownership, rewards?
• Take advice regarding tax, VAT and NHS Pensions
Finance Options:
• Who borrows; the Federation or performer?
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Mergers and partner changes – banking considerations
13
What can a bank help with?
Partnership:
• Lend to partners to buy-out exiting partner
• Lend to new partner to buy-in to partnership
• Change the account names; help/review bank mandates
Property:
• Lend to partnership to buy-out exiting partner
• Lend to new partner to buy-in to property
• Potentially provide support to sale to third party (exiting partner?)
Mergers:
• Lend to partners to buy-out any leavers
• Lend to help equalise capital accounts
• Lend to buy, develop or improve premises
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Partner changes
Options:
• Take advice; new partner or salaried GP
• Buy-in for cash; trial period and/or staged buy-in?
• Beware ‘last man standing’!!
Who will lend:
• Many banks but ‘stand-alone’ less attractive now
• Main Practice Bank should offer best rates and sort quickly
• Beware old loan terms; fixed rates, penalties etc
Term & Rates:
• Term to suit your plans. Up to 25 years
• Circa 2% to 3.5% over base depending on term
• Interest only an option
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Working together
Solicitor
YOU
Accountant
Bank
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Summary - some basic rules
Professional Advice:
• Invest in good advice; act in haste.....
• Plan: do not put heads in the sand! Have a route-map of ownership over next 10 years
• Have a up-to-date partnership/federation agreement
Finance:
• Banks lend to serviceability not security
• Things are changing and not all costs are covered
• Track record and projections
Commitment:
• Consider longer-term A-Z
• Make sure all parties have interests aligned
• A loan is only profitable in the last two years.....
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The advert 
Finally are banks lending?
LBG SME lending growth +5.6%
HealthCare Sector +14.1%
Doctors +16.9%
July 2014
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