Mutual ventures offer ways to make use of the health white paper’s business opportunities, says Mark Johnson
The health white paper promises to put clinicians in control of services and one way in which they might choose to take more control of their destiny is by setting up a mutual organisation.
What are your personal objectives? Will this become your sole income source? What is your appetite for risk?
Mutual organisations range from retail cooperatives to financial services providers, housing associations and childcare cooperatives. They have proved popular for GP out of hours services.
Mutual organisations have four essential hallmarks. First, they are established for a shared purpose - that can be to serve a closed community of members and share economic benefits among them (such as an out of hours cooperative where GPs share shifts and receive payments for services); or for an altruistic community purpose.
Second, mutuals are “owned” by their members. No individual is entitled to a share of the underlying assets.
Third, mutuals normally operate democratic voting systems, on the basis of one member, one vote.
Finally, the governance structure ensures that different stakeholders play appropriate roles; this could include staff, service users and external participants. A classic example is the John Lewis Partnership.
Mutuals can be companies limited by guarantee, companies limited by shares, community interest companies, industrial and provident societies and charitable companies, provided their constitutional documents include these features. Some mutuals could qualify as social enterprises.
Setting up a mutual
If a service is not viable in-house, the NHS host organisation might offer a group of managers and frontline staff the chance to transfer out and set up as the service provider. Alternatively, clinicians may decide they could provide services in a better and cheaper way and therefore exercise their “right to request” to take the service out on preferred terms. GPs might form mutuals to manage commissioning.
A group of service users might promote the formation of a new service provider on a mutual basis; for example a group of diabetes patients in partnership with clinicians.
There are important considerations:
- What are your personal objectives? Will this become your sole income source? What is your appetite for risk? How might your lifestyle, family and friendships be affected?
- You should also ask, how good is the team at managing finance, time and people? And Does the team have the right skills, expertise and experience?
The business plan must:
- test viability;
- focus ideas;
- identify risks and explain how they will be managed;
- help to structure the business;
- prepare the case for raising finance;
- obtain approval from a public sector host or external agency to take a business out of the NHS host.
The plan should be comprehensive, detailed and clear on what the mutual’s business is, how it will operate, where it will obtain contracts from, plus projected income and profitability in the first year and how it will achieve the income forecast.
Case study: Stockport Managed Care
Stockport Managed Care is an industrial and provident society, set up by TPP Law in 2007 for the 54 GP practices in Stockport, with the agreement of the primary care trust, one of the first of its kind in England.
SMC’s priority was to support the GP practices in delivering practice based commissioning in Stockport by realising best value for commissioners and the highest quality health and social care for patients through redesigned pathways and training for clinicians.
The GPs are members of the society. They elect a board and agree the overall purpose and direction of the organisation.
Practices are allocated, in proportion to list size, a number of membership places.
When joining the society, new members complete an application which is a binding agreement on the practice to abide by the rules of the society. These rules include:
- attendance at training events;
- keeping within the practice managed budgets;
- using prescribed and accredited pathways and protocols;
- developing standardised patient management systems.
In turn the society offers centralised support in the form of:
- public health information and practice activity data at a society, locality and practice level;
- risk management on certain corporately managed budgets;
- training and educational events;
- governance of the SMC Board and associated sub-committees.