Primary care networks (PCNs) were first introduced on 1 July 2019, and the question of whether to form a PCN company is as topical as ever.
By PCN company I’m of course referring to the provider entity scenario described on page 11 of the BMA’s primary care network handbook.
One of the reasons that this is such a hot topic is the benefits that forming a PCN company can bring.
The benefits of a PCN company are that they:
- allow for the creation of a VAT cost sharing group to overcome the issue of PCNs breaching their VAT threshold;
- provide a single entity for employing staff, on consistent employment terms, which can easily become muddled otherwise;
- resolve the PCN tax on surplus issue by accessing 19 per cent corporate tax rates, compared with the 40 to 45 per cent personal tax rates;
- allow for more formal governance and decision making by a delegated board, which can often become unwieldy in PCNs;
- limit any liability to the partners, however remote this eventuality may be, away from an unincorporated environment where personal assets are at risk;
- make accounting much simpler, since they create a separate entity; and
- can allow the entity to be party to alternative provider medical services (APMS) contracts so that it can then receive the PCN DES funding directly under a lead provider model.
With all these potential benefits, why aren’t all PCNs already operating this way? Well, there are drawbacks as well, and these include:
- the potential for needing CQC registration for the entity as a service provider;
- TUPE rules for staff moving into the PCN company;
- the set-up and running costs involved; and
- staff access to the NHS Pension, although this has been resolved for the time being.
All these issues can be overcome with the right legal and financial advice.
Using the local federation to handle the funds will still be a strong choice for many, especially where this is already in place and has been working well for the member practices. But this isn't the same as having a separate company, and there are benefits and drawbacks to each approach.
Will there be more corporate entities in existence this time next year?
Is now the right time for your PCN to incorporate?
Maybe, but it’s certainly a good time to find out.
Contact me to talk about the right operating structure for your PCN.