"The NHS will last as long as there are folk left with the faith to fight for it"
Aneurin Bevan

Sunday, 1 August 2010

What's the value of your reputation?

And how much would you sell it for? This is an interesting issue and it is being debated by GPs and accountants. Currently the Government owns a brand called the NHS. It has an immense reputation not only here but also abroad. How much is that worth?

Companies often buy and sell reputation. Mergers and takeovers may be to take over a product or intellectual property, or it may be simply to purchase a company name, and hence the reputation that goes with the name. Reputation is clearly an asset and has a value. Professionals often buy and sell reputations, it is called goodwill.

Since the inception of the NHS in 1948 selling the goodwill in GP practices has been illegal, but the Blair government relaxed this in 2004.The rules say thata practice with a list of patients cannot sell goodwill, but a practice with no list of patients (for example a Alternative Provider Medical Services - APMS - contractor) can sell their goodwill. Also out-of-hours, additional and enhanced services are not covered by the ban.

Goodwill is valuable and solicitors and accountants are used to the concept of buying and selling it. Laurence Slavin at healthcarerepublic says that "a goodwill valuation of 50 per cent of turnover is not unusual". Slavin also gives an example where if the ban on the sale of goodwill is repealed then  hypothetically the partners in a GP practice (the doctors) could sell the goodwill to an APMS and become employees of the new practice on a salary but also eligible for profit share. The APMS then runs the practice as a private enterprise. Andy Cowper, the editor at Health Policy Insight, says that the value of the goodwill of GP practices is around £8bn and currently it is owned by the Secretary of State for Health, Andrew Lansley. Cowper asked Lansley recently:

"who will own the goodwill and intellectual property in GP commissioning consortia, and will there be an asset lock on these?

Lansley replied,

"I see no basis on which consortia could realise and distribute goodwill".

 According to Policy Exchange

"The prohibition of the sale of goodwill on GP practices further adds to market distortion by preventing the sale GPs practices at true and fair value."
and they recommend:

"As part of the process of introducing fundholding to GP practices [ie GP Commissioning], restrictions on the sale of goodwill in GP practices should be lifted. This will enable high performing GP practices to take over poorly performing practices."

It would be interesting to see how long Lansley thinks he can resist allowing GPs to sell goodwill.

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