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GP premises - a funding review

1 November 2017

I recently wrote about the potential impact of the NHS property estate on the delivery of Sustainability and Transformation Plans. The success of many STPs essentially depends on the delivery of more services outside of hospitals, in the community. Central to this success were GPs working in primary care or community hubs as part of multi-disciplinary teams, with other health and social care professionals (a point recognised by the NHS Next Steps on the Five Year Forward View (5YFV) report in March of this year). However, the affordability of the ambition to achieve both this and other targets of the plans was broached. I will now consider what progress is being made, and how, on delivering the improvements long recognised as being needed in the primary care estate.

The starting point must be the GP Forward View, published in April 2016. At the heart of this is a commitment for more modernised buildings, and better use of technology, to help improve GP services for patients. That commitment has, of course, been warmly welcomed by various GP bodies, which consistently highlight the need for significant investment in the GP estate. A BMA study found four in ten practices warning that their premises were not adequate for patient care. The GPC premises lead has recently said “there is little doubt that many GP buildings are in urgent need of refurbishment …” and that “this situation is increasingly preventing GPs from meeting the increasingly complex needs of patients, especially the heightened demand for more appointments and expanded services”.

From a premises perspective there are two important elements to the GP Forward View: the Estates and Technology Transformation Fund (the ETTF), and the development of STPs and their commitment to investment in general practice.

The ETTF is a multi-million-pound investment specifically aimed at GP facilities and technology for the period 2015-2020. The 15/16 funding allocations focussed on improvements to, and expansion of, existing GP premises. In 16/17, CCGs have identified over 800 further schemes for potential investment to modernise primary care premises by 2019. These include a significant number of new-build primary care centre developments to enable practices to work with other healthcare providers (such as local authorities and NHS Trusts), to deliver services at a local level.

Clearly, the fund has an important role in relieving pressure on the secondary care system by allowing more healthcare to be delivered in the primary sector, by GPs. However, as far back as this February, criticism was being levelled at the scheme from various quarters. A leading healthcare property developer suggested that “the funding announced to date is insufficient for full implementation of all the schemes identified”. Meanwhile, GP bodies criticised the delay in delivering the funding to practices, and the impact of a funding cap, which has resulted in some projects stalling or not being delivered.

Whilst the delivery of funding has been criticised, we must recognise that NHS England is spending public sector capital monies, and that detailed due diligence on the affordability and value for money of any scheme is essential, and will take time to be completed.

NHS England is now also providing transitional support (until 30 November 17) to some practices in other areas, such as the funding of Stamp Duty Land Tax, and VAT on certain leases. This, however, is limited to new leases taken out by practices with NHS Property Services (NHSPS) or Community Health Partnerships (CHP). There is similar transitional support for service charge increases levied by NHSPS or CHP.

It is unfortunate that we have not yet seen changes to the Premises Costs Directions that are necessary to lift the 66% cap on funding that can be made available. Under Direction 12 of the 2013 Directions, a premises improvement grant is limited to not more than 66% of the total cost of the improvement. Whilst amendments to bring in changes to this have been promised for some time, we are yet to see these being introduced.

Further flames were fanned on the fire by the review of NHS estates by Sir Robert Naylor published in March of this year. It estimated that “STP capital requirements might total around £10bn, with a conservative estimate of backlog maintenance at £5bn and a similar sum likely to be required to deliver the 5YFV.” The report also said the NHS could influence the pace of change out of sub-standard primary care facilities by concluding “there is a case for changing the reimbursement payments of primary care practices for example by reducing payments for properties not meeting the future service strategy to encourage moves.”

A final conclusion of the report worth noting here is that “active consideration should be given to how GP practices can be given incentives to move into new facilities, supported by substantial private sector investment. NHS commissioners and regulators have considerable latent authority to insist that premises be fit for purpose. These powers should be used far more explicitly to ensure that new investment is in line with the 5YFV and to force the pace of investment in or exit from inadequate premises.”

Take all this together with the focus of ETTF funding on the expansion of GP service capacity, and it seems that the direction of travel for the primary care estate is clearly towards larger, modern facilities, capable of delivering the enhanced services the 5YFV demands. The thorny question is: how will this transformation be funded? Whilst the Naylor report places considerable weight on the capital that can be released from disposal of surplus NHS land and buildings, it is acknowledged that that is not of assistance in the primary care estate, a large part of which is privately owned.

It was this funding challenge that led, in August 2017, to three major primary care premises developers (Primary Health Properties plc, Octopus Healthcare, and Assura plc) putting forward their 'Primary Care Buildings Pledge': “Our new Primary Care Buildings Pledge sets out our ability to invest more than £3billion in primary care buildings through third party development during the life of this parliament, at a cost to the NHS of less than £200m of rent per year. That’s the equivalent of around 750 new medical centre buildings, so that GPs have the spaces they need in the right places for patients.” (Jonathan Murphy, CEO of Assura plc).

Sir Robert Naylor has welcomed the pledge saying: “It is encouraging to see the private sector step forward to play their part in meeting the recommendations set out in my review published earlier this year – with a credible plan and offer on the table for the NHS and Government to respond to.” However, the BMA has said that the offer should be “treated with a high degree of caution”, warning that PFI-type deals may not deliver value for money, and suggesting that the focus should be on delivering funding promised through the ETTF. This is despite the suggestion that it will not cover the cost of investment needed in the primary care estate.

It would be easy to suggest that the private sector developers are only making the pledge because they believe there is profit in it: why else would they invest heavily? There has certainly been plenty of criticism of the proposal. However, the developers have confirmed the minimum rent they are looking for, and that actual rents charged would be decided in negotiations with the NHS and signed off by the District Valuer. Of course the devil will be in the detail. There would be significant practical hurdles (for example, who is going to take on the long-term lease commitments that would be required), and political hurdles (for example, the Labour Party’s stated aim to bring PFI deals back 'in house'). The size of the challenge does, however, require that such proposals are considered with an open mind.

I began by stating that funding is one part of the equation in delivering the 'GP Forward View': the second part is the development of STPs and their commitment to investment in general practice. That topic will be revisited in a future article.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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