Adam Thompson, Director at Primary Care Surveyors, specialist in the healthcare property market, investigates and explains the issues with which the NHS and GPs have to contend. Article first published in the March 2018 issue of Health Estate Journal, the monthly magazine of the Institute of Healthcare Engineering and Estate Management (IHEEM: www.iheem.org.uk)
With the NHS under increasing pressure to provide an ever improved level of service, there are plans for 7,500 existing GP practices in the UK to become 1,500 ‘Super Practices’. So what does the future hold for primary care services in the UK? What issues need to be overcome from a logistical and estates point of view?
Under Government plans to expand opening times and drive transformation in the primary care sector, thousands of GP practices are destined for closure, with 7,500 surgeries envisaged to become 1,500 ‘Super Practices’ within the next five years. This drive is part of a campaign to improve access to services, with more services being provided in the community, together with increased access to GPs at evenings and weekends, under a manifesto pledge to offer all patients appointments between 8am and 8pm seven days a week; but that is not the whole story.
With cuts to budgets for social care, an ageing population (there are more than one million additional people over the age of 65 than five years ago), and a retirement bubble in the GP sector that sees practitioners retiring and leaving the sector for good with no natural succession, the NHS is under pressure. Factor in urban regeneration, the Government’s initiatives to sanction green field developments across the UK, increases in immigration over the last 20 years, and a shift for current GPs towards ‘part time’ working; it seems there is necessity for a change of practice.
The overall reason why the NHS is taking the ‘Super Practice’ route is very complex and there are many facets to the reason as well as the solution. NHS bodies (including NHS Property Services) are the custodians of a great deal of property which is not just poorly utilised, but some of which may not be suitable to meet the needs of the population. The key role of the NHS should be to provide the best medical care it can and as such the NHS may not be best-positioned to be a landlord managing a property portfolio.
What the healthcare sector needs is transformation of services, new vision, investment and better property utilisation. The right infrastructure is required to enable transformation in healthcare services. In a nutshell, with its capacity for enabling working at scale, the new ‘Super Practice’ model may well be a viable solution.
More than 550 GP surgeries have closed in England since 2012, with remaining surgeries expanding to take thousands more patients. The average list size has risen by 18 per cent in a decade. The ‘Super Surgery’ may herald a step change in primary healthcare, with larger surgeries able to scale up and in line with Government plans not just to expand opening times, but to provide better services to the patient and the community by offering services now normally only found in hospitals.
The current thinking is that by putting GP practices into hubs of 50,000 patients plus, those practices are then able to employ pharmacists and physios and provide more services at scale (e.g. diagnostics and specialist nursing teams dealing with long term conditions) than they could as a single-handed GP or as a practice of two or three GPs, which has historically been the norm.
Providing Services Where They’re Needed
Part of the intended outcome is to redirect patients to the appropriate healthcare practitioners best suited to provide the service or treatment those patients require. When we refer to a “doctors’ surgery”, the patients’ expectation is to see a doctor. However, a doctor may not be the most appropriate person for that patient’s particular condition. Many minor conditions can be dealt with by practice nurses or clinical pharmacists. Moreover, many patients with long term conditions will receive more appropriate care by seeing a specialist nurse dedicated to dealing with those particular conditions. This has often not been possible in the traditional GP practice due to the lack of sufficient critical mass of patients with that condition, necessary to make having such specialist teams worthwhile or effective. However, within the Super Practice this becomes a reality, and in addition there will be opportunities to provide further services, such as diagnostics or mental health services.
Depression, mental health issues and even loneliness are becoming topical issues the medical profession is struggling to deal with and there is much that can be done in the community to assist with such conditions. In some of the proposed developments for new medical centres we are now seeing community areas being provided where patients will be encouraged to pop in for a chat and some support. There may well be talks or some other activity taking place, but even if not, a room will be available for providing community care, encouraging those who may be depressed or just lonely to stop by for some much needed comfort.
These community support rooms may well be more accessible than traditional day centres and will complement the increase in social prescribing, as well as potentially provide groups such as “knit & natter” and “men’s sheds”. Sadly, this in turn will create funding challenges since the revenue funding for primary care facilities has evolved around the core General Medical Service’s activities. The provision of community space/mental health accommodation is not within the current definition of General Medical Services. This can cause conflict between the desired shift in healthcare services and what is allowed under current Regulations, notably the NHS Premises Directions 2013 (although these are due to be updated imminently).
Multiple Occupancy Practices
The occupancy of large medical centres has changed in recent years. Traditionally the property would be developed for a doctors’ practice, with it then being occupied under a single lease, sometimes with or without a pharmacy being present. Now there are increasingly a number of occupiers within a single medical centre. Some occupants may be more informal, using rooms on a sessional or part time basis, in addition to services being provided by other NHS bodies and sometimes by the voluntary sector. In other instances the use is more full time, hence a formal lease arrangement will be required. Traditionally community services such as midwifery, health visitors and district nurses were treated as being part of the General Medical Services activity and included within the revenue funding. In some instances NHS England local commissioning groups have deemed that such services are not part of General Medical Services and are therefore excluded from revenue funding.
This then necessitates a lease to be put in place with the Community Trust to recover the reduction in notional rent/rent reimbursement that has been withdrawn. This does seem to be a backward step that is inconsistent with the general shift of putting more services into the community and bringing about more collaborative working practices.
The range of occupiers within a single practice is increasing, with opportunities for pharmacists to locate alongside general medical as well as other healthcare services. In one recent case Primary Care Surveyors assisted a medical practice to directly contract with a physiotherapy provider for referral of patients, generating savings to the practice as well as to the NHS, with other similar enquiries for the inclusion of renal dialysis and ophthalmology within the primary care premises.
The Challenges of Consolidation
The advent of the Super Practice is largely driven by the significant number of merges that have taken place within GP practices in recent years, typically initiated by the number of retiring or soon to retire GPs. Primarily the purpose of a merger revolves around the consolidation of practices and patient numbers, rather than the consolidation of premises, but that is a clear direction of travel as ultimately operational savings will be achieved by reducing the number of premises and being able to provide services at scale. Having said that, this does not work in all locations. Many practices may work on a hub and spoke model with branch surgeries being retained in rural areas. Then, the ultimate reduction in the number of GP premises may have an impact upon the access to healthcare within some rural areas, but this in turn may provide opportunities for community pharmacies to provide or accommodate other healthcare services.
In the current model, pharmacists are required to provide a consulting room, often little more than a vestibule, in which to see patients. If that consulting room were to be made larger then it may be suitable for other healthcare practitioners to consult in, such as a visiting doctor or a community nurse. This would mean, even on a part time basis, that the community would have access to other healthcare services. These are examples of the different ways in which healthcare services can be provided and of how the property can be used to bring about the transformation that is required in the community.
The Rural Economy
The conundrum of providing primary care services in rural locations may be affected by another set of circumstances. Ministers are poised to weaken protections to meet ambitious building targets, with the Government investing £3billion to build 360,000 new homes on green belt land over the next year or so. With GP numbers declining through retirement, rural locations will suffer from a lack of existing primary medical clinics and GP surgeries. With 360,000 new homes planned, this will require substantial investment into medical facilities for those areas alone.
With house occupancy averaging at 2.3 residents per dwelling, this rural expansion would potentially accommodate over 828,000 ‘additional’ inhabitants. Within the UK the ratio of patients to GPs varies across the country, from 1,500 to over 2,500 in certain cases. With a mean average of 2,000 patients registered to a single GP, this increase in population within the green belt alone would make a case for over 414 GPs to administer to that number of patients. Would the ‘Super Surgery’ work in this environment and could the Section 106 contributions, which house builders pay councils to create community infrastructure, be used to pay for this new primary healthcare provision?
One other significant factor for the emergence of the Super Practice is the matter of property or, more to the point, the capital value of property. With interest rates being at an all-time low and without an increase looking imminent, it follows that investment yields are also low, which drives up the capital value of surgery premises.
Whilst this may appear to be beneficial for the retiring, or near to retiring GP, such high capital values are often a deterrent to young GPs looking to buy into an existing partnership. In addition, many GPs are concerned as to the future direction of their careers, with many now choosing between part-time and full-time work, but also having portfolio careers.
In turn, there are issues regarding the long-term suitability of some individual properties, with GPs being reluctant to take on a significant share of the equity within an existing building when partnerships consist of no more than a handful of partners.
With Super Practices sometimes having as many as 50 partners there is then a degree of safety in numbers, with reduced fractional risk per individual partner. Many Super Practices are currently exploring how property ownership will be dealt with, some solutions being that all property will be conveyed into the Super Practice, with other Super Practices considering leaving the property to the individual partners as is currently the case.
The outcome for each Super Practice does appear to depend upon the age profile of each of the individual partners in question, together with details of the outstanding mortgages. Sometimes the existing mortgages may have many years to run or were granted at high interest rates resulting in there being high redemption charges to exit those mortgages, sometimes rendering the property illiquid.
Regarding leasehold premises, it remains the case that a partnership is not a single entity and cannot take a lease in the partnership name. It is the individual partners of a partnership (no matter how large that partnership may be) that are the tenants under a lease. Not all partners will need to be individually named (it is capped at six) but those named tenants should be no more liable than the other partners within the practice if the partnership agreement has been drafted properly to include joint and several liability. This is all part of the importance of ensuring that the partnership agreement has been professionally drafted.
An issue linked to this is that of the ’last man standing’, which is often referred to as grave concern. Many of the first generation of property developments by landlords and leased to practices are now coming towards the end of their first leases. Many of the original individual doctors have now retired but it is surprising how many of them had not had their names removed from the lease before doing so. It is not uncommon for a GP to believe he is now the last man standing under the current lease, with it transpiring that the now-retired doctors have not had their names removed from the lease. Even if they tried, they would often not be allowed to, with most leases stipulating there are ultimately a minimum of three named individual tenants. It follows that those retired doctors will remain liable for obligations under the lease, including payment of rent and any dilapidations for wear and tear to the building.
This can be reassuring for the doctor who believes he was the last man standing to now find that he at least has shared liability with his former partners, rather than being solely liable.
With leases coming to an end, this does present further opportunities for many practices. Many of those premises are still suitable for the provision of healthcare, although a refurbishment may be long overdue. The granting of a new lease creates a significant improvement in the investment value for the landlord. It may also be the case that the landlord is required to undertake refurbishment of the premises in return for a new lease being granted, all at a rent commensurate with the refurbishment that has been undertaken.
Under the NHS Premises Directions 2013, it is essential that the ’contractor‘ seeks prior approval for any new contract (i.e. lease) before committing to the new lease. Without such prior approval there is a great risk that the practice will lose its entitlement to rent reimbursement.
There is much to be considered, with the advent of Super Practices, to ensure that issues of property, albeit freehold or leasehold, are considered. Putting property to one side there is fundamental reason for the Super Practice, which will ensure the delivery of improved and better healthcare services for the community.