GPs have traditionally been responsible for the provision of their practice premises. This has resulted in some very good facilities in practices tailored to the needs of the partners and their patients. It was particularly beneficial when practices could invest money from other sources and when PCTs had money available. However that has dried up significantly in recent years and practices have found it increasingly difficult to access capital moneys from the NHS for new premises or adaptations and expansion of premises.

The LMC believes that this is a short sighted response and hopes that the new configuration of the NHS will enable a fresh look to be taken at investment in practice premises. Certainly all the talk of “Care Closer to Home” and the transfer of work out of secondary care into a primary care setting cannot take place without significant investment in practice premises.

However the balance of responsibilities between the NHS England Area Teams and NHS Property Services is far from clear at the time of writing as to who will hold the money, who will be responsible for commissioning expanded primary care premises and what the links will be with CCGs in developing their Primary Care Strategies.

The tendency of previous administrations has been to concentrate the development of primary care into large “Primary Care Resource Centres” alongside a range of community services. Whilst this model can have some attractions, particularly in densely populated urban areas it is hardly appropriate in rural areas or suburbs and forces patients to travel some distance to see their GP. These large buildings can also be off-putting to patients as they do not offer the small, welcoming atmosphere found in a traditional general practice.

Borrowing costs (previously known as ‘Cost Rent’) reimbursement, notional rent and improvement grants have been pushed into the background in favour of these larger purpose-built buildings using third party developers involved in LIFT and PFI or other financing models. The effect on practice finance can be substantial because third party landlord management and service charges can be much higher than previously experienced before a move. This will feature highly in the deliberations on taking on longer leases, and practices will need some guarantees for their future.

Cost rent and notional rent taken out before the introduction of the Premises Costs Directions in 2004 continue to be paid from PCT and now NHS England baseline funding and the principles about funding for rent and premises development are contained in the Directions. However, new applications for borrowing costs or notional rent for new developments will be entirely conditional on availability of funding within a NHS England baseline. Too often the response has been we have no money so you can’t do anything! This must change.

The BMA published a useful guide  which covers in more detail the areas outlined above. Much of this is still relevant although the Primary Care Trust references now need to be replaced by their successor bodies.

The Premises Cost Directions 2013

New premises cost directions were issued this year (2013). The main changes within these directions over the 2004 directions cover 10 areas as follows:

1.   Board Approvals for Development and Sale & Leaseback Projects

The new Directions emphasise that financial assistance will definitely not be granted for development work if it has not been approved by the National Commissioning Board (NCB). If work were to begin on an extension before approval has been sought, additional reimbursement will not be given for the additional space created. Moreover, it is now stipulated that the Sale and Leaseback of a GP surgery must also have prior approval from the NCB otherwise the inference is, again, that financial assistance will not continue.

2.   Premises Improvement Grants

There are alterations to broaden the types of projects that can be funded with Premises Improvement Grants. Alterations to improve a GP premises for infection control purposes will now be considered e.g. new flooring. Also now included are water meter installations, electronic storage facilities and connection to an emergency generator. Surprisingly, improvements designed solely to reduce the environmental impact of premises i.e. solar panels, air con, replacement windows, doors or facades, will no longer be considered. Nor will any work required as a result of general wear and tear.

3.   Funding for Development Projects

With regards to the funding of projects, the NCB is limited to funding between 33% and 66% of the total cost (as per the Premises Costs Directions 2004), plus any VAT for which the contractor cannot claim a refund. Moreover, for projects costing over £250,000, there must be a guarantee that the premises will remain in use for NHS services for at least 15 years.

4.   Professional Fees

There is now a limit of 12% of the total reasonable contract sum attached to professional expenses that may be reimbursed e.g. surveyors, architects and engineers fees. However, there is now a new category for project managers, capped at 1% – hopefully in recognition of the fact that GPs increasingly need more assistance from professionals.

5.   Abatements

Instead of a 10 year abatement period, this is now based on either 5, 10 or 15 years – depending upon the capital injected that was not put in or borrowed by the Contractor.

6.   Mortgages

GPs with long-term mortgages and high fixed rates used to have to pay a penalty to move to a cheaper contract. NHS England will now reimburse this cost.

7.   GP Tenants

Practices who lease their premises will need to negotiate a rent with their landlord, and sign a memorandum recording this, before a rent reimbursement application is made. This means that the GP may need to engage with a specialist surveyor who will then liaise with the landlord’s surveyor on their behalf.

8.   Private Income

The Directions no longer contain the section which states that GPs need to declare their private income. However, the Department of Health have stipulated separately that any practice found to be doing particularly high levels of private work will still find their reimbursement reduced.

9.   Reimbursing Car Parking Spaces

Stricter guidelines are now in place for the reimbursement of car parking spaces. The number of reimbursable car parking spaces must be approved by the NCB and access to and egress from each space must be possible without the need to move other cars. This suggests that tandem spaces, which are often adopted in busy central locations, will no longer be approved for reimbursement.

10.   Alternative Use Valuations

The ability to value a surgery in terms of possible alternative uses has been removed. Surgeries can now only be valued as a medical practice.

It is important to note, the onus is still on the GP practice to ensure that they have everything in order. If they do not follow the Directions then they could be liable for significant sums. Therefore, it has never been more important to seek advice if you’re unsure.

LMC are happy to work with individual practices or groups of practices who are looking either to move into new premises or develop their own, and will be looking to maintain an on-going dialogue with NHS Property Services, and those responsible for funding premises development. In particular it is important that advice is sought before committing to a lease or service agreement in a new building. If the LMC considers that you need further legal advice we will put you in touch with recommended sources of advice.

The Regulatory Framework

There are a variety of rules governing the requirements for practices to operate from safe and accessible premises and to use safe equipment. Most of these emanate from Health & Safety Requirements which have a statutory basis. In addition practices must adhere to the Disability Discrimination Act by ensuring access to the premises by people with disabilities. They must also follow guidelines on Infection Control.

These regulations are all now brought together within the Care Quality Commission Standards and Inspection regime.

Practices are encouraged to seek advice from the LMC office over the application and interpretation of these Standards.

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