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Premises dilemma

Q: Our practice is working from two sites five miles apart. The PCT has cut our PMS baseline funding by 25 per cent so we are looking at working from one location, but the main surgery is not big enough. The parish council has expressed an interest in building new surgery premises attached to the existing village hall, which would be ideal. The PCT will support the project if it is cost neutral: the level of notional rent must not exceed the total amount we currently receive for our two surgeries. The council has concerns about financing the project but we wonder if it could pay the construction costs and then receive rent from us under a long lease that matches the notional rent. Is that workable?

A: Cost neutral surgery projects are a nice idea, but financially and economically, they are rarely realistic. Going for a new development probably means your main surgery is, at least in part, unsuitable.

Rental rates on new purpose-built premises compared with low quality unsuitable surgeries could be about a third higher.

So unless you are reducing the size by a third, you are unlikely to put together a viable project.

Where community land is available it may be that the land element can be 'put in' at a nil cost. While there are no simple guides this might reduce rental requirement by about 20 per cent. But this is still likely to leave a shortfall requiring some form of capital input to get the figures to balance.

With regard to the above, your proposals are not going to be easy to work with but are possible. If the council is prepared to ignore the land cost and only look to cover the building costs, and if your new surgery is going to be slightly smaller than the two separate surgeries added together, it may be possible for the council to raise the money and cover the financing costs by leasing the premises to the practice.

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