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Surgery upgrades and how to fund them

Chris Acton and Joanne Bartlett suggest GPs in rented premises may benefit from becoming owner-occupiers and explain the financing options.

Two thirds of the 8,300 GP practices in England are currently GP-owned with the remainder owned by private investors (some 20% of the market), PCTs and other NHS trusts. In the vast majority of cases GPs owning their buildings has proved a very sound investment.

However, it is clear that many GP premises may need upgrading or even replacing in the coming years so the need for further investment is substantial. If the DH’s stated ambition to transfer up to 80% of diagnostics and some 50% of outpatient appointments into primary care is added to this, the demand for space in outdated buildings is likely to be considerable.

New landlord for PCT-owned surgeries

Government-owned company NHS Property Services Ltd will become the landlord of PCT-owned primary care facilities in 2013. One of its first priorities will be to tidy up the lease arrangements for these buildings from which, in many cases, GP practices operate.

A lot of practices in PCT-owned buildings do not have a formal lease or licence to operate from them so these GPs in particular are potentially in a good position to invest in their own property rather than staying put in commonly low quality and poorly maintained buildings.

Options for more space

For these practices and also for those in private sector rented surgeries or GP-owned surgeries that are no longer adequate, the various options to secure more space are:  

  • Moving to new/refurbished leased premises including, in England, LIFT scheme buildings
  • Re-developing your existing GP-owned building through a sale and leaseback arrangement
  • Increasing or taking out a mortgage to upgrade your existing building
  • Applying for an improvement grant
  • If renting, ask your landlord to fund improvements
  • Moving to premises which you will share with other GPs/ healthcare providers.

For the detailed rules on accessing NHS funds for these options, see the GMS Premises Costs Directions 2004. The rules are complex so you will probably need to get expert advice on how they apply to your situation.

Putting together your business case

The starting point for any premises project is to prepare a business case. This is required by all commissioners in order to fully understand the limitations of your current building and for them to be persuaded how NHS funding will improve services for patients and be a sensible investment for the health economy as a whole. 

Your business case should:

  • Evaluate how your practice is currently meeting its community’s needs
  • Identify shortcomings and how these impact on service provision
  • Include proposals for what is need and some initial designs
  • Provide evidence that you have consulted user groups (for example, your patients) consultation
  • Give estimated costings.

Cost neutral funding

At present most new premises funding needs to be ‘cost neutral’. This may seem a contradiction in terms, but is not that difficult to achieve.  The table illustrates this with the example of just four long-term conditions for which treatment can be transferred from hospital to a primary care setting and generate savings of around £124,000 a year.  This saving can in turn be capitalised to generate the investment needed for your new or enlarged building.

If, as is likely, you require specialist help (from a consultancy firm or a professionals such a surveyor or architect) with your business case, this is likely to cost between £5,000 and £8,000.

Cost neutral projects for new practice services


Strategic Alignment – Operating Plan & QIPP

Activity Shift (actual based on 11/12 or %)

Projected saving based in current activity p.a. £000

Existing Service; Planning; or Ideas stage

Risk of non-delivery

Accommodation Requirement

Specialist Heart Failure Nurse Nurse – reduce reliance on secondary care

Change in care setting

Activity shift for cardiology – move to CCG av rate per 1000 pop




Clinic Room

Multi-disciplinary Team Meetings (MDT’s) & RISC Tool for identification of frequent attenders to hospital

Change in care setting

90% of Frequent Flyer Activity >5 admissions




Meeting Room

Specialist Falls service including Osteoporosis screening

Change in care setting

10% of CCG fallers




Clinic Room

Leg Ulcer Specialist Service

Change in care setting

Shift 60% activity for CCG – leg ulcer related




Clinic Room

Finding a lender

Once outline approval for your business case is secured, finding a lender not likely to be difficult. The lender may be a bank, or if you will be leasing your building, finance can be raised via a third party developer/investor. 

Either way, the investment will be seen as a government-backed, long-term rental income stream, so there will be plenty of companies ready to lend or invest.

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