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Opening a GP surgery in retail premises

Siting the surgery in a supermarket may solve GP premises compliance problems, but the lease terms need careful negotiation. By Ingrid Saffin

Would siting your surgery in a supermarket solve premises problems? (Image: iStock)
Would siting your surgery in a supermarket solve premises problems? (Image: iStock)

The idea of GP surgeries operating from commercial premises has been around for over than 10 years. 

By 2005 there were 57 such surgeries and plans for more, championed by the then health secretary John Hutton. These surgeries were located in railway stations and other commuter friendly locations. 

Fast-forward to today and Boots has a number of in-store GP surgeries up and down the country; Sainsbury’s is shaping up as a growing player in the market and Morrisons has also expressed an interest. 

This all suggests that GP surgeries in retail outlets are here to stay, despite the controversy that it excites. 

The ethical issues around relocating to a supermarket or other store are well documented but what are the commercial property issues that a practice should bear in mind if it is considering relocating in this way?

Property issues

Your starting point is to be aware that your landlord is a commercial entity and the purpose of bringing a GP surgery into its premises is because a commercial benefit is perceived. 

This should not be seen as problematic; the relationship will only work if it is interdependent.  

The key is to understand clearly what the relationship is intended to achieve for both parties and to proceed only if this is properly balanced and documented.  

Location, location

You will need to identify with your landlord the best location in the store for your surgery. Patients should be able to find it readily and there should be good access to it within the building. 

Easily accessible parking facilities and proximity to any in-store pharmacy are important and the surgery should not be near any excessively noisy or smelly area nor, if possible, to departments or aisles of goods not conducive to a healthy lifestyle. 

Your landlord will be sympathetic to this but will need to factor in its general store layout, changing customer habits, seasonal issues, footfall and marketing issues.   

Be aware that stores are frequently re-configured. Discuss with your landlord what your position will be if this happens and make sure that you document any protective measures that are agreed. Do not rely on verbal assurances.

Leaving problems behind

Your practice will be the first GP occupier of your space so it will be created specifically for you. 

Within the specified budget and the confines of the space identified for you, you will be able to configure and fit it out in the most appropriate way for your surgery’s requirements. 

This will give you the opportunity to leave behind any problems at your existing premises with CQC compliance, disabled access, fire, asbestos and air conditioning regulations and other statutory compliance issues. 

Terms of occupation

Your lease will govern the relationship between you and your landlord, as it will set out your respective rights and obligations.   

Matters to be dealt with by the lease will be include:

  • What the practice must pay for and when 
  • Your parking rights, hours and means of accessibility
  • Limitations on your ability to transfer the lease to new partners
  • Responsibility for repair and maintenance and what will happen when your lease ends.  

If you are moving from freehold premises, you will necessarily find more limitations in terms of what you are permitted to do at the new premises. 

You should think through how you want to use the new premises and check that your lease does not prohibit or restrict any essential functions. 

Lease term and security of tenure

A key issue will be how long your lease will last and whether or not you have security of tenure. 

Your landlord might want to be able move you to a different location within the store – or even to close the surgery altogether – if its business plan changes. 

Make sure you understand what might trigger a change in your relationship with the landlord and that you are aware of and comfortable with what is on offer. Most importantly, make sure you understand how much control you have over the situation.

Cost and payments

Some landlords will offer a period of no-cost occupation. However, this might be followed by a period of occupation where the cost to the practice is higher than elsewhere. 

Look at the overall cost, taking into account service charge, insurance and maintenance costs as well as rent.   

Some landlords will offer an all-inclusive payment regime, under which a single sum will be paid to the landlord to cover rent, rates, building insurance and service charge. 

The sum might be variable, with your lease setting out how it will be calculated, or it might be fixed. 

VAT will generally be payable in addition to the sum. Fixed sums can be better for budgeting purposes but they are not always cheaper than a variable sum. Where a variable sum is payable, try to negotiate an upper cap.

Adequate reimbursement

Where a service charge is payable, the landlord will calculate and collect on a proper commercial basis. In other words, it will seek to recover what it pays out in repairs and maintenance costs.

Ask what the historic figures have been and find out what costs are anticipated in the foreseeable future. 

Depending on how many years your lease will run, it is likely that the rent will be reviewed at some point. Make sure you understand how the rental valuation will be arrived at so that you know what to expect when the time comes.

Before committing to a deal, check with a specialist healthcare surveyor that what you will pay falls within the parameters of the NHS reimbursement that you will receive.

  • Ingrid Saffin is head of the healthcare team at law firm Mundays LLP

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