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Extensive advantages to leasing premises

Middlesbrough's £12 million health village has a number of benefits for GPs, reports Lucie Benson

The North Ormesby Health Village in Middlesbrough has enabled four GP practices from the area to relocate from outdated, run-down premises into this new, state-of-the-art primary care development, which is set to provide extensive services and facilities for more than 20,000 patients in Middlesbrough.   

The project is one of the largest primary care developments in the North East and is part of a leasehold arrangement that has been forward-funded by the Assura Group (formerly known as the Medical Property Fund), at a cost of £12 million. The Assura Group, which specialises in investment for primary care premises, is the long-term owner of the buildings, which are being leased to Middlesbrough PCT.

The main benefit for GPs in choosing the leasing option is of course the opportunity to move into modern, fit-for-purpose premises, without having to worry about the burden of owning the property.

In North Ormesby, the GPs pay a range of costs including rent, business rates, water rates and service charges. However, the PCT reimburses them for everything apart from the service charges, for which the practices are responsible.

The health village has taken exactly five years from planning to opening. Phase one of the development — the relocation of the four GP practices — was completed in July of this year, when the GPs moved into the premises. All four practices are in one centre but operate separately.

Phase two, to be completed by the end of this month, will be PCT buildings housing a range of services, such as reproductive health, speech and language therapy and physiotherapy. It is hoped that phase three will be completed this time next year, and will provide further health and social care services.

Patient focus

Other planned services for the site include a pharmacist, optometrist and dental services.

Tim Meggitt, managing director of the Assura Group’s property division, explains that leasing enables GPs to provide a much better level of service to patients, without the hassle of creating a new development themselves or using any of their own money.

‘It is a very time-consuming and often fraught process, in terms of land identification and acquisition and getting the revenue funding in place,’ he says. ‘All these things take time, so from a GP’s point of view it is much better if they don’t have to worry about that and can concentrate on their patients.’

Dr Sameer Dave is a GP at the Oakfield Surgery, one of the four practices to move into the health village in July. He says that the GPs, staff and patients are all satisfied with the new premises and he believes it is a much better atmosphere in which to work.

‘The patients are happy and feel more comfortable because there is a pleasant waiting room and they have got more space,’ he says. ‘The disabled patients now have easier access to all our services, which we had difficulties with before in our old premises. We’ve also got a minor treatment room to provide more sterile conditions. The staff are happier with the greater room and freedom they now have, and it befits the way that we would like this practice to move forward.’

Future services

Dr Dave says the practice would like to be offering more services, but adds that this will happen over time, as each phase of the centre’s development is completed.

‘In the future, we hope to provide a more extensive minor surgery list,’ he says. ‘In terms of practice-based commissioning, our increase of space should be able to accommodate some of the issues that arise from this, too. Also, with time, when the PCT gets its building across the road, we will then be able to provide an in-house physiotherapist, nutritionist and so on.’

Colin McLeod, chief executive of Middlesbrough PCT, says he is delighted to have chosen the leasing option for this development.

‘A majority of the practices that have moved into North Ormesby were originally in premises that were either in converted houses or not fit for purpose,’ he explained.

‘They were cramped, they didn’t meet the requirements for disabled access, and there were constraints in developing new services.

‘In addition, because they were all owned by the practices, it made it very difficult to recruit new GPs because they don’t necessarily want to buy into property investment.’

No constraints

Mr McLeod adds: ‘The leasing option doesn’t constrain GPs in joining the practice because they can sign up to a lease that we have given an indemnity on anyway. It allows us to develop a far greater range of services in new, modern premises.’

This development has enabled a range of services to be moved out of hospitals and into primary care, he explains.

‘This includes musculo-skeletal and dermatology services. We are also doing minor surgery in the community and are looking at remodelling the GUM service. In addition, we are developing a new heart failure service in the community. These are just a few examples and its only through this type of development that we can do this.’

Once the PCT facility is on site, it will be able to co-locate with the GP practices, says Mr McLeod. ‘GPs can then provide a wide range of services that they can access for their patients, for example reproductive health services and district nursing.’

Other services planned for the site include a sexual assault and referral centre and a renal dialysis facility.

Complicated agreement

The main drawback that Dr Dave can see, in terms of leasing premises such as this, is that it was a very complicated agreement for the GPs.

‘There were parts of the agreement that we didn’t understand and there were three or four contracts that had to be signed between the GPs, the PCT and the developers,’ he explains. ‘Also, it is a 25-year agreement, and although we hope the contract we’ve signed will make things very clear over this 25-year period, it is difficult to identify what issues may arise in the future in terms of any costs to the practices.

‘The contract signed today can’t cover every eventuality that might happen over the next 25 years.’

Dr Dave credits the PCT for being very supportive of the project.

‘The PCT has been instrumental in pushing it through,’ he says. ‘The fact that we have had this support has been reassuring. So, if a GP is thinking of going down the leasing route for new premises, I would advise them to make sure they have the full support of the PCT behind them.’

Over time, the full impact of the move and choosing to lease the premises will become apparent.

‘Only time will tell, but we are happy so far and the staff, GPs and patients all feel this is a better place to be,’ Dr Dave says.

What you need to know when considering leasehold options

The funding must stand up. GPs are not going to have anything with a capital value at the end.

GPs must always make sure that the rent matches the amount they receive by way of reimbursement from the PCT.

GPs must ensure that they are happy with the design and quality. They should use a separate surveyor, independent of the developer, to represent their interests and vet what the developer is doing.

A crucial part of the lease is the get-out clause for the GP. How do you escape? How flexible is it? Can other parties come in?

For unforeseen problems with the premises, the developer may agree to make changes in the future, provided the cost of doing so is funded by a pro rata increase in the rent and depending on available funds from the PCT.

Minimise the risk of future costs at the time of negotiating the terms of the lease. It may not be possible to remove all risk but that is the nature of being an independent contractor. Always take specialist legal advice.

Repairs and running costs should be the landlord’s responsibility, usually including the external maintenance and structure of the property.

Practices should not plan to carry out alterations. They will cost, there is no return, and they may have to be reversed.

Source: Information from Lynne Abbess, a specialist medical lawyer

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