Wright Johnston and Mackenzie Solicitors

Futures Trust and Healthcare

25th January 2016 

Securing public or private money for new GP premises is rarely straightforward, no matter which government is in power. Two recent examples involving the Scottish and UK governments prove this point. In Scotland two major health centre projects had been stalled for months whilst the Scottish Government investigated whether its flagship private finance initiative model, the Scottish Futures Trust (SFT), complied with EU accounting guidelines on the classification of such projects to the private sector. Scottish Finance Minister John Sweeney’s announcement at the tail end of last year of a resolution to the accounting problem has allowed SFT projects finally to move ahead. Meanwhile, in England and Wales, the Treasury’s review of the original £1billion Primary Care Infrastructure/Transformation Fund earmarked for improving GP premises puts planned health centre developments in doubt.

Such problems will not be unknown to GPs wishing to move their practices into new health centres commissioned by the NHS but paid for by private or public capital investment. Through a mixture of changes in government policy and funding cuts, new health centres can often take years to reach “shovel ready” stage, particularly where the centre is a modern multi-disciplinary “hub” building involving a number of multiple partner practices and units for other healthcare professionals or specialist services.

Even when funding has been secured, there is a further problem – the legal basis on which a GP practice is to occupy premises in the new health centre. Until ten to fifteen years ago, GP occupation of public health centres was relatively straightforward: typically, the practice would either occupy a health centre under a short-term licence or, in more complex cases, they would lease the premises from the local health board using a common style of lease. Nowadays, the variety of innovative ways in which health centres get commissioned – PFI, NHS LIFT Initiative and 3PD leases - has spawned a variety of legal arrangements for their occupation, many of which are not properly thought through.

For general practitioners the disadvantage with such funding models is their novelty and inevitable complexity. Not surprisingly, the primary focus of the NHS management team and the private investors is on getting the projects up and running within the allotted budget and timescales. Faced with these pressures, it is hardly surprising that arrangements for GPs’ occupation of these centres may be considered an afterthought.

Take the Scottish Government’s SFT model as one example. The SFT is the Scottish Government’s equivalent to the UK Government’s Private Finance Initiative (PFI) in which the private sector takes on the cost of construction of new health centres and charges the NHS for rent and maintenance, typically over a 25-year period. The SFT differs from PFI schemes used in England and Wales, chiefly in that profit levels are capped, there is an opportunity for public bodies such as the NHS to invest in the project and the contracts follow a national standard set by the Scottish Futures Trust that is designed to ensure value for money.

Regardless of one’s views on the merits or otherwise of such schemes, it is fair to say that little thought seems to have been given to doctors’ concerns and interests. There is, for example, no nationally negotiated SFT style of occupancy agreement for GPs to sign and no real provision in the SFT standard documentation as to how GPs will actually deal with day-to-day issues arising from occupation of a health centre building.

There are also numerous practical issues which have simply not been thought about but will be of concern to a practice. For example, what certainty do GPs in a practice have that, once they have sold off or given up a lease of surgery premises, they will be able to occupy the new surgery in the building for the lifetime of that building? What input does a practice have in the day-to-day running of the building? What happens if there is a dispute between the practice and the facility management operator, particularly on the level of occupancy charges, service charges and other day-to-day running costs? Will an SFT centre attract or dissuade doctors from wanting to become partners in a general practice?

Many of these issues apply equally to the other methods used to procure new health centre buildings. A practice will, in all likelihood, need help to bring enough pressure to bear to negotiate acceptable terms for occupation. Our solicitors are experienced in advising on exactly this type of work and in helping negotiate changes and concessions.

Michael Dewar, Partner, Healthcare Sector Team, Wright, Johnston & Mackenzie LLP (Published 25.1.16)