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Partners faced with £800,000 potential liability following practice closure

GP partners at a practice that is set to close face personal ‘financial ruin’ from a bill of £800,000, having taken out a long lease with the support of NHS managers.

The North Bicester Surgery in Oxfordshire is set to close for good on 30 September because the withdrawal of MPIG funding has made it ‘financially unviable’, leaving 4,500 patients having to find new practices. 

As a result of the closure, the senior partner has told Pulse he could face being hit with almost £1 million in bills because there are eight years left on the lease.

However, he added that he took on the 25-year lease in 2000 following enthusiastic support from the health authorities, because Bicester is and was one of the fastest growing towns in Europe.

The BMA has warned of the risks of GP partners, with GPs facing the danger of being left with all the practice’s liabilities were they to be the last partner to leave.

Senior partner Dr Andrew Gibson told Pulse that his practice was on the NHS England list of 99 practices deemed as being at risk due to MPIG cuts - yet no support was forthcoming and now the practice may have to close.

But, as a result of the proposed closure, he may be facing ‘financial ruin’.

Dr Gibson said: ‘The nasty underside of this is that we are left with a building and a lease that runs for another eight years and obviously the landowners – the freeholders – will want their lease paid.’

The premises are owned by a private landlord, and Dr Gibson’s name is the only one on the lease.

He added that the purpose built premises was designed with encouragement from NHS managers.

Dr Gibson said: ‘We built it in 2000 with the NHS provision in mind, growing Bicester, safe as houses, 25-year lease. When it came to having a purpose built premises it was the obvious thing to do – I wanted to do it and they wanted me to do it, so it was a mutual encouragement, if you like – it made sense.’

However, he added: ’If [the landlords] call in the lease I’ll be facing a bill of £800,000.’

GP leaders said that GPs must be alert to the dangers of being the last man standing. Dr Peter Holden, member of the GPC finance subcommittee and former GPC premises lead negotiator, said the case was an ‘object lesson’ for GPs to ensure they take specialist advice before taking on a lease.

Dr Holden said: ‘I feel very sorry for this GPs but this needs to be an object lesson. The bottom line is, he who signed the lease is responsible for it and GPs need to be warned that if there is no break clause the landlord wants your money every quarter until the end of that lease. Your estate is liable.’

He added: ‘The problem is that the GPs are in the middle of this process. Some anonymous civil servant or minister will come in and change things, but there is no impact to them – the impact is taken at the North Bicester level.’

Julie Dandridge, head of primary care and localities at Oxfordshire CCG, said: ‘We are currently working closely with North Bicester Surgery to help them support all of their patients during this time.

‘We understand that some patients may be worried about these changes but we are positive that they will continue to receive good treatment from one of the four other GP practices in the Bicester area or wherever they choose to register.’

Debra Elliott, director of commissioning at NHS England South Central, said: ‘NHS England will continue to work with Oxfordshire CCG and North Bicester Surgery to ensure the smooth transfer of patient care and records and those patients with more complex conditions are supported as they look to move to alternative GP practices.’

Pulse campaigning for support for vulnerable practices

Stop Practice Closures-logo-online-330

Stop Practice Closures-logo-online-330

Pulse has been pressing for immediate support for vulnerable practices across the UK since 2014 through its Stop Practice Closures campaign, and NHS England has recently announced a new tranche of £16 million of funding to support struggling practices.

Health secretary Jeremy Hunt first announced the fund in his ‘new deal’ last year, and NHS England said in December that practices with poor CQC ratings or higher-than-average referrals and prescribing would be prioritised.

By March 2016, NHS England had formally identified more than 800 GP practices as vulnerable as part of its work to allocate £10m worth of support funding.

It found the situation was worst in the North Midlands where 22% of practices were identified as struggling. In London and South Central, around a sixth of practices have been identified as eligible for support funds.

 

 

Readers' comments (34)

  • Potentialy in similar position. Took same 25 year lease on PFI, following legal advice and copy of have written proof from our local Care Trust Plus absolving/deflecting any financial hit from being the "last man standing" but they are now taking position that as we are CCG nothing to do with them/honour. NHS Propco (we think) are supposed to be working towards a solution but hightly sceptical.

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  • typical comment from that particular NHS E employee - no concern for the GP's plight at all.

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  • And partners wonder why nobody wants to join them

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  • It is right that GPs do not trust the managers. Look at the statement that NHS England is helping support the patients etc...no support for the poor GP that has worked so many years.

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  • Must be terrible for the GPs and staff involved - sadly these are the risks inherent in the small partnership based approach that Pulse and others so strongly support. Rare that another NHS organisations would come in with a blank cheque to cover debts.

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  • Unfortunately, GPs are in difficult situation. I have always advised my colleagues not to get into long term lease for premises unless they believe that they will be working for the whole period of the lease. This includes sale and lease back. The best option for entrepreneurs has always been to own the property at the regional market value. Investment is well paid off by notional rent. And if you want to retire or leave the contract then there is no headache of long lease liability. You can sell the property and keep your investment. A colleague once suggested that he would be smarter by transferring all his assets including property to his wife and children and declare bankruptcy to get out such situations. Unfortunately he forgot that his NHS pension and state pension cannot be transferred to families and the landlord would still take this person to court to pay for remaining years of the lease.

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  • Is there a market for a private enterprise in this area?
    with NHS primary care getting worse and worse and patients getting a poorer and poorer service, we all need to start thinking about other options.

    We are all skilled professionals with a market for our skills...if the NHS cant be funded to provide this service, surely we have the skills and ability to take our skills direct to the consumer.....?

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  • For most partners premises are a free pension but it does come at a risk. The partners had a choice at the time of using a third party developer and having no risk. Will be more of this happening in the future

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  • I also took out a 25 year lease on premises from a private developer however I did have a signed legal agreement from the pct in 2006 committing them and successor bodies to taking on responsibility if no other party could be found to take on this lease. It remains to be seen if this is legally enforceable !The problem is of course that if you own a property you can always sell it (although that assumes it has an alternative use), while a long lease is much more difficult to transfer.

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  • all support for the patients, nothing for the partners. If you don't look after the doctors, how can they look after the patients. This is unbelievable. Don't sign a lease for fear of losing everything as a partnership. Only sign as a plc or llp so that you are not at risk of losing everything.

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  • Free pension??I wish!Having retired after 34 years I fortunately was bought out by my remaining Partners but I would have got almost as good a "return on investment" if I had kept the money in an old sock.
    As a GP CQC Advisor, I now visit many Practices and ,as noted above, there are time bombs ticking a-plenty.
    Remaining benefits of being an "independent contractor"? No, I cannot think of any either.
    "Clear and present dangers": many, as our unfortunate colleague is facing.
    My advice:
    1. Where do your skills lie?Clinician or property developer?Decide,now before it is too late.
    2.If the former, look at options to be bought out of the premises(let a developer take over ) and/or combine that with becoming salaried to a third party provider.
    3.Be prepared to involve your MP,Council,patients in supporting you.
    4.Never,ever trust a Civil Servant nor anything in writing from them.

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  • Free Pension!!
    Notional rent is provided for GPs to provide and maintain fit for purpose premises. It is not there to provide a pension top-up, even if you chose to keep it in an 'old sock'

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  • Rent is rent. I think the investment under discussion relates to buying the surgery building.

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  • This comment has been removed by the moderator.

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  • For clarity notional rent is a payment made to a practice where they own the premises and therefore actual rent is not applicable. The value includes an element for maintenance of the premises. In many cases this does not happen. Also once the premises have been bought outright with no mortgage payments outstanding the notional rent should be adjusted downwards accordingly. In many cases GPs end owning buildings to which they have contributed nothing personally, fair?

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  • MPIG was promised for ever. BMA took no legal action. what is happening to this practice is predictable. practice must continue to use premises as practice. who wil pay business rates?
    partners may have to do OOH work to generate income. ccg seem more worried about patient. what are they doing to support poor gp. .

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  • from the taxpayers point of view - they want quality healthcare as cheaply as possible - they don't care if doctors end of losing their career or work. So it should be no surprise that government doesn't care BUT it should be our professional representation that cares and takes up our interest. Sadly our leadership only care about the NHS - we are all expendable.

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  • Two NHS Managers have responded to this article but I am not sure that they are correct. I a retired GP but I have considerable sympathy with the doctor potentially caught in an unexpired lease where a practice might close owing to viability issues, but of course previously this virtually never happened and the practice simply passed on to the next GP and it perhaps highlights a new need for some sort of underwriting of leases in case this happens in the future. Notional rent when I worked was paid to doctors providing their own premises in their own name(s) as being the figure that those premises might justifiably generate on the open market in rental terms and is a figure checked by the District Valuer.The D/V compares the premises with other similar premises in the area and will not authorise above what he/she sees locally. There is no reason why notional rent should go down as any loan on the premises is paid off, unless rents in the area generally drop. If a buy to let investor buys premises/accommodation with a loan and lets it he does not expect the rent to go down simply by paying off the loan although it will be affected by demand in the area generally. Indeed at the beginning it is very possible that the arrangement may be at a loss as might the arrangement with a GP. Actual rent is the figure actually paid in rent to a third party or company owning premises, but again is the actual figure paid if no more than the maximum that the D/V will agree to. He/she is the umpire of public funds. On a National Scale the alternative is that the NHS itself provides all premises and the doctors occupy them on some sort of licence arrangement while working in a local practice occupying them, but the task of doing this is enormous over and above the very small number of premises that it does own. The present arrangement where doctors themselves sort out their own premises must be to the general advantage of the NHS.

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  • Anonymous | NHS Manager04 Aug 2016 2:02pm

    a one sided view of notional rent.

    dont forget that for many years in the 80s the interest rates on mortgages went as high as 15%. A notional rent these days only seems economically viable due to the ridiculously low interest rates. Property was not always destined to rise in value and no one could have forseen the house price boom of the 90s and 00s.

    It makes perfect sense that if you want GPs to work along the contractual basis that they do now (capitation per person), you should make provisions for the premise that they operate from. Given the above, the notional rent is a reasonable option and allows thrifty GPs to make some profit by being sensible with their buildings management. Otherwise NHS England should just nationalise all GP premises and look after them fully. NHSE cannot have it both ways.

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  • I am in a complex issue with my landlord at the moment but fortunately have a true property professional helping me. He is in total shock regarding the NHS ability to deal with any property problem. Do not reply on there help people. If they really understood property they would be making good money and not working in the unwieldy NHS bureaucracy.

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