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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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