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Private investors pledge £3.3bn to build 'hundreds' of primary care premises

Three private companies have said they are investing £3.3bn into primary care premises, claiming they could build 750 state of the art buildings to 'kick-start the next generation' of primary care premises over the next five years.

The consortium of premises investors - Assura plc, Primary Health Properties, and Octopus Healthcare (which advises investor MedicX Fund) - says it would fund this by charging rent of ‘less than £200m a year’ to NHS bodies, which is says would unlock savings of £270m through reducing secondary care activity.

But BMA leaders were sceptical about where the private sector would find returns from such a sizeable investment and whether the NHS would be able to pay the recurring costs.

The consortium said investment would focus on 'Sustainability and Transformation Partnership' (STP) areas where NHS bodies and councils are collaborating to move care out of hospitals and into the community.

The British Property Federation - which includes Assura and PHP - estimated that the NHS could save £270m through the use of ‘modern, multi-functional premises’ by reducing non-urgent demand at A&Es, relieving pressure on walk-in centres and improved outcomes by increasing access for the elderly.

It adds: 'This investment would require less than £200m of rent per annum from the NHS – rent which would be set for the NHS independently, at market rate, by District Valuer Services'.

A spokesperson for the consortium told Pulse that it would also be up to the NHS to decide if this would be in addition to any existing premises, or if it would replace those no longer fit for purpose.

Talks between the consortium and the NHS and regional STPs are underway, but the government estates tsar Sir Robert Naylor welcomed the pledge saying: ‘It is encouraging to see the private sector step forward to play their part in meeting the recommendations set out in my review published earlier this year – with a credible plan and offer on the table for the NHS and Government to respond to.’

Jonathan Murphy, CEO of Assura plc, said: ‘There’s enormous potential to help STPs move forward on their considerable estates challenges… It is going to take significant funding, expertise and experience to support GPs with the premises on which transformation can be built, and we’re ready to help.’

However,  Dr David Wrigley, BMA deputy president and a co-author of the book NHS for Sale, warned that these investors will expect a return on their investment. He said: ‘They seem to say they will use the £200mn of cost rent that the buildings attract but this must mean other premises will close down.

‘Private firms would never invest so much money if there wasn’t a big chunk of profit to be made.’

A spokesperson for the group told Pulse that it would manage maintenance on the buildings and everything else would be up to the tenants, but the rental and charging would be decided in negotiations with the NHS.

Readers' comments (18)

  • Invest 3,3bn in GP's otherwise there won't be a need for premises in the next 5 years .

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  • Oh..an Initiative to provide Finance by the Private sector...how novel....

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  • This is what should be happening. The Bank of England has forced interest rates down to levels never seen before to encourage this sort of investment activity.
    If there is commitment to invest in premises then these companies, or just GPs, can afford to build quite expensive buildings. The 10year gilt yield is only 1.18% today, the 30year 1.82%
    The £200million return on £3.3 billion investment looks good in comparison.
    We did this ourselves as a practice with a branch surgery that was appropriately described as "a hovel" by one of my patients.
    We did it on notional rent,( I don't think they need cost rent), the notional rent went up by 12k, peanuts, the surgeries much better for patients and particularly staff .. who wants to think the climax to their career is working in a hovel in a deprived area??

    The council got 200k for the land, maybe 400k to the builder, that gets spent on goods and wages...

    The failure of the NHS to invest in GP is manifest in many ways, the obsession with QIPP and making none existent "savings by next April" is surely apparent to all GPs.

    There are many ways to invest taxpayers money that will give great returns for the NHS if only we look beyond "next April"

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  • "Oh..an Initiative to provide Finance by the Private sector...how novel.... "
    and how expensive in the medium to long term - but it doesn't matter - it will be the GPs that go bankrupt not the hospitals so we (DHSS) do not need to worry!!

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  • Down here in Devon we have at least one PFI financed community hospital with a cast iron contract and huge penalties. As with all private finance the shareholders/investors will want a guaranteed return.

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  • This will only work if the risk is taken by the NHS, not by individuals or individual practices.

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  • If you're a GP with premises you are likely to be in a strong position if you can see this through.

    The risks lie in partnership with long leases and no control of associated costs -i.e service charges. Even MCP/ACOs will not be able to deal with the long term costs.

    The whole point of PFI s is that governments have hidden the long term and ongoing costs without political fallout.

    The property companies will be meticulous in their charging for premises use and service charges will be extortionate.

    Can't see much profit though for them as I suspect many GP's will walk away from those kind of set ups.

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  • So......average annual rent for each property will be over £266k? Hard to fathom this when the notional rent on our GP owned premises has been slashed from £45k to £27k per annum..........😡😡😡 crazy idea......won't be enough GPs to provide service anyway in a few years time...

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  • Great, but err.. there may not be many GPs left to work in the new buildings by then.

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  • Normally, these deals involve 3 years leases. Simple maths: 200mn x 30 = 6bn.
    In other words, the investors would double their money over the life span of the premises.
    Neat!

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