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Property charge hike leaves GP practices ‘under threat of closure’

NHSPS GP premises agreements

A hike in service charges has left GP practices located in Government-owned buildings ‘under threat of closure’.

Practices saw their service charge bills increase by 25% in April ‘with no explanation’ from their landlord Community Health Partnerships (CHP), GP leaders told Pulse.

CHP, which is owned by the Department of Health and Social Care (DHSC), said it wants to ‘ensure that all tenants are charged fairly for the services they receive from us.’

North Staffordshire LMC secretary and BMA GP Committee lead for NHS England policy Dr Chandra Kanneganti told Pulse that the increase in service charges came ‘with no explanation’ and could lead to the ‘collapse’ of ’a number of practices’.

LMC member Dr Andrew Green added that practices ‘cannot get any clarity’ on what the charges are for, except one new cleaning contract.

He said: ‘There are things on our bills that we have no idea what they are. We’ve asked the questions and we’re not given any answers at all.

‘And nobody seems to want to take responsibility from the NHS England point of view [or] the CCG who say they don’t have any money for it.’

Meanwhile, Dr Kanneganti added that CHP’s management fees have also increased – by £1,000 per month in his practice – and that both these and the service charges are no longer being reimbursed by NHS England.

Dr Green said that a scheme reimbursing CHP practices for ‘the majority’ of their management fees and ‘a proportion of certain service charges’ was quietly dropped, leading practices to question whether they had been ‘mis-sold’ their contracts.

He said: ’We were told in writing, in black and white, that it would be running in perpetuity [but] that ran for three years from April 2015 and then it just stopped. Nobody seems to know why it stopped and this has left practices with considerable financial difficulties.’

Costs such as a ‘random’ £1,500 charged for minor works last year ‘just in case something happens in the future’ were not part of the rent agreement that practices signed, he said.

Meanwhile, there is also inequity in the payment of VAT on the service charges, with NHS England or CCGs paying it for practices in some areas but not others, Dr Kanneganti added.

Dr Green told Pulse this ‘triple whammy’ could ‘put practices under threat of closure and just not being able to carry on’. 

The charges could lead to partners leaving their practices and other doctors being ‘put off’ taking on partnerships because the practices are no longer profitable, he added.

He said: ‘[It will affect] the long-term stability of practices because it makes them vulnerable to succession planning. New doctors don’t want to come in and take that risk.’

Dr Kanneganti added that the GPC is awaiting the outcome of a legal case it launched against NHS Property Service (NHSPS) over ‘unjustifiable’ service charge hikes in November, which he hopes will become a ‘test case’ applicable to CHP practices. 

He said: ‘Things need to be sorted out before practices start to collapse. If they want general practice to survive they should start this soon, it’s been dragged down for years now. Some practices financially are not viable at all.’

In the meantime, Staffordshire LMC has advised all CHP and NHSPS practices to pay only ‘historical levels and reimbursed monies, as advice on the GPC list-server implies that paying these new fees sets a legal obligation precedent’.

In a statement on its website, the BMA said practices ‘should only make payments if they agree with the legal basis upon which NHSPS/CHP have claimed the charges are due and agree they are accurate.’

The GPC ‘will stand with’ GPs where charges are enforced and will ‘consider all options to reach a fair process for calculating service charges’, it added.

CHP told Pulse that ‘a number of factors’ have affected service charges for 2020/21 ‘including but not limited to’ contractual inflationary increases and increases in the National Living Wage and Agenda for Change pay scales.

CHP chief operating officer and deputy chief executive Mark Day said: ‘We want to ensure that all tenants are charged fairly for the services they receive from us.

‘I do accept that we could have made things clearer to tenants previously as that would have aided understanding of where the changes, and in particular increases, occurred. 

He added: ‘If it is the case that tenants have contacted us to raise queries and not received a reply from us in a reasonable timeframe that is unacceptable, and I apologise.’

A spokesperson denied that management charges have increased.

A spokesperson for NHS England said: ‘NHS England and NHS Improvement in the Midlands has had no queries nor conversations about the discontinuation of the local arrangements in place for Staffordshire practices around premises funding arrangements.’

Premises funding arrangements are set to be transferred to Staffordshire and Stoke on Trent CCGs as part of delegated commissioning, they added.

NHS North Staffordshire CCG and NHS Stoke On Trent CCG were approached for comment.

The ongoing disputes between practices and NHSPS have been well-documented, most recently when a number of practices were threatened with bankruptcy due to unpaid rent in February.

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