Relocating a Medical Practice to a Health Centre – 3 points to consider

The BBC recently reported that NHS Lothian has announced that it has entered into contracts for construction of three new £27.6 million health centres in Edinburgh and West Lothian.  The centres will provide accommodation for GP practices alongside other health-related services, including podiatrists, therapists and dentists.

You can read the full story here http://www.bbc.co.uk/news/uk-scotland-edinburgh-east-fife-35961007 ]

Completing these contracts is a major achievement for the Scottish Government’s equivalent of Private Finance Initiative, the Scottish Futures Trust (SFT).   A number of these projects had been slow in fruition and there was real concern in the second half of last year that the SFT might breach European accounting rules, causing all of the SFT projects temporarily to be suspended.

The SFT does also give doctors a further method of securing new health centre accommodation and shows the variety of public funding routes available to general practitioners wanting to build, or see built, new surgery premises.  Not long ago the more common model of privately financed health centres was a standard 25 year commercial lease, typically financed by a specialist GP lender with rents reimbursed by the local health board.  Next, specialist health care developers became active, building health care centres directly and entering into leases with GPs.  Now most health boards favour larger multi-practice health centres buttressed by satellite or complimentary services.

Practices wishing to move to new surgeries at least now have some choice over how to finance new health centre premises.  The inevitable difficulty for GPs is, of course, persuading the health board to foot the bill for such premises (health boards will usually reimburse 100% rent to practices) and in minimising their liability for repairs and running costs of potentially expensive new premises.

How you contract for your space can become a minefield for doctors, dentists and medical practices as this is often a ‘once in a lifetime’ negotiation to tackle.

Here are my top tips to consider for any GP practice thinking of moving into a new health centre.  Take account of three points:

  1. Fact find the hidden costs – find out early on the likely running costs of the premises; as new health centres typically include large common areas, service charges and running costs can be significantly higher than for existing premises.
  1. Take stock of liabilities– work out the total exit costs from the practice’s existing premises – if, for example, the practice occupies leased premises, there may be significant repair costs at the end of the lease.
  1. Review the practice agreement – it is essential to review and, if required, update the practice’s partnership agreement before entering into any occupancy agreement.

As a commercial property specialist with a track record in successful contracting and negotiating for healthcare professionals I am happy to respond to queries from individuals and partnerships as well as the media on this topic. You can contact me directly on 0131 220 7605 or email me at michael.dewar@ccwlegal.co.uk. You can also learn more about our services for medical professionals here http://ccwlegal.co.uk/your-needs/medical-profession/