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1 March 2011

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What does the new Health and Social Care Bill propose for replacing PCTs with regard to rent reimbursement and new medical centre projects?

The Health and Social Care Bill was launched in late January 2011 and follows on from the July 2009 white paper. The key aim is to pass a reported £80bn of NHS budget over to GP consortia by 2013, with a number of pathfinders running in shadow, essentially acting as trailblazers to find the glitches. This will coincide with the abolition of the PCTs and strategic health authorities (SHAs) by 2013; a target has also been set for all NHS trusts to become foundation trusts by 2014.

According to the government, its aim is to “increase the current choice of any provider significantly… and create a presumption that all patients will have choice and control over their care and treatment, and choice of any willing provider.” Health Secretary Andrew Lansley said modernising the NHS was “a necessity, not an option”. However, there has been a mixed response, with Unison commenting that “far from liberating the NHS, these proposals are going to tie it up in knots for years to come.”

The proposed outline structure will have the new GP consortia taking on responsibility for buying in the bulk of hospital and community services for their patients. There is a target of around 500 consortia, although to date there are commitments for approximately 177, representing about half of the population.

What does this mean for the ongoing funding and delivery of new premises? The simple answer is we don’t currently know. The bill is largely silent on how the existing portfolio will be funded and new buildings and extensions procured. Its focus is on the commissioning of services, not buildings.

We can only assume it is ‘business as usual’ until told what the alternative funding system for primary care premises will be. Clearly, once the PCTs are disbanded, the reimbursement system as we know it must change. However, the fundamental issues for the primary care estate remain the same – namely, the high percentage of outdated stock and the ongoing need for flexible, high-quality, purpose-built medical space to accommodate GPs and the wider services that may be commissioned by consortia under the new system, possibly under the same roof.

So, what might replace reimbursement? Realistically, it is likely to be a similar system, most probably with GP practices being allocated a premises budget, but there will need to be some procedure for external referencing on the level rent to ensure that these reflect market levels and build costs with regular reviews, as is the case currently. Without this income security, banks will not lend and so new buildings, extensions and upgrading will not get off the ground.

I would also not expect the government to try and apply retrospective changes to existing facilities where GPs or the PCT have signed up to leases from investor landlords where the rent is underpinned by the current reimbursement system. There will need to be some ringfencing, as these are pre-existing and legally binding contracts.

There has been a mixed reaction to the Health and Social Care Bill from PCTs up and down the country. Some have pushed ahead with new projects to ensure that these are committed prior to their disbanding, but others are holding back and are not prepared to make final decisions. GP practices, investors and developers continue to promote new schemes and opportunities for development and extensions, but are experiencing delays in the decision-making process.

Furthermore, a recent directive from the Department of Health requires that PCTs do not enter into any new agreements relating to the acquisition, management and disposal of property or to interests in land or buildings without SHA approval. This could mean some developments that have been through the business-case approval stage, but where agreements to lease with the PCT have not been signed up and legally committed to, this would need to be referred to the SHA. This does not affect reimbursement commitments, but where the PCT was to take an over-riding lease of a new facility and sub-let it to individual practices, there is an increased risk of a delay – or, in a worst-case scenario, of the SHA not approving the proposal.

The Health Bill is only two months old and so far raises more questions than answers. It is not possible at this stage to draw these together and give any firm conclusion or statement on what the future holds. What is clear is that we are in for an extended period of uncertainty as the bill works its way through parliament. Based on some of the reported feedback, it may not have a smooth path through to legislation and we should expect it to evolve over time, particularly as the pathfinder consortia find their way and feed back on the practical outworkings of the new system.

At the end of the day, there cannot be too much tinkering with the fundamentals of primary care property if new developments are to be fundable and deliverable. As the central theme of the policy is to improve quality of care for the patients, this must also include the physical environment from which the service is delivered.