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Procurement options for upgraded premises

19 June 2009

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Associate and Head of Primary Care
EC Harris

Louise is an associate at built asset consultancy EC Harris. She leads the primary healthcare team and is based in the Midlands. Louise has considerable previous experience in both healthcare and project management, having previously held a number of senior positions with NHS trusts. Outside of work she enjoys spending time with her family

Primary care trusts (PCTs) are increasingly “encouraging” GP practices to come together to deliver a wider range of core and enhanced services, along with further complimentary community services, to provide greater choice and local access for patients. The arguments for this arrangement are many, and on paper make clinical and economical sense. Yet there are a number of challenges that often still need to be overcome.

For example, many practices are protective of their client base (patient list), and are quite rightly proud of the services they consistently deliver. They may also just simply not want to share their facilities. However, although GPs are independent contractors to the NHS, they remain almost totally reliant on the commissioning of their services and funding of their premises from the NHS. Their ability to provide enhanced services is therefore largely dependent on the support of their local PCT.

However, the introduction of practice-based commissioning (PBC) is about engaging practices and other primary care professionals in the commissioning of services.1 Through PBC, frontline clinicians are being provided with the resources and support to become more involved in commissioning decisions.

Many practices, though, are still operating out of wholly inappropriate facilities that are not fit for purpose and don’t meet statutory requirements – eg, fire regulations, the Disability Discrimination Act, etc – or patient expectations. This means they cannot develop their services to become a teacher/training practice, for example, as their existing buildings do not meet the necessary requirements or are prohibitively expensive to upgrade.

So, what are the choices and how should practice managers who are contemplating premises development go about it?

The initial assessment
First, a practice needs to assess the existing situation: what services it currently offers; what services it is currently unable to offer; and, most importantly, what services it would ideally like to offer. At this stage it is also useful to assess what primary care community services – such as physiotherapy and mental health services – aren’t being provided in the local area, as this can help with negotiations at a later stage.

Once a practice has established where they are and where they would like to be, a “condition survey” of the building should be undertaken to establish the state of its current premises. This should have been carried out by the PCT in developing its estate strategy and Strategic Service Development Plan (SSDP), and will have prioritised developments for the local health economy.

When all this has been done, a practice is in a good position to sit down with an expert – eg, from a consultancy or the PCT – to explore the various options available and to produce an outline business case setting out the need, justification and indicative costs for the proposed reprovision.

The options
There are a wide variety of options available to practices,  including:

  • Renovating or extending an
  • existing building.
  • Relocating with another practice.
  • Building a new purpose-built facility.

At this stage an initial feasibility/cost report will need to be undertaken, which considers issues such as risk, land availability, potential costs and funding. This will help build up a business case that must be submitted to the PCT, making the case for reprovision and enhanced General Medical Services (GMS).

The PCT will evaluate the need for the service provision. If approved, they will reimburse the practice’s rent and commission their enhanced services, while also using the opportunity to provide their own community services, such as district nurses, midwives, health visitors, podiatrists, dentists and physiotherapists – creating strong community hubs in the process.

The PCT will commission the district valuer to determine the reimbursable rent and confirm that affords value for money. The rent level can be affected by geographical factors such as land availability/value etc, and is negotiable. It is advisable for the GPs or their agents to enter into informal talks with the district valuer. While the district valuer won’t commit to a value until the formal negotiations take place, they should be able to give an indication of acceptability.

In theory, GP practices have the choice to procure their new premises themselves, through a third-party developer, Procure21 (P21), a Local Improvement Finance Trust (LIFT), or now Express LIFT. But in practice, if their local PCT has signed up to a LIFT company and they wish to provide non-GMS services from the new facility, then increasingly the PCT will not support any other form of procurement, even though the GPs haven’t been consulted or signed up to any exclusivity deal.

It is, therefore, vital that a practice establishes with its PCT if it is in a LIFT area. However, if only GMS services are to be provided then in theory the GPs can develop the new facility themselves or through a third-party developer.

There are a number of practical but innovative options that primary care practices can use to ensure both their own vision of a quality patient environment that meets the policy objectives of the PCT while also maximising the value of their development to the community as a whole. This article looks at each option and the advantages that each offers.

If a practice is in a LIFT area, then it should get in contact with the PCT to establish how high a priority the reprovision of its facilities is on the PCT’s SSDP. If it is a priority, then the practice should submit a business case. If this is approved, the PCT will hand over the project to a LIFTCo – a public/private partnership that provides long-term contracts for the refurbishment, construction, maintenance and management of large bundles of GP and primary care facilities.

The LIFTCo will then take on all relevant responsibilities, including: site finding; scope of works; operational policies; setting up clinical and nonclinical user groups, etc. The partnering agreement will normally run for 20 years with an exclusivity arrangement that means the LIFTCo has the first option to provide all primary care developments that include community services.

However, if the PCT is not in a LIFT area, or the LIFTCo declined to undertake the development, then the procurement options could be as below.

Express LIFT
Express LIFT is a streamlined version of the LIFT procurement process, which has only recently been launched. The Express LIFT Framework consists of seven companies that have been preprocured through the OJEU (Official Journal of the European Union) process. They are:

  • Community Solutions for Primary Care.
  • Express LIFT Investments Limited.
  • Equity Solutions.
  • Eric Wright Group.
  • Fulcrum Infrastructure Group.
  • Odyssey Healthcare.
  • Prime Plc.

In theory, the creation of this new framework has a number of advantages, although as yet it is untried. It should benefit PCTs (and therefore GP practices) by reducing the time and cost incurred in appointing LIFT partners. It should also reduce bid costs for the shortlisted companies, and finally it should benefit the taxpayer, as schemes which previously took years to complete could potentially now be finished in a matter of months.

A request for Expressions of Interest would be issued to the framework companies. A preferred provider would then be chosen and a Special Purpose Vehicle would be created in the form of a LIFTCo to deliver the defined project. Upon completion of the scheme, the LIFTCo will lease back the premises to the PCT or the GPs.

The Department of Health’s intention is for the framework to run for two years, with an option to extend for a further two years. Strategic Partnering Agreements will usually last 20 years (with an option to extend by a further five years) and “exclusivity” shall usually be of 10-year duration (again with an option to extend by five years).

If a PCT has capital funding available then it is possible to go through the Procure21 scheme, which is up for renewal in 2010 (to be replaced by P21+). Procure21 has eight supply chain
partners (PSCPs):

  • Balfour Beatty.
  • Costain.
  • HBG (BAM).
  • Integrated Health Projects.
  • Interserve.
  • Kier.
  • Laing O’Rouke.
  • Medicing.

A request for Expressions of Interest will be issued by the PCT and a preferred partner will be chosen from the respondents. It is important to note that a PSCP is selected following their performance during the interview; the objective of which is to cut out waste and duplication of effort in the tendering process, but also to bring the best of the construction industry together to deliver better value for money, resulting in better clinical facilities for patients.

The premises would be owned by the PCT, who would rent it back to the GPs. This option has the advantage of being quick, and a maximum price is defined for the project. Any cost savings achieved through construction are also shared between the PCT and the contractor.

PCT Design & Build
Another option for a PCT with capital funding is to advertise for a contractor for a specific project through a Design & Build contract. However, it is likely that such an advertisement will have to go through the OJEU process.

Third Party Developer
A practice can decide to procure new premises by using a third-party developer. A practice would advertise a scheme and choose a suitable developer. Upon approval of a business case by the PCT, a third-party developer (with a consultant) is then likely to undertake everything on the project, including securing funding, delivering the external and fabric of the building and potentially providing management and security services for the practice.

Upon completion, the third-party developer would then lease back the premises to the practice or negotiate an equity stake with the GPs. Some developers may sell on the completed premises, meaning potentially the practice may ultimately not know its landlord.

A GP practice could decide to commission a contractor itself (following PCT approval of a business case). The practice would then be responsible for: securing funding for the development; negotiating rents with the PCT; and all costs associated with the development. This route is often chosen when GP practices want to progress with smaller refurbishments or extensions.

There are a number of routes a practice can go down to secure new premises that will potentially let them expand, offer extended services or become a teaching/training centre and result in bespoke healthcare facilities.

Each of them offers advantages and varying risk profiles. The area can be complex, and expert advice from an experienced consultancy or the PCT should be sought before any major decisions are taken to identify the procurement route that best suits the needs of the local community, GPs and the PCT.
A clear vision of what the practice ultimately wants to provide to the local community will speed up the process by providing direction, impetus and helping to shape a robust business case.

Whatever option is chosen, every effort should be made to maximise the potential outcomes for the local community through the provision of a range of convenient health services from high-quality primary care facilities.

1. Department of Health. Practice based commissioning: clinicians in commissioning [homepage on the internet]. Available from:…