The new NHS property company is set to take over a core portfolio worth at least £1.7bn, HSJ can disclose.
It will support itself largely through rental charges, prompting fears of new costs to GPs and providers.
The figure is the first estimate of the value of the primary care trust estate to be transferred to NHS Property Services Ltd. It is based on an HSJ survey of PCT asset values (attached right).
However, NHS Property Services’ final portfolio could be worth well in excess of £2bn. HSJ has learned some community service properties that had initially been expected to transfer to provider trusts under guidance issued by the DH last summer may remain with PCTs before transferring to the new health service-run company next year.
HSJ understands the Department of Health calculated the total PCT estate to be worth £5.2bn in summer 2010.
HSJ’s survey shows for the first time that one of the company’s main roles will be to act as a landlord to providers, including many GP practices. Properties hosting clinical services accounted for most of the value of the portfolio, worth three quarters of the total.
For example, Nottingham City PCT owns offices worth £484,000 and clinical assets worth £36m, including 10 health centres typically housing GPs.
Meanwhile, Blackburn with Darwen PCT’s clinical assets are worth £35m, and include 11 health centres. Hampshire PCT holds £110m worth of buildings, including an extensive portfolio of primary care and community service facilities.
HSJ has seen a DH presentation document for PCT chief executives from late February which makes it explicit that NHS Property Services will have to support itself largely through rental income.
“The company will be funded by income from rentals that are paid on the properties,” it says, “[and] will also need to receive the proportion of existing local allocations that is used to fund any estates running costs.”
At the moment many clinical properties are leased by PCTs to NHS providers or GPs for less than market rents, but a company dependent on rental income to survive is widely expected to put rents up.
One well placed NHS property source said that below-market rents were “extremely widespread” because NHS bodies and GP surgeries had previously operated as a “family”, with cost-covering arrangements.
Foundation Trust Network chief executive Sue Slipman said: “You would expect the property company to have a business plan around that, which could certainly include market rates for rents.
“An increase in rents would have to feed into a trust’s reference costs, and commissioners will have to pay more for services. That is not going to be impact-free on services – there is only one pot of money.”
She said it would be a “scandal” if trusts could not recover the costs of higher rents imposed by profit-making subsidiaries of NHS Property Services.
Peter Holden, a British Medical Association GPs committee negotiator, said: “If they think they’re going to fund themselves by jacking up rents to GPs it’s not going to happen”. He added that any increase in rents should be met by the DH as “premises provision is a legitimate healthcare cost”.
HSJ sources suggested the introduction of market-level rents and the need to consolidate the estate could also introduce new perverse incentives, such as making provision untenable in high-rent areas, or incentivising the acquisition of sites in cheap locations regardless of access for communities needing services.
The DH document also confirms that estates staff will transfer to the property company along with the assets they manage, meaning that NHS Property Services will initially have high fixed costs.
DH figures leaked to HSJ earlier this year suggest there are around 600 PCT staff managing office space and a further 1,400 responsible for clinical assets.
David Lawrence, head of health for Capita Symonds, said if NHS Property Services linked up with a large private joint venture partner it would mean “staff could be re-skilled and/or redeployed”.
Clinical commissioning groups have been advised to base themselves in NHS Property Services buildings and told that they will pay for this out of their running cost allowance.
The 104 PCTs for which HSJ has reliable data had assets worth £1.2bn, suggesting a national figure of £1.7bn.