‘Untenable stalemate’ is halting GP practice upgrades, say ICBs

Several integrated care boards have raised concerns that the combination of high and rising construction costs, and a broken national model for funding GP estate improvements, have all but frozen the pipeline of improvements. 

Very little national NHS funding has been granted to primary care in recent years, leaving it even more reliant on commercial deals between GP partners and development/construction firms.

In the past, the companies have been willing to invest in building new surgeries, or carry out expansions and improvements to ageing estate, on the basis they would recoup it through future rent payments funded by the NHS.

However, the soaring cost of construction after Brexit and covid-19, combined with GP rents being held down (see explainer below), means this route has now also dried up over the past year.

Developers are increasingly pulling out of schemes after deciding they are not viable, several sources said.

One ICB manager told HSJ two schemes on their patch “cannot get off the ground” because of the cost/rent mismatch. They said: “If there is not a nationally-funded investment programme for primary care, the only route is through third-party developer routes. If you cannot get those affordable, the whole thing runs the risk of grinding to a halt.”

An industry source described the situation as an “untenable stalemate”, while another said many schemes “will simply not go ahead” unless rents increase. 

ICB warnings

A Coventry and Warwickshire ICB board paper said practice upgrades and rebuilds in its area were at “high risk” because of “significant inflation in construction and lending markets” and no prospect of them being recouped through practices’ rent. 

It had been raised as a “national risk” to the sector, the ICB said, adding: “There are no real preventative mitigation actions that can be put in place to avoid the current situation.”

Norfolk and Waveney ICB said it was “facing challenges with rental valuations for new build premises not matching developer expectations (due largely to the increased cost of construction materials and labour), meaning some developments are stalling”.

Greater Manchester ICB said it had been forced to put “on hold” any estates investments, despite “concern that there is insufficient space in general practice”, and the move “may result in the inability to deliver the core and additional services required”.

A Hertfordshire and West Essex paper added: “The lack of [national] funding combined with rising inflation and rental income opportunities [is] a barrier to expanding care delivery at many practices.”

North West London ICB papers noted “a lot of risk” to primary care estate plans due to “increased rent and rates”, while Shropshire, Telford and Wrekin said there is “no NHS capital funding source” to enable premises projects despite a “shortage of space in practices”.

Several reviews and surveys have found the GP estate funding system to be broken, but have not led to significant changes, while national schemes have dried up – the most recent being the cancellation of an NHSE scheme to build six “pioneer” health centres.

A Royal College of General Practitioners survey last year found a third of practice staff said their buildings were not fit for purpose.

The government has claimed it will publish a much-delayed NHS capital strategy this summer, and last year said it recognised the need to review the primary care capital regime.

The Department of Health and Social Care, asked about the current problems, told HSJ it had agreed changes in the “premises cost directions” in 2020 — which include adjusting the rent valuation process, and allowing ICBs to fund the entire cost of schemes — but acknowledged these had not yet been enacted. It is also trying to get housing developers to fund more GP facilities. 

It said it allocated “£4.2bn a year in operational capital for ICSs to invest in local capital and estates priorities”, and that it had “minimal involvement” in where they chose to spend it, adding: “We are committed to ensuring that funding for GP services matches the communities they serve, so the best care can be delivered to patients. Decisions around the prioritisation of funding for health facilities are largely devolved to local areas or individual practices.”

The Fuller Stocktake review of general practice in 2022 said: “The focus of capital investment has been weighted towards secondary care – something that now needs to change.” And it admitted the “GP owner-occupier model” – in which most surgeries are owned by GP partnerships, rather than the NHS – “includes perverse incentives which can make cross-system collaboration more difficult”.

An NHS England/British Medical Association premises policy review in 2019 proposed a large number of changes, most of which have not been implemented, and said: “Over time we expect more practices to want to separate the decision to enter premises ownership from the operation of primary medical services.” It would “pilot alternative premises reimbursement arrangements at a network level”, it said, and also pilot “a simpler model of premises provision in which the NHS directly bears the cost of premises in multi-use new build premises, removing the need for bureaucratic premises reimbursement systems, promoting integration of service delivery and optimal use of space”.