Providing another way of treating people forced to attend a hospital at the weekend would free up resources and reduce stress levels on hospital employees. This is a ticking time bomb because by 2039 the number of people aged 75 or over is expected to nearly double to close on 10m people. And because people are living longer they tend to need more medical attention. People over 85 see their GPs on average 13 times a year – significantly more than those under 85.
This has been recognised in a government review highlighting the importance of primary healthcare premises as a way of providing evening and weekend facilities. But it’s not going to be plain sailing. Building a new health centre is more regional locations is more viable financially than building one in a built up area, where there is greater competition for land from residential and commercial developments.
And there is another problem. Staffing new centres won’t be easy, with many doctors currently working part-time, and nearly half of all GPs are aged 45 or over. Numbers of new recruits into the GP world are simply not enough to replace those leaving, let alone enough to consider seven day openings and extended hours. And unlike a converted semi-detached house with a receptionist, a doctor and a prescription pad, new centres will need nurse practitioners, pharmacists, and physiotherapists and a whole range of specialists. Adopting the new approach will take some handling because GPs will have to be encouraged to work together through a cluster of merged practices, as the business model relies on economy of scale to be most effective.
Funds have been dribbled out piecemeal for GPs to apply for funding to build a new centre, but this hasn’t been enough to even scratch the surface. In fact, investment in recent years has fallen to historic lows. This is at a time when nearly half of all GPs are operating in premises that are entirely unsuitable for providing the wide range of services and the space needed. And the financial side is quite scary. In 2005/06 the NHS swallowed £75.8bn of taxpayers’ money. Planned expenditure for the 2017/18 is now expected to be £123.7bn.
There are currently three main players operating purpose-built primary health centres; Primary Health Properties (PHP), Assura (AGR) and MedicX Fund (MXF), who between them own a little over 800 health centres. But this pales into insignificance against the 7,500 GP surgeries in the UK. From the investment point of view, all three benefit from a pretty safe revenue stream because the rent that they collect from new health centres is paid a majority of the time by the UK Treasury. The business model also travels, with Primary Health Properties investing in the Republic of Ireland. Initial lease terms in the UK are usually of 21 years or more, with upward-only rental reviews. Rental growth is slow however because until recently the RPI linked rent reviews have seen very little growth as inflation has been low. The open market reviews have struggled too because land and build costs for new developments are used by district valuers to price market rents. So as redevelopment gathers pace the significant cost inflation seen in commercial real estate in the last few years should start to feed into higher rents.
Another key attraction is the almost complete absence of any fallout as a result of the UK’s decision to leave the EU. The only potential hazard would be increased pressure on the UK’s financial resources which would inevitably mean that spending could be restricted, even though the NHS could save money in the long run. However, it seems as though the message is starting to get through. A review published in 2016 set out plans to recruit 5,000 more doctors to the 67,000 registered GPs, together with additional support staff. This will involve spending £2.4bn a year more in general practise; that’s a 25 per cent rise from 2015/16, although it’s not entirely clear where these highly trained people will come from.
Jonas Crosland is Investors Chronicle's specialist property writer
