The World Health Organization published a report last year that ranked the overall performance of the British Health care 18 out of a total of 191, with France and Italy in first and second places respectively. The findings of this report served only to confirm the poor conditions of primary health care in the UK and the need to bring health care in line with its EU peers. To address this problem, the UK’s Department of Health and HM Treasury in cooperation with Partnerships UK have designed a blue print known as NHS LIFT, this is intended to break the traditional demarcation between different healthcare professionals and to aggregate the provision of such services around local healthcare centres.

The scale of the task is substantial. In the United Kingdom ninety percent of patient contacts with the NHS are via primary care. To satisfy this demand, there are approximately 27,000 general practitioners (“GP”), 10,000 pharmacies, 17,000 dental practitioners and 7,000 opticians. The majority of their premises are privately owned (only about 16% of GP’s premises are owned by NHS trusts). The great majority is also below the required size and on average they are more than 30 years old.  (See chart below)

The current situation suggests that only 40% of primary care premises are purpose built and almost half are either adapted residential buildings or converted shops. This translates into premises that are often difficult for patients to access, a situation worsened by the fact that less than 5% of GP’s premises are co-located with a pharmacy and around the same proportion are co-located with social services. Increasingly, physical access is becoming a more critical issue after the introduction of the Disability Discrimination Act 1995.

Investment in new primary care facilities tends to be on a fragmented and piecemeal basis with many small-scale developments concentrated in the more affluent areas with stable property prices, which means that investment carry a much less risk. Consequently, inner cities have the poorest infrastructure, unsuitable for the delivery of modern primary care services. A number of factors appear to make working in inner city areas unattractive for GPs, prime among which are the problems of securing suitable premises with minimum financial risks. GPs are often faced with a choice between a long lease with maintenance obligations and restrictive provisions to deter breaking the lease, or the risk of purchasing property and uncertainty as to its future value. Many health practitioners indeed with UK property prices much more volatile than in EU counterparts, who purchased premises in the wrong part of the economic cycle find themselves facing negative equity

Policy  framework

It is under this scenario that the UK Department of Health will try to meet the investment targets identified within the NHS Plan, including

• Up to L1 billion investment in primary care.
• Up to 3,000 premises refurbished or replaced
• 500 new one stop-centres

To meet these targets and along the lines of other public service delivering schemes, the government has chosen a PPP funding scheme  - the NHS Local Improvement Finance Trust (NHS LIFT) as the preferred alternative to increased investment and adherence to targets. According to the Department of Health “The establishment of local public private partnerships aims to introduce private sector skills and disciplines to future developments…. The local health community will have the responsibility for identifying its future service requirements. It will be the function of its private sector partner to identify the most efficient manner in which the required services can be provided. This will involve the private sector in considering potential additional revenue streams, which may make schemes more attractive to the public sector”

How will the NHS LIFT work?

At the national level a join venture – “Partnerships for Health” - has been established between the Department of Health and Partnerships UK plc

The Department of Health will identify appropriate sites to bring forward LIFT schemes on the basis of a health service strategy, investment needs based on estates, human resource audits and the commitment of local stakeholders to progress a scheme under NHS LIFT to improve health provision.

Once an area has been prioritized, the national JV will work jointly with the stakeholders such as Primary Care Trusts, Health Authorities and Local Authorities to prepare a scheme that can be taken into procurement, by initiating a competitive process for a private sector partner. It is important to note that, the Department of Health will be able to provide funding for essential preliminary costs.

As the common shareholder to all LIFT schemes, the national JV will also be in a position to assist in the development of the documentation to initiate the procurement. It will provide a full package of standard documentation necessary to run the competition, minimizing the cost and time incurred in the actual procurement. It will, however allow, enough flexibility to accommodate the specificities of each case and to make available a range of advisors in the relevant disciplines likely to be needed in a local procurement competition.

The chosen private partner is expected to provide and manage the necessary investments of the facilities.  To do so, the partner should have skills in areas such as property development and management, construction and services contracting and project management. Additionally it will work with the local health commissioners and health providers to plan future needs and requirements and how they can best be delivered.

The local schemes are likely to be led by the statutory health bodies responsible for primary care in the locality – The Health Authority and Primary Care Trusts (PCTs). They will form the point of contact for prospective private sector partners, and will be expected to bring forward investment opportunities that are based on an integrated and coordinated health strategy in agreement with the rest of the local health community involved.

Once agreement is reached, the local joint venture  - a local LIFT – will be established to deliver the required services.  The national JV will most likely be one of the equity participants, and the LIFT will be responsible for delivering investment and services over a long agreement period. The local stakeholders and users are likely to be able to become part of the LIFT, alongside the national JV and the private sector partner.

The LIFT will have a long term Partnering Agreement with the Health Authority and PCT(s)  that will establish the LIFT’s exclusive right to be the development partner as new investments requirements are identified, as long as they can be delivered to the standards, pricing and payment forms pre-agreed. Additionally, it will include the parameters to deal with areas such as:

•       Long term planning needs relative to the primary care facilities of the area
•       Minimum standards for services and facilities, and the arrangements for monitoring the delivered services
•       Initial investments, including pricing, time schedule and standards
•       Payment structures to NHS bodies and others
•       Pricing of new developments

The services provided by the LIFT, alongside the on-going planning and liaison on existing and future requirements, are likely to include, for example:

• Investment in new one-stop health centres, providing an integrated range of primary and intermediate care services
• Leasing premises to individual primary care service deliverers, such as GPs, on flexible terms that can respond and adapt to changing requirements over time
• Management of the facilities provided, such as maintenance over the whole life of the assets, providing all energy and utility requirements.

The end users of services and facilities provided by the LIFT - i.e. GPs, dentists, opticians – would be obliged under leases or other agreements to meet financial obligations in relation to the premises they occupy and/or services they receive. To meet these premises costs the NHS funded bodies will continue to receive funding, for example in the forms or actual or notional rent reimbursement.

Schemes will be batched together to provide a systematic approach to investment. The aim is to take advantage of the economies of scale generated though grouping schemes with the same documentation requirements and a standard approach. It is also hoped that this will serve to reduce transaction costs and delaying times.

What will this new scheme mean to all the participants?

For the local Health Authorities, which have the responsibility to improve the health of their local populations, and to produce service and investment plans for their areas, the new scheme will bring a much-needed access to capital and maintenance costs. It is expected that the private sector partner will offer to the LIFT specific skills in areas that are not traditionally core to health authorities.

Currently, it is almost impossible for suppliers to identify in advance where opportunities are likely to develop, and certainly not to influence how and when they come forward other than through individual contact with the various relevant interested parties. Once an opportunity is identified, the terms often have to be negotiated by the developer with each individual occupant or tenant outside of the framework of any strategic planning of primary care services for the area. This creates a high risk of cancellation and understandable wariness about commitment for the scheme. It is expected that under the new scheme, the service/facility providers engage in long-term contracts covering a wider group of services/facilities with exclusive rights over further developments. Crucially, they will be able to participate in the planning of future developments. This represents a shift from the present system where private sector suppliers and primary care community work independently.

The returns on investment in property will be based either on prevailing market rates under the statutory schemes that currently prevail -for example for GPs – or, on a cost basis proposed by the partner and agreed by the Health Authority and/or PCTs as part of the initial contractual agreement with the LIFT. The returns on investment will effectively be backed by the DoH, that is to say by Government cash flows.  

In particular, for the GPs and other health professionals it could represent the option of practicing without the risk and responsibilities associated with property ownership, i.e.- negative equity and landlord duties - . Theoretically, GP’s will still have the opportunity to invest in the local LIFT, hence reducing the risk of their investment through ownership of a share of a portfolio of properties, rather than one specific property, becoming themselves local investors.

In this case, the participation in the LIFT might be secured, for example, by selling the freehold on existing premises to the LIFT in return for shares of an equivalent value. The long term investment in the LIFT would provide an interest in a business with risks spread across a portfolio of assets and locations, providing services to the local NHS and other parts of the public sector for the locality, and would therefore be a very low risk investment. In effect, an interest in one property, and the associated risks, would be swapped for an interest in a diversified portfolio. Mechanisms for the entry and exit of participants will be established in the Shareholders Agreement when the LIFT is created.. It is important to note that not only GPs are expected to become local investors, alternatively the statutory bodies such as the HA or the PCT(s) could also act as investors in one or several LIFTS.

Conclusions

The current conditions of the NHS primary care facilities are in urgent need of improvement. To do so the Department of Health has chosen a PPP scheme that encompasses GPs and other health professionals, local health authorities and a private sector investors. The scheme seeks to provide new, more convenient primary care centres that integrate GPs, opticians, dental services and pharmacies under the same premises and with sufficient room for further developments.

LIFT schemes will try to eliminate the main obstacle for private sector investment, namely a big number of separate bodies involved in relation to relatively small individual investments. One of the most important aspects of the LIFT is that it will enable local stakeholders to take a financial interest in the long-term service development and in the investments and facilities available to the area, as well as to join plan for future investments. Ultimately, the returns for the service/facility provider will be determined by his ability to perform efficiently under the parameters set by the health authorities.

In as much the new format for the development of primary care centres will relieve GPs from the burden and risk of acting as landlords and, at least in theory will join the skills of the private sector with the exiting infrastructure to improve the provision of health at the primary level, there are a few aspects that should be considered carefully.

It is crucial that sufficient studies are conducted in order to make sure that the scheme will prove affordable to the eventual occupants of the new centres. Very little is to be gain from new improved centres settled in deprived areas if they are understaffed.  

Finally, the inclusion of a profit-maximizing partner as a service provider could potentially raise ethical issues that should be prevented. As in other PPP schemes, setting minimum standards in advance and with clear contractual conditions if these are not met, such issues could be kept to a minimum. IJ