Part of the third wave of LIFT projects, the Barnet, Enfield and Haringey project closed 18 June 2004 with initial capital value of £29 million (US$53 million).

The project is being managed by a SPV LIFT company called Elevate Partnerships. The private sector investment came from the gbconsortium – a venture consisting of Galliford Try, Bilfinger Berger, BAG Holdings and Sapphire Primary Care Developments. The consortium is also involved in two other LIFT schemes in Liverpool and Coventry.

The public sector consists of the three local authorities and primary care trusts in Haringey, Barnet and Enfield united with the cross-borough mental health trust, the London Ambulance Services and the Acute Hospital Trusts and Partnerships for Health.

The project

The public sector partners issued a tender for a specialist private sector sponsor to help them develop their primary care health facilities.

The main schemes to benefit from the scheme are:

Lordship Lane Health Centre – the existing clinic, which dates back 20 years, is an important base for health visitors, district nurses and a Sure Start team. Services include childhood immunisations, speech and language therapy; physiotherapy; family planning and baby clinics. However the clinic has space restrictions and has suffered from maintenance problems. It will be replaced by a three-storey building. Burgoyne Road Clinic – the Burgoyne Road clinic provides similar services to Lordship Lane and additional audiology, ante natal, parent craft and physiotherapy assessments. However space limitations mean that it is impractical for these all to remain on the same site. Therefore under a redevelopment, only the baby clinic and family planning would remain on this site. The majority of the clinic space would be redeveloped to allow for the creation of GP practice space – creating a three-GP practice. The redevelopment would also include a minor surgery suite. Church Road, Highgate – the redevelopment of the current three-storey clinic presents particular challenges as it lies within a conservation area. The Highgate Group practice currently serves a population of over 15,000 and has outgrown its existing premises. The adjacent Church Road clinic has provided a base for a number of services but is currently largely unoccupied. It would present an ideal opportunity for relocating the Highgate Group practice. This would provide a nine-GP practice – with three-GP trainees – a health clinic and health visitor/district nurse base. Hornsey Central – although the former Hornsey Central Hospital was a much loved cottage hospital throughout the 20th century, it became apparent that it was not suitable as a modern health facility and closed in 1998. However a major redevelopment would see it providing services principally for older people and up to six practices with a patient list of 18,000. Services would include integrated care teams for older people, physiotherapy, active aging and healthy living services, dementia day care and residential care home services for older people with high dependency, intermediate care and mental health needs.

The LIFT deal

Stuart Gavurin, director of LIFT projects at BHE Holdings says that the capital value of the scheme is currently worth £29 million (US$53 million) but this would increase.

‘These are ongoing projects and over the years will be worth a lot more,’ he said. ‘There are two sample schemes we’re building on already, another two will come about early next year, another two in the middle of next year and we are evolving the strategic service development plan to see what comes along after that.

‘Because it’s a long-term project, the strategic service development plan is a living document. It shows what the public sector partners wanted when they originally drew up their LIFT plan, and it gets updated every year. We knock off what we’ve built and add on what we have to build.’

The contract

The gbconsortium is split between Galliford Try Investments (10 per cent), Bilfinger Berger BOT (40 per cent), BHE Holdings (40 per cent) and Sapphire Primary Care Developments (10 per cent).

The General Practice Finance Corporation (GPFC) – part of Norwich Union – was the sole funder for the project and provided a £80 million (US$143 million) debt facility. The debt:equity ratio was 95:5 and the equity was £4.2 million split between the private and public sector shareholders. The money has a 25-year debt tenor once construction of initial sites has been finished.

Andy Sturgess, managing director of Galliford Try’s construction division, says Elevate Partnerships – the LIFT company – is split 60:40 between the private and public sector and the public sector share is split equally between Partnerships for Health and the local care trusts.

Mark Farnham, finance director of Galliford Try’s construction division, says that the first tranche of the scheme involved £13.6 million (US$25 million) of debt and £800,000 (US$1.5 million) of equity – most of which is sub-debt supplied by all shareholders. The pricing for that first facility was 4.88 per cent per annum.

‘This is the financial close on the first phase of project and the debt will increase as more parts of the scheme close,’ said Farnham. ‘At the moment we’ve got visibility of the first tranche and that’s got seven projects in total. They will all have to be closed within the next year or so.’

The consortium’s legal advisor is Pinsents and its financial advisor is Robson Rhodes. The public sector partner’s legal advisor is Capsticks and its financial advisor is PwC.

The legal advisor to the banks was Cambridge-based Mills & Reeve and the legal advisor to the government was Beachcroft Wansbroughs.

A spokesperson from GPFC said that because of confidentiality issues the bank was not able to comment on individual cases, but in general terms GPFC provide debt facilities based on cashflow and does not limit the amount lent based on the equity stake. It provides the funds for the sample schemes at financial close, with further tranches following at later dates.

Conclusion

‘As a procurement method it’s still new, but LIFT gives health authorities the chance to build bigger primary resource centres,’ says BHE Holdings’ Stuart Gavurin. ‘It’s been a learning curve and will continue to be for a year or so, but it seems to work.

‘Crucially, once started the project becomes easier as things go along. Once you’re on the circle, when you go around again you’ve got the experience and it gets a little bit easier. That’s not to say new things don’t pop up!’

Although it was still too early exactly how successful the LIFT concept had been, the fact that the fourth wave of LIFTs were due at the end of the year was a good indicator that the concept had been a success, said Gavurin.

‘The information we are getting is the government will include clinical services under the private sector side of the contract,’ he explains. ‘I think the government are going to extend the remit and say ‘what else can we get out of this?’ Since LIFT was first mentioned we’ve provided facilities management but not soft facilities. However, the next wave will ask for both, meaning the private sector will be providing not just a building, but also more of what goes inside the building – be it clinical or be it cleaning.

‘This is a good indicator of LIFT being a procurement success,’ he said.