Exclusive: Six-figure service charge hikes threaten future of GP practices across England

Six-figure service charge rises could force GP practices across England to close this year unless the NHS delivers immediate bailout funding, GP leaders have warned.

Health centre: GPs hit by service charge rise for NHS-owned premises (Photo: iStock)
Health centre: GPs hit by service charge rise for NHS-owned premises (Photo: iStock)

Service charge increases imposed on practices in Northumberland alone have slashed the equivalent of funding for an entire average-sized practice from local GP funding, the area’s LMC has calculated.

Northumberland LMC medical secretary Dr Jane Lothian told GPonline that practices across the area would be forced drastically to reduce clinical or nursing staff, and that some risked being forced out of business altogether within the next 12 months.

Practices have received documents setting out new service charges in recent weeks, with some facing six-figure rises that increase costs for individual practices by up to seven-fold.

GP service charges

Across England, service charge increases could add tens of millions of pounds to GP expenses for the 11% of GP practices in premises owned by NHS Property Services, senior GPs estimate.

The GP Forward View published last month by NHS England pledged ‘transitional support’ for GP practices facing ‘a significant increase in the costs of facilities management on leases held with NHS Property Services and Community Health Partnerships’. An NHS England spokeswoman said it was working with the BMA and others to clarify how funding support for practices hit by service charge increases would operate.

But Dr Lothian - who planned to voice concerns about service charge rises at the LMCs conference 2016 on Friday - warned that practices needed immediate support to prevent them going out of business, and that ‘transitional’ support alone would not be enough. She also criticised the lack of information for practices to explain what the service charges relate to.

‘Practices have had great difficulty getting breakdowns of what the charges relate to,’ she said. ‘This has been unfolding over the last year, and this is the first time they have had concrete figures presented to them...by NHS Property Services.’

She said in one case in Northumberland two small practices had been required to use an external contractor to maintain their building, increasing their costs by around three times.

LMCs conference 2016: full coverage

‘Many practices are just saying they have not got the funds,’ Dr Lothian said. ‘I know of none with excess funds. Practices, if they are forced to pay this, they will have to review clinical staffing - paying an extra £100,000 is one or more doctors. £50,000 will see a full-time equivalent nurse lost.’

The largest single loss for a practices in her area was £125,000 for a practice with about 11,000 patients, she said.

Across the county, which has a population of around 320,000, the extra service charges amounted to ‘the equivalent of losing a whole practice’s worth of funding’, Dr Lothian explained.

Even with transitional support funding, some practices would simply be unable to absorb an extra cost worth around 10% of their funding, she warned.

‘Overnight to be given a bill for 10% is unsustainable - it threatens viability. For smaller practices, the impact is disproportionate. We have certainly had practices saying if they have to pay this it will threaten their ongoing business.’

GP funding

An NHS Property Services spokeswoman said: ‘Service charges are a necessary cost of running a building and have always been paid by the NHS.

‘These charges are not new. What has changed is subsidy arrangements with NHS England and the fact that the costs are now transparent on the bills.

‘Some costs have actually gone down. Where there are increases we are proactively meeting with GPs to explain the bills and we are working closely with NHS England in planning how best to support practices, including new transitional funding announced recently.

‘The NHS estate needs to be operated on a more professional basis. As part of that reform, we are making the true costs of occupancy transparent for the first time. This means that occupants are now being billed for actual  charges that were, in the past, picked up in an inconsistent way by different local PCTs around the country.’

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