In recent years an increasing number of medical premises have found that they are no longer able to satisfy their requirements in terms of physical space and facilities provided and are struggling to meet latest NHS infection control standards. This has an impact on the growing range of services that they are expected to provide.
There has been an increased demand for primary care services and an ongoing move away from smaller non-compliant or converted premises towards extended and improved premises, and new developments to meet increased pressure and demands on existing space.
COVID-19 has also raised additional issues as to how practices use the accommodation they already have, and increased design and flexibility becomes even more important to ensure the long-term suitability of the property for continued use.
This gives rise to the need to either improve and extend existing premises or consider relocation or new development. This is a substantial undertaking and understandably causes concerns, raising numerous questions for property owners or investors, whose skills set understandably lie elsewhere.
In this article we consider some of the issues relating to these projects, aspects to consider before commencing, as well as risks and problems that can arise along the way and how to avoid them.
Obtain specialist advice
Most importantly, is to ensure that from the outset an appropriate specialist team is appointed to advise the practice, not only in terms of dealing with improvements or developments in general, but specifically in relation to primary care premises, which have very specific requirements in terms of specifications and guidance that must be met.
These developments are unlike other commercial developments and the professionals involved must have a broad experience of the primary care development marketplace.
Problems that can arise are normally associated with construction risks, unexpected delays and increased or unexpected costs, which may have a negative impact on the overall viability of the project.
Unexpected delay in construction or gaining appropriate consents and approvals can have a knock on effect on finance and associated cost. A realistic timescale can be built into the cost process and if delays are likely to occur then this can be reviewed and factored in appropriately.
At the outset
To avoid expensive mistakes and problems later, a specialist monitoring surveyor should have early involvement in the design development and shaping the practice’s initial brief. When looking at the proposed specification of the premises, it is important that the practice and the monitoring surveyor liaise surrounding their particular requirements alongside the relevant NHS guidance in order to provide comprehensive, accurate, impartial and concise proposals.
Many developments have suffered from design shortcomings, which were not picked up until later in the design phase, when a resolution was more problematic. A specialist architect will also be required to lead the design process and liaise with the monitoring surveyor to understand the required design of the premises in terms of the practice and NHS requirements.
Why do you need a development appraisal?
A development appraisal will be one of the first and key documents to the project, which should be prepared by a healthcare surveyor, experienced in rental and valuation matters relating to primary care premises. This document will pull together all the cost related factors and information to ensure that the project is financially viable.
This will include details of the size of the improved premises or development and an appropriate assessment of anticipated reimbursement for GMS space and details of any income in relation to non-reimbursable areas such as dentists, pharmacies or clinic space based on the improved specification.
It will also indicate a realistic estimate of market value once the project is complete. Details of construction costs, fees and finance, costs in relation to seeking necessary approvals, professional fees and of course ideally an element of profit will all be factored in. The importance of this cannot be underestimated to avoid serious cost implications at a later date.
Small variations in rental levels or costs can have significant impacts on overall viability. By continuing to update this regularly, potential cost-related issues can be identified at an early stage and can be factored into discussions with the district valuer on behalf of NHS England when agreeing and approving reimbursement levels and the size and scope of the project.
As costs become more certain, and quotes are finalised, discussions with the district valuer progress and finance is implemented this document will become increasingly accurate and useful.
Involve NHS England
Whether grant funded or funded by the practice it is important to ensure that NHS England is fully consulted throughout. There have been occasions where improvements or even extension works have been undertaken without seeking NHS approval prior to commencemen. This can result in the new or improved space not being reimbursed at the expected levels due to not meeting required design guidance, or not being reimbursed at all as they did not agree to support the project.
Remember that NHS England is not obliged to support a project or pay additional increased rent and therefore approval should be sought at an early stage and on an ongoing basis. This reaffirms the importance of a specialist team to ensure compliant premises, which will attract the best possible level of reimbursement.
Of course no project is without risk and unforeseen circumstances are always a possibility. But instructing a specialist team to manage various issues and provide full cost and specification advice from day one will help to ensure that delays are minimised and projected outgoings are accurate. It could also help to mitigate many of the potential problems that can occur.
- Paula Mace MRICS is director and head of healthcare at Aitchison Raffety