Real Estate

NHS property company battles £422m of unpaid charges


The National Health Service property company is owed more than £422m of overdue rent and other charges as cash-strapped doctors’ surgeries rebel over rising bills.

NHS Property Services, which runs about 10 per cent of the NHS estate, is mired in disputes with tenants, who say it has imposed steep increases in service and other charges as financial pressures  on the health service intensify.

The British Medical Association, which represents doctors, accused NHSPS of implementing “astronomical increases in service charges and facility management fees” and added that it was “no surprise that some practices are not simply handing over cash they do not have”.

Payments classified as overdue had reached £422.4m by the end of the last financial year, according to accounts filed by the state-owned group last month — up £8m from a year earlier.

NHSPS, which was set up five years and a half years ago to run thousands of properties including doctors’ surgeries and hospitals, confirmed this figure represented late rent and other charges from tenants. The group has written off £103.4m of the latest total, the accounts said.

Some tenants are refusing to pay bills from NHSPS, while others say paying the charges has stretched them to the brink of financial viability.

The company said a fall in cash flow in the year to March was “mainly [driven] . . . by the increase in debtors last financial year . . . which reflects the fact that the company has continued to experience slow recovery of amounts due from its customers, including general practitioners”.

Net cash flow at NHSPS, which is wholly owned by the Department of Health, fell from £156.6m a year earlier to £97.5m in the year to March 2018, it said. That came as losses widened from £5.5m a year earlier to £40.9m in the year to March, on an operating loss of £23m.

NHSPS was set up in 2013 and took on thousands of healthcare properties previously owned by health authorities and primary care trusts, with a brief to manage them and sell off surplus sites. It runs properties worth over £3bn and employs over 3,000 staff.

But it has struggled with a programme of implementing market rents and service charges on its properties, especially where properties had previously operated without formal lease agreements.

One GP surgery, Whyburn Medical Practice in Nottinghamshire, said last month it would dissolve the GPs’ partnership and hand back its contract with NHS England because of “a large increase in the service charge relating to the NHS Property Services-owned building that it resides in”.

“These highly inflated charges and other business issues have resulted in the business becoming financially unviable,” the partners said. They said NHS commissioners were looking for a new provider to take over the practice.

Whyburn Medical Practice said last month it would hand back its contract with NHS England because of ‘a large increase in the service charge relating to the NHS Property Services-owned building that it resides in’ © Google

NHSPS said: “Service charges and facilities management charges have remained relatively static at the property since 2015. In 2015-16, the Department for Health and Social Care and NHS England agreed NHS Property Services would charge customers the actual running costs associated with their buildings.”

The NHSPS said the 2015-16 shift had resulted in changes to the sums that some healthcare providers can reclaim from clinical commissioning groups, the bodies that plan and commission health services.

Doctors say they are paying too much. Dr Krishna Kasaraneni, of the BMA’s GP committee, said: “Recent years have seen GPs hit with astronomical increases in service charges and facility management fees from NHS Property Services, with little to no detail on the reasons behind them.

“At a time when GPs are facing extreme financial pressures, providing unlimited high-quality care to a rising, ageing population that is more commonly presenting with a number of complex conditions, these unilateral price rises could lead to practices being forced to shut down.”

NHSPS said it was “continuing to work constructively” with the BMA, NHS England and the Department of Health.

It added: “NHSPS’s remit is to support the NHS estate, so that healthcare professionals can deliver excellent patient care in modern and well maintained facilities. To do this the company must recover direct costs for providing essential services like cleaning and repairs.”

The group said it sought to recover the costs of operations from its tenants but not to make a commercial return. “NHS Property Services continue to apply market rents . . . in the same way as other landlords to NHS tenants,” it added.

NHSPS made the largest disposal in its history during 2018, selling off the St George’s Hospital site in Hornchurch for £42.5m.



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