Sale and Lease Back: a solution for talent attraction and succession planning

At both ends of a GP’s employment lifecycle – joining a surgery and later leaving it – the issue of property ownership can be a challenge. Currently, practices are struggling to fill vacancies and high numbers of doctors are retiring or leaving the profession. In this context, the issues surrounding property ownership are particularly acute. Surgeries where doctors directly own the premise not only limit their potential pool of candidates when recruiting, but must also pay the equity of the GP who is leaving.

Declining numbers of GPs

Stark figures recently presented to parliament by Steve Brine, MP show the total number of GPs in England falling by 4.5% between September 2015 and December 2017. This trend of declining numbers of GPs is partly due to the high percentage of GPs who are over the age of 50, combined with a lower average retirement age. The shortage is placing increasing strain on GPs, resulting in many leaving the profession due to illness or a change in career. If practice doctors own the surgery building, a GP who is leaving needs to sell their share of the property onto their replacement. But this is easier said than done.

GP recruitment

There is a growing challenge finding replacements. A survey by Pulse magazine in 2017 found that 12.2% of GP positions were vacant. This was a significant increase compared to 2.1% in 2011. And whilst the Government has pledged to increase the number of GPs, this policy does not seem to be having a positive impact, as demonstrated by the overall decreasing number of GPs. The situation is compounded where GPs own the surgery building. Increasingly those entering a new practice are unwilling to make the financial commitment of owning a share of the building, making the recruitment challenge yet harder

Outsourcing the ownership of the building

So, what can be done? ‘Sale and lease back’ is a practical solution. At the Medical Centres Group, we specialise in buying surgery buildings from doctors and then leasing the building back via the rent reimbursement scheme. This means the hassle of ownership is outsourced to a third party. The Medical Centres Group have a long-term interest in the property to maintain the building to a high standard and develop an ongoing partnership with the GPs. As improvements are required to the premises, the funds can be raised via the owning company, rather than the GPs. If the existing premises becomes too small, the owning company can oversee the sourcing of new land and develop a new facility fit for purpose (for example this award-winning development in Hove).

But don’t just listen to us. Here’s what one of our client’s, Dr. Narsapur, a Senior Partner at the Nethergate Medical Centre in Dundee, said on the topic: “We were unable to get new partners in because of negative equity and were worried the partners would be declared bankrupt. Personally, this also caused great stress and health issues. We approached MCS and were able to work with them to eliminate all these issues and we now have a much more stable practice and have been able to bring in new partners. “

If sale and lease back is something you are interested in, please get in touch with Nigel at nigel.ford@medicalcentres.co.uk

Woodstock Medical Centre

Woodstock Medical Centre. This is an example of a sale and lease back. Following the sale, an extension was added to the building.