Joining the Dots

1 May 2017 The Five Year Forward View, the Naylor Review, strategic estates partnerships, Project Phoenix. There is no lack of initiatives in the NHS at present, but can they all coalesce into a coherent strategy, asks Paul Jarvis

On the final day of March, two publications mapping out the future of the NHS were published within hours of each other.

The fact that NHS England published its Next Steps on Five Year Forward View just a few hours before the Department of Health finally released the much-anticipated Naylor Review into the health estate is perhaps indicative of the challenges facing the sector.

In their own way, both documents are advocating a more joined-up approach to the way in which the NHS is run. But the apparent lack of coordination between their publication seems a missed opportunity: a joint announcement might have sent a powerful message to the healthcare sector.

And it is not only in these two areas where work needs to be done. NHS England and the government both accept that there needs to be a refocusing of priorities towards greater care in the community, and that means more integration between acute and primary services so that people can access treatment on their doorstep – and avoid continually clogging up A&E departments with minor injuries more suited to smaller clinics.

That will mean taking yet another look at the health estate, not only in terms of reducing costs but also how services fit together and where they are administered. That has opened the door for the development of a whole range of private sector involvement, from strategic estate partnerships (SEPs), to the plans being drawn up by Community Health Partnerships (CHP) under its ‘Project Phoenix’ banner.

However, how these different initiatives will work together – especially in the context of a health administration that gives significant autonomy to foundation trusts and includes a property services organisation that was originally established as a commercial arm of the NHS estate – is far from clear.

Sir Robert Naylor’s review into the NHS estate’s headline recommendation is for Community Health Partnerships (CHP) and NHS Property Services (NHSPS) to be joined as one organisation, through the creation of the NHS Property Board.

Most agree that, in principle, this should be a good thing. “I have always thought combining NHSPS and CHP is a good thing to do,” says Richard Coe, project director at Kajima Partnerships. “It is absolutely the way forward.”

However, there are concerns that the idea – which Naylor recommended should be established immediately – could face difficulties. “I think it might be mired in politics,” warns Coe.

“Naylor is saying that there should be an advisory overarching resource to manage and give guidance on the NHS estate, which is a different message to NHSPS being set up as a commercial arm,” adds Stephen Collinson, managing director at Ryhurst.

“There needs to be more clarity there: is it an old-style estates body, or a commercial arm? Those are quite different objectives.”

Overall, there is plenty of positivity in the market for the Naylor review. “It is really pleasing to see the emphasis on the estates as an enabler and the opportunity to use it,” says Collinson. “It is good to be having this debate publicly.”

“I’m in total agreement with the idea of the NHS looking critically at its estate,” agrees Coe.

However, concerns remain that the sheer complexity of land ownership within the NHS will make life virtually impossible for those trying to rationalise and transform the estate.

“The Naylor Review has covered a very wide and complex range of ownership interests and development models within the existing NHS estate,” suggests Bridget Archibald, partner at law firm Mills & Reeve.

One piece of ongoing work that formed part of the review is unlikely to create too much clarity in this regard. The development of sustainability and transformation partnerships (STPs) across boundaries between trusts, and including other public bodies such as local councils, are designed to create a more holistic view of the NHS.

As part of this plan, NHS England is looking at providing STP-wide bodies with budgets for their own localities. While these organisations may only serve to further confuse the ownership picture, there are hopes that the STPs could yet act as a catalyst for change.

“Partners in the STPs are being asked to look at the potential for savings across the whole of the STP area, and I would be surprised if the estate doesn’t form part of that,” explains Archibald’s colleague, Tim Winn.

Vicky Smith, partner at Deloitte, agrees that the STPs may open up a host of new opportunities to tackle the estate. “A lot of property is in good locations across the country; a lot is on the greenbelt, which obviously has issues in terms of development,” she says, pointing out that this could be used as a way of raising cash for projects either through selling surplus estate or through developing partnership models with the private sector.

“But the difficulty is how to turn that into delivery. STPs will take some of this forward. They have each been allocated an estate adviser and they are being encouraged to look for efficiencies in their estates.”

“What is apparent from the Naylor report is that there are a number of opportunities for the market, which could potentially include the development of over 26,000 homes; residential homes for NHS staff; and releasing land from the NHS estate which is no longer required to deliver health and care services,” adds Jackie Heeds, partner at law firm Eversheds Sutherland.

She suggests that the last of these could be a major benefit to the NHS, arguing that, with the assistance of specialist advice and the adoption of a commercial approach, “the NHS could maximise its returns on the land being disposed of”.

“If you take the message that STPs are all about faster recovery, the estates bit is that there needs to be a community-focused and smaller acute footprint,” adds Collinson. “Bringing each party to the table to do that has been the challenge.

“In 10 years’ time, many more people will be treated at home. The health services should look very different, and the health estate should be an enabler to help make that change happen.”

Enter, the SEPs. Designed as a way to help cash-strapped trusts unlock capital and reduce the cost of their buildings by working with a private partner to design a more efficient and long-term estate strategy, the SEP model has in many ways become central to the future direction of the NHS.

By allowing trusts to get on with their day job and leaving the estate management side to private partners, SEPs have in some ways overtaken the ideas behind NHSPS. They can also help fulfil the drive to integrate the primary and acute care sectors, while at the same time bring more services into the community by making best use of the facilities already available.

“What Naylor is saying nationally is what SEPs are doing locally,” continues Collinson. “Naylor recognised the idea of using private advice and securing land for investment was important and SEPs dovetail with that.”

Coe agrees. “We like SEPs because of the trust-led approach, in terms of our ability to work with the trust and assess the challenges together. They are fairly quick and economical to bid. It is very evident from the projects that we have done that things can be done in a different way.”

He highlights Bicester, where half of the site was used to create new housing – something that is a target for the NHS. That generated capital receipts for the NHS of nearly £1m, while the remainder of the site was used to deliver a new hospital.

Housing could be a key part of the equation in pushing the NHS estates programme forward. “There is a high housing requirement within the Department of Health’s targets, so they are equally interested in how much housing they can create as how much money they can release,” explains Smith.

“The Department of Health is interested in the Transport for London approach for co-locating and divesting property, releasing land for housing.”

Of course, much of the attraction of SEPs to trusts is the improvements they can offer at a managerial level. “Part of the problem on sites like these is that they currently have high levels of backlog maintenance, and keyworker accommodation is in a poor condition,” Coe explains. “That means it is difficult for the trusts to attract and retain staff.”

He points to one trust which is currently operating out of around 30 buildings. “Running a business out of 30 sites is pretty tricky,” he says, adding that the aim of a SEP in that particular case was to lower that number to around just 10 key buildings.

However, SEPs may not be the only way forward. As we continue to await the publication of PF2 projects, there is a strong feeling within the industry that large schemes could be funded by the model.

“Our understanding is that where NHS bodies are looking to procure really large projects requiring private funding, the preference is for these to be structured in accordance with PF2,” says Archibald. “Other projects can harness other models such as 3PD, Lift as well as those evolving from Project Phoenix.”

From the flames

Quite where the primary care programme of Phoenix fits into the overall picture of a more holistic healthcare system is perhaps the biggest question of all at the moment.

It is understood that CHP has been spending a lot of time over the past year or so examining existing approaches to PPP and now intends to take the best bits of those to put into a new model. At the time of going to press, the Phoenix initiative was still awaiting sign-off from central government, but if approved the plans are radical compared to the Lift model.

Instead of small, local partnerships, Phoenix envisages just six regional PPP companies, covering the remaining parts of the country not currently covered by Lift. Each will be an 80% private, 20% public ownership structure.

Rather like the SEPs model, the companies will not be there just to deliver new infrastructure – like the old PFI approach – but will focus just as much on planning out the whole estate. This contrasts with the approach of some previous Liftcos and even the Hub model in Scotland, where some critics argue there was a feeling that consortia were contractor-heavy, so they were seen as builders rather than estates planners.

This is where a range of options – including PF2 – might start to come into the equation, as this new regional model will be able to attract a range of investment approaches.

Flexibility will be key, with some buildings having four or five different clinical providers using them during their life. It is understood that debt providers have already been sounded out about this and many are comfortable with the idea.

However, one area of concern for the market is the sheer size of these new partnerships, with Collinson warning: “What works locally is usually what works best. We are uncomfortable with the idea of quite large regional frameworks. It doesn’t give a chance to provide local people with any input.

“Having six regions looking at the primary care estate and allowing foundation trusts and others to associate with that is going to be difficult.”

Supporters, though, point out that the larger organisations should be able to secure better deals in the debt markets, by potentially bundling a group of projects together under one contract.

Phoenix may bring in primary care, acute trusts, mental health trusts and other organisations that will work together to start delivering the vision of more integrated NHS provision. “The traditional boundaries have been blurred,” says one industry source.

The hope is that the new approach will encourage greater collaboration, ending the parochial approach of a trust chief executive simply doing what is best for his or her organisation, but being able to look across the wider estate.

Getting that kind of buy-in will be the new property board’s first major challenge – as well as the one that defines whether the new body can really create a harmonised, homogenised, health estate across all sectors.

This page was last updated on:
3 July 2017.


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