Public sector property: NHS

Best of health

17 November 2015

Kerry Bourne offers a perspective on how the NHS is changing its property strategy, and what this could mean for the future of the public sector estate

The pressure on the NHS to deliver world-class services at the same time as achieving ever greater efficiencies has never been more intense. In this context, the efficient use of the £30bn estate owned and managed by the NHS has a vital role to play.

There is a clear acceptance among many trusts that a fresh approach is needed to ensure that decisions around property are no longer viewed in isolation. Instead, there is an acknowledgment that they must be fully integrated into their financial, clinical and investment strategy.

Rather than an inflexible ‘straightjacket’ that they simply have to accept and work within, the view is that property needs to be thought about in a completely new way as a flexible and powerful asset for leverage.

A number of trusts are already embracing this challenge with some innovative thinking, for instance at Barts Health NHS Trust.

Serving a population of 2.5 million people in east London, the trust includes six main hospitals as well as a number of community buildings. Such a complex and fragmented portfolio that is centred in a prime London property area presents an obvious opportunity for either a one-off capital gain or a continued revenue stream through redevelopment.

Working with Barts, Essentia reviewed the trust’s whole estate strategy and quickly identified that not all its buildings were suitable for providing high-quality clinical care for patients. Consolidating assets on the main acute hospital sites facilitated the disposal of underused areas of the estate that were outdated and unsuitable for modern healthcare. For example, the London Chest Hospital was a highly prized opportunity for residential redevelopment. When placed under offer in spring 2015, it generated tens of millions of pounds for Barts to invest in modern facilities and new services. This is just one of a number of opportunities being worked through.

Another example is the work Essentia has been doing at Guy’s and St Thomas’ NHS Foundation Trust. As one of the country’s largest hospital trusts, it had a large portfolio of mainly leasehold office accommodation that was fragmented and varied greatly in quality. A full property review was undertaken to allow more informed decisions to be taken on how to manage its property more efficiently, harnessing the power of IT and therefore reducing square metre footprint costs.

We need to think about the public sector estate as a whole

Elsewhere, the approach taken by a mental health trust in the Home Counties shows how the adoption of an innovative approach to property management can benefit patients and the trust. Encouraging patients to live as independently as possible resulted in long-stay accommodation and care homes becoming redundant. Disposing of these properties freed up £70m of funds for the creation of a modern, comfortable and non-clinical mental health hub – the first such purpose-built facility in the area.

Practical steps

So, best practice is emerging, but truly integrating a trust’s property with the wider organisational strategy is still uncharted territory for many. What advice is there for those looking to achieve this?

  • Challenge the status quo and ask whether the property portfolio suits the current configuration of clinical services: Because they have grown organically over many years, clinical services can be spread over multiple locations. Consider clinical need first and property second. Can property be provided or shared with other organisations or would new models of ownership could be more appropriate?
  • Don’t bite off more than you can chew: If you are faced with a very large, complex estate, break it up into small chunks – do not try to tackle the whole estate in one go.
  • Consider whether your property could be used to release funds: This would allow investment in clinical services, either through sale or joint venture.
  • Capitalise on current demand for housing: Given the government’s focus on housebuilding, repurpose property that is better suited to housing stock, e.g. Victorian buildings, and raise funds for more appropriate clinical facilities. Encourage planning authorities to support clinical development through planning consent.
  • Think holistically about your property needs: Break down traditional silos between clinical and non-clinical management to plan your requirements. This will enable the most efficient estate footprint to match clinical needs.
  • Ownership isn’t everything: Be mindful that it is not always necessary to own the entire property estate. In the changing face of healthcare, flexibility is key so be prepared to consider renting facilities where this could be more cost effective and efficient.
  • Harness the power of technology: Enable remote working, which can reduce your property requirements.

Integrating sectors

With the recent introduction of the Department of Health’s Local estates strategies: a framework for commissioners, more emphasis is being placed on collaboration between acute, primary, mental health and social care to ensure greater efficiencies and, more importantly, higher quality of care for patients.

Strategic estates management will play a crucial role. For instance, to be better integrated, trusts need to analyse their property portfolios and identify sites suitable for sharing and those that should be released for sale. Such collaboration allows trusts unable to expand due to landlocked sites to share healthcare facilities from other providers.

We need to think about the public sector estate as a whole. This means the facilities occupied by local councils, not just hospitals. Stakeholders should look at the optimal configuration that meets the needs of the catchment area, including population growth. Services can then be located in the most appropriate places, for instance a public library could be the ideal location for a dialysis clinic or a library could be co-located within a hospital.

While integrating the public sector estate makes sense, it is by no means an easy thing to do. However, a more joined-up approach is crucial if the outcome is to deliver a sustainable and ‘future-proof’ trust.

A fresh approach

The demands on the health system are continuously expanding and trusts’ approach to property and the planning and management of their estates has to change quickly – as many are already demonstrating. By integrating their property strategies into their wider business and investment strategy, trusts will achieve greater operational efficiency and deliver better, more sustainable patient care, where it is needed most.

This means seeing beyond the immediate constraints of the property legacy they have inherited, being prepared to ‘throw away the rule book’ and to adopt new and different solutions. This may involve partnering with the ‘unusual suspects’ such as other parts of the public sector, as well as property developers and other parts of the private sector.

Kerry Bourne is Director of Property Consultancy at Essentia

Further information