Report claims trusts are failing to manage their estates, with potential savings of £2.3billion possible
The NHS has been accused of being ‘short-sighted’ in failing to properly address the problem of disused and underutilised estate, which is currently estimated to be equivalent in size to London’s Hyde Park.
A report published this week by built asset consultancy, EC Harris, reveals that while there has been a 53% reduction in disused space since 2009, the total amount of wasted estate is still greater than the size of Hyde Park and costs a staggering £407m a year in facilities management and estates spend alone. This equates to the annual running costs of a large-scale district general hospital.
On average, mental health trusts are running with 5.9% of their estate underutilised, compared to 5.2% for NHS ambulance trusts, 5.5%% for acute hospitals and 5.6% for primary care facilities. Social enterprises are leading the way in creating estate efficiencies, with just 1.4% of estate being underused, but these organisations currently make up less than 0.5% of the total NHS estate.
Some hospitals face the challenge of operating out of life expired facilities, but we contend that it is the job of an effective executive team to ensure patients are housed in 21st-century facilities and that staff are given sufficiently risk-free environments to maximise clinical outcomes
The report reveals that while some trusts have made significant efforts to take stock of their facilities and improve or release underperforming assets, poor management is causing others to lag behind. Compared to a number that a running close to 100% occupancy, there are 56 organisations with unutilised estate of 10% or more, and five where 30% of space is unused.
It states: “Some hospitals face the challenge of operating out of life expired facilities, but we contend that it is the job of an effective executive team to ensure patients are housed in 21st-century facilities and that staff are given sufficiently risk-free environments to maximise clinical outcomes.
“While the best trusts are active in pursuing improvements, senior staff in other trusts often don’t know their own metrics for area, condition and costs by estate type. This is a marked contrast to those in the private health sector or major non business sectors who view the estate as a comprehensive business enabler.”
If this problem was properly addressed, the report claims the NHS could make savings of at least £2.3billion and at the same time kick-start the construction of much-needed new residential housing stock.
However, key to any turnaround will be the dissemination of best practice in asset management, collaboration in procurement and facilities management, and better commercial strategic capital procurement including implementing better governance regimes.
Connor Ellis, head of health at EC Harris, told BBH: “The NHS is faced with an unprecedented challenge in delivering the £20billion Nicholson challenge which was expected to be completed by 2015 and appears just over 50% completed on official figures to date.
“One of the key drivers is efficiency and driving clinical federation and mergers, which have not proceeded at the pace required to ensure delivery. Our research shows that that the NHS could save in the region of £2.3billion alone by better FM, procurement and estates management.”
Our research shows that that the NHS could save in the region of £2.3billion alone by better FM, procurement and estates management
Such improvements would mean that, by 2015/16, the NHS could realistically see 97% of its overall estate fully utilised.
“We contend that the right leadership and team effort makes a fundamental difference in driving up efficient space utilisation of the better performing organisations,” the report states.
One of these forward-thinking organisations is Mid Essex Hospital Services NHS Trust, which reduced its floor area by nearly 10,000sq m in just eight months while at the same time reducing estate revenue costs. Benefits included a reduction in capital of more than £735,000; better functioning of support departments such as medical records as a result of the opportunity to relocate into main buildings; and improved asset usage within departments by up to 80%.
But the report reveals that opportunities have also been lost as the Government struggles to make cuts across all public services.
“Figures show that the NHS has handed back to the Treasury more than £3.4billion over the last two years including £1.27billion of capital funding,” it states.
“We remain surprised that given a high risk associated with backlog maintenance of £1.22billion that the NHS could have not done more to wipe out a large part of this risk and still invested in new building stock or lifesaving equipment.
“Having accepted in the previous Comprehensive Spending Review a reduction in the overall capital settlement, to then hand back resources that could improve both the long-term recurring efficiency and potentially reduce patient and staff outcome risks seems short-sighted.”
Having accepted in the previous Comprehensive Spending Review a reduction in the overall capital settlement, to then hand back resources that could improve both the long-term recurring efficiency and potentially reduce patient and staff outcome risks seems short-sighted
The transfer of a large amount of the NHS estate to the new NHS Property Services body as part of the healthcare reforms will also be key to future success, the report adds. It is likely to be tasked with disposing of around a third of the former PCT and SHA estate, while at the same time achieving standardisation of FM performance, tenure, facility outcomes and overall asset management. With around 3,600 buildings on its books, 3,000 members of staff, and an annual operating budget of between £700m-£900m, it will be taking the lead from those organisations currently at the top of the table in terms of estates efficiency.
The report states: “A standardised performance regime should reduce operating costs and simplify audits for comparative value for money. This is key to achieving transparency and identifying the real scale of the challenge to achieve a streamlines estates operation. If the NHS Property Services develops integrated reporting and reporting platforms then the potential for improved operational management will bring better service and value for money.”
If the NHS Property Services develops integrated reporting and reporting platforms then the potential for improved operational management will bring better service and value for money
Massive savings are also possible within FM procurement, with improvements to hard FM services offering potential efficiencies of more than £1.45billion a year.
Ellis said: “Everyone accepts that health is facing a more-for-less agenda over the next five years plus. Trusts must look at benchmarking to those best-performing trusts in all asset forms, from hospital throughput and clinical safety to hard and soft FM alongside management performance to ensure effective delivery - the so-called whole life/holistic model. Likewise, the NHS needs to ensure it doesn’t reinforce the status quo and deliver a message that the small numbers of regularly failing regimes are permitted as this will not prove a good strategy towards driving standards up.
“In the decentralised NHS world, this means collaborating with other trusts, local authorities and other parties to form partnerships not only to improve outcomes and risk, but to clearly reduce cost via scale and standardised performance.”
Click here for the full report.