A new approach to estates management within the NHS is offering a lifeline to trusts wary about entering into controversial PFI contracts.
Increasingly, the healthcare marketplace is showing interest in forming strategic estates partnerships (SEPs), whereby NHS trusts join forces with private-sector firms to form companies that are responsible for running entire estates.
This is not PFI; it’s a company, of which we own half and the NHS trust owns half, and, every time we do something, we test the market to ensure we are getting best value
By sharing the responsibility and risk 50/50, trusts are protected from some of the high costs and poor service often associated with PFI deals.
Speaking at the 2015 IHEEM Annual Conference in Manchester last month, Stephen Collinson of Ryhurst explained how the company was leading the way in bringing SEPs to the NHS.
Of the six SEPs currently operating within the health service, Ryhurst is a partner in three.
Collinson said: “SEPs are about focusing on the patient, value, creating sustainable solutions, and delivering savings.
“It’s a 50/50 partnership approach that is about improving performance. We do not make decisions for the trust, we do not strip assets, we do not cherry pick the projects we want to do, and we do not bring in a fixed supply chain.
“In the past the NHS has opted for frameworks or working with partners on a contractual basis; that’s not what SEPs are about.
“This is not PFI; it’s a company, of which we own half and the NHS trust owns half, and, every time we do something, we test the market to ensure we are getting best value.”
Ryhurst’s three SEPs vary in what they include and are tailored to help each trust get the most out of its estate, and to improve and enhance the services it provides.
Collinson said: “It’s not an estates plan or a strategy; it’s about looking at what the trust is trying to do clinically and then creating the estate they need to be able to do that.
“We test their clinical ambitions and this informs what the estate should look like. Funding is a real pressure for trusts, so we can also help to manage and deliver capital projects, align clinical and estates strategies, optimise value from surplus land and buildings, identify commercial opportunities, and increase incoming sources of funding.
It’s not an estates plan or a strategy; it’s about looking at what the trust is trying to do clinically and then creating the estate they need to be able to do that
“These are straightforward companies, owned 50/50 and managed very simply with four board members, one non-executive and one executive member from both parties.”
Ryhurst formed the first NHS SEP in 2010 alongside Lancashire Care NHS Foundation Trust, operating as Red Rose Corporate Services (RRCS).
The initial aim was to rationalise the estate, improve hard and soft FM services, and deliver new capital projects.
The result is that the SEP has exceeded the trust’s initial cost improvement targets and continues to do so year on year. It has secured revenue savings of £5m and a further £3m savings through improved space utilisation. In addition, there has been a 39% increase in the use of facilities, and a 50% reduction in consultancy fees. The flagship mental health development, The Harbour, also brought about savings of £20m through working with the ProCure21+ construction team to reduce building costs and to cut the annual PFI charges.
These savings were echoed at Villicare, Ryhurst’s second NHS SEP, set up in conjunction with Cheshire and Wirral Partnership NHS Foundation Trust in 2013.
The trust wanted support with the acquisition and disposal of its estate, estates rationalisation, delivery of new-build and refurbishment schemes, and property management.
Like a marriage, you do not want to get in with the wrong person and you need to know them well and know who you are dealing with
Since its launch, the SEP has saved £1.4m on the cost of a new child and adolescent mental health unit; has identified soft FM service inefficiencies; has taken over the running of the trust’s IM+T services; has helped to maximise returns from land and property sales; and is now looking at taking over the operation of hard and soft FM services.
“In both situations the SEP has helped by looking at a whole estates solution, not doing things piece by piece,” said Collinson.
Ryhurst’s third SEP is also the first joint venture partnership of its kind to involve an NHS trust which does not have foundation trust status.
The Wight Life Partnership began operating in 2014 and is unique in that it covers mental health, community, primary care, acute care and ambulance trusts under one umbrella organisation.
Speaking at the conference, Karen Baker, chief executive of the Isle of Wight NHS Trust, said: “We knew we had a problem with our estate and that we needed help with that.
“The NHS is not very good at taking risks and we were anxious about entering into this sort of agreement. Relationships are really important.”
Comparing the SEP to a ‘marriage’, Baker added: “Like a marriage, you do not want to get in with the wrong person and you need to know them well and know who you are dealing with.
Through the SEP we know exactly what we are doing and the cost, and we have access to experts. I honestly don’t know why everyone is not doing it
“The 50/50 approach is important because you need to know they are not going to steal your money and run away with it.”
Through setting up the SEP, the trust was looking for innovative ways of securing extra capital funding, reviewing its surplus land, and aligning its clinical and estates strategies.
“We did a space utilisation exercise, prioritised our capital projects, and identified commercial opportunities,” said Baker.
“We identified £150,000 worth of savings through improvements to space utilisation and through the SEP we are now looking to install a 4G mast to solve internet and WiFi problems on the island. That will help to revolutionise services in the future.
“Through the SEP we know exactly what we are doing and the cost, and we have access to experts. I honestly don’t know why everyone is not doing it.
“The NHS is nervous and does not like to take risks, but to me it does not feel like a risk. For me it feels better than anything else on offer.”
Karen Baker
Collinson added: “Quite a few trusts are looking at the SEP approach now and we expect more deals to be made over the next few years.
“The important thing for the NHS is that it doesn’t feel like the trust is being privatised or something is being done to the organisation. It’s a 50/50 deal and we expect that, moving forward, SEPs will play a big part in the Government’s efficiency challenge.”
The important thing for the NHS is that it doesn’t feel like the trust is being privatised or something is being done to the organisation. It’s a 50/50 deal and we expect that, moving forward, SEPs will play a big part in the Government’s efficiency challenge
Speaking to BBH, Simon Kydd, head of healthcare at WSP Group, said he also expected to see a significant increase in SEPs over the coming year.
“The Midland Metropolitan Hospital development is the first NHS scheme to utilise the PF2 approach, but I don’t think it will be a catalyst for this new PFI framework.
“This Government is not a big fan of PFI and SEPs are starting to realise tangible projects. Partnerships that were set up a few years ago are bringing about real change and I expect to see more of them in the future.”
Bevan Brittan is currently advising several trusts on their plans to enter into SEPs, including Southend University Hospitals NHS Foundation Trust.
A spokesman said: “For a number of reasons, including changing models of care, changes in technology, lack of capital to invest in the estate, and many NHS organisations inheriting a large and diverse estate, for example from the former primary care trusts, many organisations are left with estate that is not always fit for purpose, is not aligned with the optimal model of care, is not sufficiently flexible and, in many cases, includes surplus estate.
Strategic Estates Partnerships are emerging as a new model that aims to maximise value from the NHS estate and to align it more closely with clinical strategy
“Tackling these issues requires staff resource, capital investment, and commercialisation skills, which are not always available to trusts and foundation trusts that understandably wish to focus on their core business of providing care.
“Augmenting what the trust has with additional capacity and capability from the private sector is attractive to a growing number of trusts who are facing not just financial pressures, but pressures to deliver closer integration and out of hospital care.
“Strategic Estates Partnerships are, therefore, emerging as a new model that aims to maximise value from the NHS estate and to align it more closely with clinical strategy.”