8 August 2012
There are approximately 15.4 million people in England living
with long-term health conditions. Many require frequent diagnostic
and follow up treatment and often need in patient care.
So if you are 40 today, depending on your lifestyle you are
likely to live until you are 90 and you might have to cope with a
long term condition such as diabetes. Depending on how you manage
your condition you may need to constantly visit the GP, clinic or
hospital for routine checkups and follow up treatment in hospital.
If it’s not diabetes you may have to live with other long term
conditions such as heart disease, COPD and, what’s more, as you
grow older your risk of dementia will increase.
Depressed? Well it’s not all bad news as more efficient and
effective treatment and medication is developed, coupled with
advances in technology, your condition might be able to be
monitored and managed remotely. Consequently, medication will be
more efficient and, as more treatment is offered as day cases, the
length of stay in hospital is likely to be far less.
Imagine shopping in Sainsbury’s wearing a watch that constantly
monitors your blood pressure and/or blood sugar levels and sends
the results to a data centre to check and text you for your next
appointment based on evidence from your results?
At this point you may be mistaken that you are reading a medical
journal rather than Property Week and you might well ask what this
has got to do with the property industry. The answer is that if the
advances in technology and in particular tele-health continue at
the current pace, coupled with the reduction of length of stay, we
will soon find we actually have too many hospital beds. There are
currently 156,000 hospital beds in the UK. Advances such as
tele-medicine could easily help to reduce this figure by about 20%
- equivalent to around 40 District General Hospitals.
But what about the politics? Given that it has just taken the
government 18 months to get a new policy through into legislation
you might ask whether the public and or politicians have the
resolve to tackle a potential problem of over capacity that could
lead to hospital closures.
In a report commissioned by the Department of Health, McKinsey
stated that NHS Trust performance varied six fold, and if all
trusts came up to the average performance of asset utilisation then
a saving of £3.3bn would be realised. If all trusts performed at
the upper quartile of asset utilisation then £8.3bn could be
realised.
The answer of course is that not many hospitals will close. Hospitals will simply merge their management and services will be moved on to single sites, or continue with vastly reduced bed capacity, while services are developed closer to people’s homes (an essential factor considering the ageing population).
In addition you have the value of the capital receipts that
could be generated from disposals of redundant estate. The amount
will depend on how aggressive the Trust is realising the asset and
investment required to do so. The example I would give you is a
provincial NHS DGH operating out of 60 acres of land with 68,000 sq
m of buildings. We have proven that it is perfectly possible to
remodel the trust with an integrated care model and reduce the
building base by 25% and the land take by two thirds. In this case
you could free up 40 acres of which approximately 25 acres would be
net developable. This would give a disposal value of say between
£600k to £900k per acre depending on a range of planning factors
and residual land use.
The traditional approach would be to dispose of the surplus land
but the more innovative trusts have recognised that out of hospital
care requires new type of facilities that are more likely to be
more ‘campus style’ developments, with facilities such as GP
services, treatment centres, step down facilities and extra care
housing, patient hotels and care villages.
Infrastructure remains an attractive asset class and the current
uncertainty in the debt markets will encourage these government
backed/supported investments. The launch of NHS Property Services
Ltd by the Department of Health provides an exciting opportunity
for investors and developers but this can’t be achieved
successfully without a real understanding of how the proposals can
make a real difference to future patient care. This will require a
partnership between investors, developers and professional service
providers.
If we get it right more of us will live longer and healthier
lives.
David Lawrence (david.lawrence@capita.co.uk)
is Head of Health at Capita Symonds