13 February 2012
David Lawrence on the new NHS ‘Prop Co’…
That the Department of Health (DH) is to set
up a national property company to own and manage ex PCT estate
should come as no surprise. Quite simply, this had to happen if the
NHS is to achieve the £20bn savings required by the government -
the Prop Co will be able to deliver improved efficiency and
facilitate the provision of care closer to people’s homes, thus
ensuring that the hospital estate can be properly rationalised to
better meet the demands of local communities.
In a nutshell, the property company covers the
ex PCT estate that includes everything from the GP to Acute Trusts.
According to the ‘NHS Hospital Estates and Facilities Statistics
2008/2009’, this estate has a total floor area of some 5.2 million
sq m. To put this firmly in perspective, a major supermarket chain
reported that its store portfolio across the whole of the UK was
3.05 million sq m in February 2010.
The opportunities for optimisation and
investment are therefore huge. We’re looking at a portfolio that
comprises as many as 4000 sites with a book value of £4bn which,
with the right commercial advice, could be the answer to
regenerating and rationalising NHS property in support of new
models of front line care.
The new ‘Prop Co’ is the result of the DH
needing to seek new management and ownership arrangements coupled
to a need for private sector routes to gear in capital investment,
achieve efficiencies and enable radical shifts in transferring care
to communities outside of the hospital. In terms of the hard
financials, it will have to balance the need for investment in this
community property portfolio with repayment terms that are likely
to be over 30 years, set against new clinical commissioning groups
with contracts for clinical services over a 5 to 7 year period.
In principle, a Prop Co with the freedoms to
buy and sell property and enter into joint ventures should be able
to achieve this; it would hold/own the assets, with regional
companies acting as landlords. This would be a major enabler from
which the Clinical Commissioning Groups can commission clinical
services to any qualified provider (AQP), while minimising the risk
of the property being a barrier to entry as the AQP would simply
take a lease for the period of the service contract e.g. 5 to 7
With capital in short supply and the need to
have community premises to facilitate changing clinical practice
the Department of Health should be looking for developers and
investors to manage the existing portfolio and optimise it in close
consultation with CCG’s. This is where arguably some of the LIFT
and indeed PFI Companies have been perceived to have failed to make
the critical link between developing buildings and delivering
effective health services.
The vision for Prop Co should be to transform
health services through the application of technology and the
efficient use of property. Therefore alongside the commercial
acumen of developers they will need to ensure full capability to
match technology and property with healthcare planning thereby
offering an end to end solution.
This is undoubtedly an exciting development
which will transform NHS care and provide a boost to frontline
services. The key now is to grasp it.
is a Director at Capita Symonds