Real Estate Tip of the Week: Not going to plan?
It sometimes happens that the plan that is attached to a completed lease is incorrect because it does not show the correct extent of the property…
Published 8 June 2016
Are Strategic Estates Partnerships (SEP) between trusts and private sector partners the answer to Lord Carter of Cole’s recent report calling for smarter and more efficient use of the NHS estates portfolio, asks Mark Gould.
Lord Carter of Coles’ call for smarter and more efficient use of the NHS estates portfolio – such as reducing non-clinical floor space and unoccupied floor space – in his recent report, Operational productivity and performance in English NHS acute hospitals, has triggered a rise in the number of trusts reviewing the ways in which they operate.
Many trusts are seeking Strategic Estates Partnerships (SEPs) with a wide variety of private sector partners to maximise the value of their bricks and mortar, improve the quality of care and make hospitals nicer places for patients and staff.
Anne Batanero, DAC Beachcroft Partner and commercial property specialist, says the Carter review has probably pushed the SEP piece ahead of any new models of care. “Partnerships need to sit in the broader context of efficiency and so trusts will be considering how much support they may need in achieving the Carter recommendations.
“Consequently, whereas up until now there may have been limited enthusiasm for considering a SEP, they are likely to become more interesting.”
At the same time, the more complex the estate, the more opportunities exist for the strategic partner in terms of estate rationalisation, the need for new buildings and better use of space, and improved operational performance.
“If a trust is under-resourced and has under-utilised estate it may feel that a SEP is the answer – though it must be prepared to take on some risk,” warns Batanero.
“Ensuring that a partnership is future-proofed and fits with a potential new model of care is critical to its success, as are levels of assurance, not only on financial matters, but in terms of governance and risk. A SEP can deliver benefits at speed, but care must be taken to ensure the right fit,” she adds.
Construction and development company Ryhurst is helping Isle of Wight NHS Trust to map future clinical and demographic demands against the current estate, undertaking a space utilisation exercise, aiding in the prioritisation of capital projects and identifying commercial opportunities.
“Improvements to space utilisation have saved [the trust] £150,000,” says Stephen Collinson, Ryhurst Managing Director. Now the partnership is exploring operator funding to install a 4G mast to solve internet and WiFi problems for service users on the island.
“That will help to revolutionise services in the future and has solved two problems in one,” he adds.
Collinson says SEPs such as these make sense for the NHS as trusts do not always possess the depth of skills, capital or the time to take a step back and focus on strategic estates issues, asset efficiency, commercial opportunities or best use of land. He adds that trusts can use a SEP to manage and deliver new capital projects, source external funding, reduce property overhead costs, utilise space, generate income from surplus property and identify commercial opportunities to improve income.
Andy Headdon, University Hospitals Bristol Foundation Trust’s Strategic Development Programme Director, says the trust’s partnership with business processing and outsourcing company Capita to create a £4.95 million Welcome Centre for the front entrance of the Queens Building Bristol Royal Infirmary had been “a real success story”.
The project delivered over 500 square metres of space for retailers including a coffee shop, grocery retailer, and clothing and gift shop, which will fund the provision of the facility and potentially provide an income to the trust. It also houses the hospital’s main reception area and associated administration, waiting areas, Patient Advice and Liaison Service, including a patient information centre, toilets, cashier and cash machine.
Headdon says Capita brought the original idea to the trust and provided market intelligence from the retail sector on how such a scheme might work in terms of financial modelling. Capita also undertook the market testing and selection of retailers to ensure that there was a financially viable scheme that met the requirements of the trust and its patients, visitors and staff.
“The main contractual or legal issues centred on the interface between the landlord’s works and the ‘fit out’ by each tenant, with a basic template lease agreement negotiated with each tenant,” says Headdon.
On the Isle of Wight, the NHS Trust has formed the Wight Life Partnership LLP (Limited Liability Partnership) with Ryhurst – following approval from the NHS Trust Development Authority – signifying the start of the 15-year agreement with an option to extend for a further five years. Wight Life Partnership LLP will review the estate across all trust sites, ensuring that buildings and grounds are fully utilised and are suitable for the delivery of modern healthcare. The aim is to improve asset efficiency at the trust and help to identify and develop any commercial opportunities.
Collinson says many trusts are wary of outsourcing, led by a fear of legal issues or difficulties with TUPE. The same applies to NHS staff who may fear redundancy under such a scheme.
“We are able to advise and take time to help staff, unions and the wider community, including patient groups, local politicians and the media, understand the objectives and reasons for a partnership. Partnership doesn’t mean outsourcing,” he explains.