Strategic Estates Partnerships (SEPs)
In light of the NHS’s huge financial challenge of saving £22billion by 2020/21 and Lord Carter's recent review of hospital productivity, DAC Beachcroft's health estates experts have produced guidance on the effectiveness of Strategic Estates Partnerships (SEPs) in helping to meet these cost efficiency targets.
Alongside Lord Carter's report, which suggests how savings of up to £5 billion can be achieved, SEPs will encourage savings through a practical approach, which can be delivered quickly with immediate benefit to an organisation. In essence, SEPs are a collaborative approach to estate and asset management with a private sector partner becoming part of the planning and decision-making process to deliver substantial savings.
What is a Strategic Estates Partnership?
SEPs are partnerships created by Trusts and private sector partners to develop and enhance the Trust's estate to achieve a number of aims, including:
- Increase efficiency in estate use;
- Generate revenue;
- Reduce cost;
- Allow the Trust to access capital; and
- Improve technology, services or infrastructure.
A Trust may want to enter into a SEP in order to take advantage of:
- The flexibility which a SEP can provide (it can take a number of guises depending on how the parties wish to structure the SEP);
- The sustainability offered (a SEP will usually be a long-term partnership/project);
- The access to skills not available within the Trust;
- The access to capital; and
- The opportunity to draw on the best attributes which each party to a SEP can provide.
In essence, SEPs are a collaborative approach to estate and asset management with the private sector partner becoming part of the planning and decision-making process. This can be in relation to either the existing operational management of a Trust's estate, or purely in relation to new projects (or even a mixture of both).
The central pillar of SEPs is the focus on the private sector assisting the Trust in delivering an effective, cost-efficient estate which delivers value for money.
What is involved in a SEP?
SEPs can take any number of structures; however, the most common structure is through the creation of an equal partnership between the Trust and SEP partner, with the creation of a joint venture company ("JVC") through which the SEP will be performed.
The Trust and the private sector partner will each take an equal share in the JVC, with the JVC itself either being a limited company or an LLP. The business of the JVC will be the subject of a plan, agreed between the Trust and the private sector partner, through which the business aims of the SEP will be realised.
This single, agreed strategy between the Trust and the private sector partner (whether for the whole Trust estate or simply new projects) has the aim to generate revenue and make savings where possible, which is often used to fund improved clinical services and facilities.
If the joint venture model is to be followed, then the SEP will require the following documentation:
- A Partnership Agreement entered into between the Trust and the private sector partner;
- A Joint Venture Agreement between the Trust, the private sector partner and the JVC;
- A Shareholders' Agreement between the Trust, the private sector partner and the JVC; and
- An agreed documented strategy.
The benefits of a SEP
The notable benefits typically associated with SEPs include:
- Potential improvements in services - there will be dedicated, technical expertise on hand to assist in the delivery of the estates portfolio;
- Capital projects managed within relevant budgetary and time constraints;
- Greater access to external funding where there is a funding gap;
- Increased technical expertise, with an on-hand team working in tandem with the Trust to deliver an effective, cost-efficient estate; and
- Innovative solutions for existing space, with the Trust and the private sector partner developing a strategy to maximise under-utilised space within the Trust's estate.