Show image

NHS Asset Disposals - A Fine Balancing Act

3rd June 2014

The launch of NHS Property Services Ltd (NHSPSL) in April 2013, resulted in the formation of one of Europe’s biggest property companies and a landlord of approximately 4,000 community properties valued at circa £3bn.

NHSPSL owns or manages about 11.5% of the recorded gross internal area of the NHS’ £44bn estate which predominantly provides community (primary care) services (its role does not extend to acute - secondary care - estate or that serving mental health and well being). 

The challenge to NHSPSL, of managing such a large and fragmented estate with multiple occupiers, is also a significant opportunity; it has the power to identify a holistic, strategic plan for the whole of the NHS community estate, align it with healthcare service delivery and make it fit to meet a challenging future.

The chairman of NHS England, Malcolm Grant, recently highlighted that the delivery of healthcare services will need to embrace significant change from traditional models to maintain a viable and sustainable future.  Using the analogy of how our shopping and banking habits have changed in recent years, with a shift from physical processes to a greater dependency on the virtual, he identified that the estate from which healthcare services are provided will also need to reflect change and meet the expectation of continued levels of quality in an arena of constant and significant change and fiscal restrictions. 

Appropriate and timely investment, reorganisation or disposal of public assets will make a significant contribution to the sustainability of our healthcare services. Nevertheless, without a joined up approach to disposals and reprovision, many opportunities could be lost, including those to improve inefficiencies and underutilisation. As Malcolm Grant points out, the UK has ten years to effect sufficient change in the NHS to ensure that the country continues to enjoy the level of healthcare we have come to expect.  To meet this significant target, the approach must be succinct and actioned quickly seizing the prime opportunity to assist in meeting budgetary shortfalls which are unsustainable.

One of the suggested strategies to raise capital and provide additional funding is for ‘simple’ disposal of assets. However, this needs to be considered in the context that extensive funding is needed to effect changes in the estate in the first instance, and ensuring that the remaining estate is fit for purpose and in the right location. Whilst the pledge from NHSPSL to raise £100m in capital receipts by 2015 is commendable, it still needs to be seen in the context of how the estate is aligned to the changes in service delivery and meet strategic service objectives. It is but a drop in the ocean and all public sector asset holders need to do their bit.

There will always be a need for the built environment, it just might not look and feel the same as today’s  traditional health buildings. The health estate must be flexible and light as a public sector asset; it is an enabler for the provision of care and must combine the clinical and commercial approach when optimising uses to facilitate service solutions. This will be fundamental in future proofing the role of the estate for the delivery of our beloved NHS.

NHS Property Services, just one asset owner of the NHS Estate, has also recently come under scrutiny from some commercial property companies, who suggest that they have an inefficient disposal strategy with higher valued assets being retained and lesser valued assets being disposed of.  We should not, however, look at this situation from an over simplistic point of view - land values are but one of many considerations when forming an asset strategy and there are a multiple of competing priorities.

It is therefore important that a holistic approach is taken, assessing clinical and strategic drivers as well as the commercial opportunities to determine which properties are considered ‘surplus to requirements’.

In our experience, whilst there is an opportunity to dispose of surplus property for, say, housing development, there is also a need to make sites viable for the development of sustainable communities, including sustainable healthcare solutions, contributing for example to the rising demands for elderly care and affordable homes.

The NHS estate has a vital contribution to make in the delivery of savings and should be seen as an enabler as opposed to a constraint. There are many considerations to be accounted for and mechanisms in the delivery of assets strategies that create value, enable change, deliver care, utilise surplus space and provide land for development. The key now is to work together in right sized partnerships delivering more for less from our public sector assets.

Shane Dineen is a director in Capita’s health property team

  • Share