Is there a cure for our healthcare hangover?
Conor Ellis, head of health at Rider Levett Bucknall discusses what needs to be delivered to fix the NHS.
There has been much talk of the need for health investment, with politicians from all sides promising differing sums of revenue and capital.
Despite all the noise and bluster, the final investment figure to “fix the NHS” looks likely to be a relatively small investment versus the £20bn-plus revenue shortfall and there remains a lack of long-term vision.
While political parties traded blows over the state of revenue and capital needed, what is becoming more and more apparent is that the present government will be simply looking to continue to juggle the financial shortfall around the system. In the coming budgets, we can only hope for significantly better capital funding on buildings and IT, not just clinical equipment.
The bottom line is that after each of the 44 Sustainability and Transformation Partnerships (STPs) have been appraised, there simply isn’t the money in the system to fund the needs of the groups to deliver the transformation agenda regardless of who is in power.
Although in some cases the transformation plans are far thinking, in others they are no more than a script for making the system stable and improving the environment and reducing the risk of a major service failure.
What remains obvious is that for many there are whole-scale structural deficits that cannot easily be solved.
The latest NHS statistics on hospital estates and facilities, known as ERIC (Estates Return Information Collection) shows that 12.9% of the estate isn’t functionally suitable in 2016. This backs up my experience, with many of the Trusts that I have collaborated with working out of conditions that are more in line with Eastern Europe standards than our main OECD competitors.
The NHS statistics also reveal that 16.5% of the estate dates to before the formulation of the NHS, and more than 11% was built between 1955-74, a period that is not highly regarded in architecture and engineering terms for its quality, lifespan and flexibility.
All the three main political parties pledged increasing capital expenditure in the NHS – a strategy aimed to woo the voters and counter the financial paucity over the past six years or so.
The more measured capital expenditure figure is that used for Trusts’ new and refurbished buildings and equipment, which fell for the last three years to just above £2.13bn from £2.74bn. It is therefore unsurprising that even the best run hospitals are struggling to deliver services efficiently and effectively.
Clearly, as the NHS continues to cut back on maintenance and provides new or improved facilities, the result is a total repairs backlog of £4.34bn in 2014/15 to £4.97bn in 2015/16. The table below shows the extent of the issue.
That’s a rise of over £820m and buildings at high risk has grown by more than £317m in a year with many estates with high risk backlogs approaching £5m and above.
Yet even more concerning for all stakeholders is the scale of the table below, which shows that there are more than 50 individual estates with £10m-plus high risk and significant risk backlogs, including one London Trust that has declared a position of more than £100m on three individual sites.
Given the NHS review after the fire at Grenfell Tower and a number of high-profile risk areas identified, it is likely that cash will be released to make good not only some cladding issues, but inherent major fire and safety risks.
This should provide the private sector with projects to go at, whilst the STP process starts to slowly evolve to more delivery mode. Construction teams can expect only a few new major acute projects (the likes of Birmingham Children’s & Women’s, Royal Brompton and Velindre as examples), but consolidation onto major sites and a mix of improved facilities reducing the backlog and getting facilities in the right place in urban environments.
Likewise, the bulk of new investment will be in community hub facilities and ideally in better mental health provision.
Whilst there has been talk of PF2 for at least a couple of years, there seems less appetite on both sides and “Project Phoenix” (a form of PPP) in some form may be that vehicle for a reasoned portion, particularly in devolved economies like Manchester. The role of pension funds has also had some play in pump priming such needed developments.
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However, progress on reducing the unused estate has been made. The NHS has heeded the warnings and tried to reduce the size of its overall footprint from the gross internal area (GIA) of 26.8 million m² of which 24.8 million m² was in use as of 31 March 2017. This is compared to a GIA of more than 28.5 million m² in 2011 and unoccupied or unused of more than 3.12 million m² (some 25.38 mm² in use). Further activity though requires access to capital.
All these statistics pose the question: How can we expect NHS staff to meet their targets for transforming both care and the patient experience within these facility constraints? Especially when the overall cost of operating the NHS estate facility management is at £4.86bn within an expenditure of £8.31 bn.
If the NHS-owned or leased buildings were in better condition, services could be faster and FM operating (particularly hard FM) lower with less maintenance on outdated buildings. Obviously, the present scenario sees significant FM waste which has an adverse ongoing revenue impact for the NHS.
So, what’s the solution?
I believe, in part, it will come from the Accountable Care Organisations, which will drive greater efficiencies, as will pathfinder chains’ integration on sub-regional basis and sharing best practice and know-how as well as leadership and resources.
Devolution plans, such as STPs being able to debate regional priorities, should also bring together all estates into one seamless umbrella, enabling better use and economy. But there is more to the solution than just tinkering with three letter acronyms. The answer requires real investment in facilities and IT.
Many Trusts, including Mental Health Trusts, often operate out of a huge variety of buildings, many of which are too small, not designed for purpose and with poor utilisation and often developed piecemeal. Instead be bold, challenge NHS Improvement (NHSI) by demonstrating the clinical improvements, environmental benefits and fewer sites that will be occupied by a new forward-looking model.
Many NHS buildings are too small, not designed for purpose and with poor utilisation and often developed piecemeal (Image: Dreamstime)
This means thinking more unconventionally – for example, possibly accepting that some elements may be leased, shared or not owned, that clinical processes and technologies may render other practices obsolete and therefore not needing the same estate scale. It is also the job of the private sector where needed to prove the case that such plans are sustainable economically and where possible help the short-term set up costs.
Above all it is reenergising the Estates and Strategy teams to avoid spending slugs of capital funding in a piecemeal way. We all like new buildings but much more should be spent on the infrastructure when we build them allowing future developments to become easier to build as such utilities capacity becomes more freely available.
There is a hard choice for Trust leaders: if you really want to see such facility improvements, it means working collaboratively with clinicians over the next four or five years and restraining the use of the capital budget for every new bell and whistle as funding becomes more prioritised.
Too often large sums of Trust budgets go into the latest clinical equipment, and whilst there is no doubt this is good for those specialities, it is often very hard to argue that it is a greater need than better wards, mechanical plant, theatres and emergency departments where there are already safety risks identified.
The NHS has drifted into a “make do and mend” scenario that in many cases has already resulted in an appalling waste of public money. Many of the Trusts and STPs are so removed from looking at the larger capital planning picture due to lack of robust capital resources that their mindset becomes tactical rather than strategic and they are forced to make small-scale, sticking plaster improvements, rather than full-blown surgery that is needed.
Let’s take a four-stage strategy:
- Do not concentrate slavishly on capital cost. Over the lifetime of a building, studies have shown the capital cost is often only 1/50 -1/200th of the revenue position.
- Look at different ways of working or partnerships to bring efficiencies. This is where the private sector can bring innovation. Likewise, better collaboration between public authorities can gain economies of scale or a different operating regime.
- Shrink the footprint of Trusts, local government or Clinical Commissioning Group (CCG) footprint by targeting information technology and change processes to help reduce the requirement for new build or refurbishment area.
- Offer innovative solutions. Outside of Greater London, land costs will rarely provide the solution, and are one-offs, so in working collaboratively with NHs partners or other stakeholders and commercial developers this can provide funding elements in different ways, whether via Strategic Estates Partnerships or other vehicles.
The £10bn requested by the Naylor Report (whilst being possibly toppy in cash terms from the Treasury NHSI position) is unlikely to be received by the NHS quickly enough for the capital demand to continue to grow as buildings and equipment age.
Whilst hopefully the new government will offer a better capital allocation for 2018/19 than the last six lamentable years, we are likely to see a need for continued prioritisation and imagination to progress clinical and estate planning.
At Rider Levett Bucknall, we have worked on numerous projects that use a mixture of capital funds to ensure Trusts can deliver their masterplan and not return to a collection of piecemeal developments. Private sector input to increasing social care is paramount, especially given more than 1.3 million bed days are blocked each year in the NHS alone.
Whether it’s funded through the so-called Phoenix project or Procure 22 as one of the key methods or other initiatives currently available, is less of an issue. Methods of procurement get too much personal promotion.
The key is having streamlined procurement that doesn’t lead to monopoly providers and equally, we do not want a return to individual project-by-project delivery that leads to slow and low-cost solutions that are no more than poor public value solutions.
In these cases, significant project and programme-based good practice learning is lost as each project becomes unique rather than part of a NHS continuing improvement and long-term plan.
Maybe I am cynical, but despite politicians’ new-found love of promising the NHS capital expenditure, having starved the service of access to an adequate supply of capital for nearly a decade, whoever’s in power, the state of the NHS is unlikely to be a quick fix. Revenue affordability needs to be methodically tested to demonstrate best use of capital funding.
With more than 50 sites needing £10m and upwards simply to be safe, not clinically effective, there should be some interesting debates in Trusts and within NHS England. Capital solutions, but well-planned projects are urgently needed. Until this impasse is sorted out, UK construction will have to wait a little longer for higher volumes of work.