Cheques and balances in NHS Estate

You are a foundation trust looking to procure new premises. How can you plan for that?

What are the structures and funding options?

PF2 – Papworth’s new state of the art facility, a newly located hospital in Cambridge next to Addenbrooke's will be opening this year! However there is no pipeline apparent and the Liverpool and Midlands hospital schemes have suffered delays from the Carillion collapse. If a Trust wants to use this model it should choose its partners and their supply chain carefully through a robust procurement exercise . This could provide a model for the future.

P21+ Can be used to deliver new buildings inside or outside the umbrella of existing PFI projects. Change notice can be served on the Project Company partner to amend the Project Agreements arrangements enabling you to build further facilities.

NHS LIFT – Lift Companies still exist and operate over half of England. There are precedents of acute and mental health providers acceding to the strategic partnering arrangements enabling them to make use of this structure.

Strategic Estates Partnerships – If you have land to contribute this can be an affordable way of upgrading your estate. By putting in land for residential or other development in return your premises can be provided and upgraded and there are no (or significantly reduced) ongoing costs.

What do you need to look out for?

  • Existing loan commitments to DHSC – these will include a requirement for consent.
  • Balance sheet “trips” – You may be offered money but if the deed is on your balance sheet it will go on the Government’s and that may provide an obstacle to getting consents from NHS I, DHSC and/or Treasury as required. 
  • There has been a move to think innovatively including repaying a PFI loan at Northumbria Hospital through borrowing from the Public Loan Works Board via its local authority, devising strip income structures, exploring how Trust development could be used to provide investment for local authority pension funds and using fundraising charitable arms of Trusts where they have significant endowments. Operating as well as Finance leases are now deemed to be on the balance sheet. 
  • More than ever compliance and attention to safety is key – the ongoing Grenfell enquiry is a stark reminder of how buildings can be built or upgraded and not be fit for purpose – many Trusts need to spend significant sums to meet standards and comply with fire safety requirements.

What is coming down the track?

  • More (or less) autonomy for FTs? Following up on their Public Accounts Committee appearance, NHS Improvement wrote to Meg Hillier, the Chair of the committee, in March of this year, referring to the statutory power of FTs to establish and participate in companies and saying: “NHS Improvement does not currently have any specific oversight in that regard: in the past this wider power has been considered to be one of the foundation trust “freedoms”.”

    Indeed NHSI say, “NHS Improvement’s Resources Committee has asked for some work to be undertaken to look again at the question of oversight to ensure we are striking the right balance between regulation and the freedom foundation trusts have”, so we anticipate that we might see further developments on this.
  • More reforms? Murmurings around the possible unravelling of some of the 2012 reforms could result in a change to who will have the power (and resources) in relation to new development. 
  • New integrated bodies? Where bodies have both commissioning and provider roles it may be easier and faster for decisions regarding estates planning and investment to be made.
  • Less long term ownership? Space may start being used in more of a “pay as you go” basis – note recent news of an interesting development in “step down” care where an entirely speculative care home development next to Broomfield Hospital in Chelmsford is now being booked on a floor by floor basis to accommodate patients needing sub-acute care. Early signs show that this benefits the patient who is less likely to be readmitted and whose return to home can be managed in a more gradual way and provides capacity for other patients who need the acute care. 
  • More sub-acute, clinically competent care homes, local and personal home treatment? This would reduce both the need for so much acute space and the pressures on accident and emergency units. 
  • “Project Phoenix”? We anticipate now this will be rolled out later this summer. Its vision is to provide 6 new regional development PPP companies to support facilities re provision and estates management across England. 

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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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