West Country Chronicle: A £2.5m bureaucratic nightmare

If you are triggered by NHS bureaucracy, stop reading now.

A magnificent – and depressing – amount of red tape is hampering commissioners in Devon in their desperate bid to save cash as part of efforts to exit NHS England’s special measures regime.

The commissioners are locked in “negotiations” with NHS Property Services, local residents are fuming, and around £2.5m of NHS funds have been wasted.

At the heart of the issue is former ward space at Okehampton and Seaton community hospitals which has been unused for several years.

To understand what’s going on and why this matters, we need to travel back to 2016-17.

Unfortunate effect of reconfiguration

That year, a contract for community services was won by Royal Devon and Exeter Foundation Trust, which saw off the existing provider Northern Devon Healthcare Trust, as part of a reconfiguration by Devon Clinical Commissioning Group.

The changes included closing wards in the two community hospitals – the idea being care was shifted into people’s homes. Ownership of the hospitals was moved from Northern Devon to NHS Property Services, which is owned by the health and social care secretary.

The ward space – being now unused – had no tenant, which meant NHSPS charged an annual “void cost” to Devon CCG. This national policy is in place to incentivise local NHS leaders to make maximum use of their facilities.

Since then, Devon’s commissioning body (first the CCG and now the integrated care board) has been forced to pay around £500,000 to NHSPS every year for space which is not used.

The result is around £2.5m of much-needed NHS Devon-allocated cash being drained away to a national arms-length NHS body, while a frustrated community watches on amid frequent headlines about NHS overcrowding and a lack of capacity.

Ironically, Northern Devon has since been taken over by the Royal Devon. So, had the reprocurement never taken place, the hospitals and services would now be under the same provider, and the ICB wouldn’t be liable for the empty space.

ICB accepts criticism

Now, it is very reasonable to question why on earth Devon’s commissioners allowed this money to be wasted on vacant space over the years without doing anything about it.

The ICB acknowledged this as “understandable criticism” in a paper this month to Devon County Council’s health overview and scrutiny committee.

It said commissioners had allowed a “period of time to embed the new model of care”, then been distracted by the pandemic and the subsequent recovery asks.

Understandable to an extent, maybe. But the gross waste of money also gives us a flavour of the kinds of vexed issues contributing to Devon long being a poor financial performer.

However, the ICB now has a “renewed focus on addressing its financial challenges”, as it languishes in level 4 of NHS England’s national oversight framework – which comes with strict spending controls.

Having identified the vacant space as a potential significant saving, the ICB wants to hand it back to NHSPS, in order to stop being liable for the charges.

In theory this sounds straightforward: There are no local NHS-commissioned services provided within the spaces, and NHSPS has another policy known as the Vacant Space Handback Scheme.

Unfortunately, this policy is aimed only at entire buildings – not unused space within a building – which has led to difficulties between Devon ICB and NHSPS agreeing the transfer.

It is not quite clear why this is the case, although NHSPS – itself no stranger to financial turmoil – may be unsure what it can do with just part of two buildings, the rest of which still houses other NHS services.

Local fury

Meanwhile, local residents have expressed disappointment that local NHS cash is disappearing into a national vacuum.

Seaton’s inhabitants are particularly aggrieved as they themselves raised the funds to build Seaton Community Hospital back in the 1980s and they’re concerned offloading the space to NHSPS will lead to the hospital’s sale or demolition.

The situation is not helped by the fact that efforts to bring the space back into use for the community have been stymied by NHSPS’ market rent, which locals say is unaffordable.

At least the ICB and NHSPS are now meeting around the negotiating table, but progress appears slow.

And time is ticking for the ICB, which said in its paper (regarding Seaton Hospital): “Mindful of the significant financial pressures it faces, NHS Devon needs to end its liability for the cost of the vacant ward space at the hospital quickly.”

The same is true for Okehampton.

And the issue may not stop there, as the ICB is reviewing the use of Devon’s remaining 10 community hospitals – all of which were transferred to NHSPS under the 2016-17 changes. The ICB estimates it spends £1.9m annually on rent and other charges for vacant space. It is important to note that spending on vacant space does not necessarily mean the money is being wasted, if there are valid reasons for maintaining the spend. 

NHSPS told the Chronicle it had an “obligation to use its properties for healthcare and generate the best value from any sale or income, to be reinvested back into the NHS”.

It said it was working with the ICB to “help develop a locality-focused solution which will cover off the challenge of vacant space at both sites”. This would “minimise holding costs for the ICB while remaining in line with policy,” a spokeswoman said.

She added: “While properties are vacant, we consistently seek to minimise business rates through mitigation and exemption where appropriate, such as through empty rates relief.”

Ultimately, the NHS is often praised as being an efficient healthcare system.

But the saga in Devon, where millions of pounds of taxpayers’ money is spent on payments for an unused space to a government-owned national body with little local accountability, highlights a bureaucratic and fragmented system in need of reform.