The NHS owns empty or under-used buildings and land that could be sold for £1.45bn, saving a further £521m in revenue costs each year, according to a new study seen exclusively by HSJ.
Space analysis of the NHS estate
Research by consultancy EC Harris said there were large scale inefficiencies in the use of space. It analysed Department of Health data showing 3.3million square metres of “empty” or “under-utilised” space across the NHS estate.
The research comes as NHS deputy chief executive David Flory told the Parliamentary Health Select Committee on Tuesday that the Department of Health had set up a team to look at the efficiency of the NHS estate. The committee was told “there is a lot of potential for savings.”
EC Harris partner and report author Conor Ellis said: “The NHS has to get away from seeing capital as a free good, that you don’t have to think about the cost of or if it can be used more efficiently.”
The EC Harris report outlines the means and benefits of disposing of the unnecessary land and buildings - from reducing the number of specialist treatment and seminar rooms to getting better prices for the sale of surplus land.
The £1.45bn figure is the estimated receipt for selling 50 per cent of this redundant space. The sum is based on an asset value of £868 per square metre, arrived at by dividing the gross internal floor area by the value of the NHS estate.
The report states: “From studying the estate we are of the opinion that the NHS contains significantly more land than is necessary and should work to get a proper maximum value out of the assets they are foregoing.”
It recommends trusts hiring agents and developers to ensure this, citing a case where commercial developers neighbouring an NHS trust got their land re-designated to allow the construction of residential property, while the trust’s own surplus remained in a less valuable category.
The report also backs the idea of creating land banks, which collect all redundant space from throughout an organisation and can make disposal easier. These would be particularly useful once land prices began to rise again.
EC Harris’s Mr Ellis acknowledged the barriers to effective disposal created by the ageing nature of the NHS estate, but said trusts “should be looking at filling up the core of hospitals then demolishing outlying buildings and getting rid of the land.”
The EC Harris research claimed the NHS uses an average seven per cent more floor space to house “back office” services than the private sector. Health Finance Managers Association deputy chief executive Chris Calkin said he was impressed the difference was only seven per cent given the NHS’s need to store large amounts of data.
Mr Calkin added the higher design specifications around infection control, privacy and dignity for modern hospitals meant space wasn’t always used as economically as in the past , for example hospital beds, which used to be placed 2.9 metres apart, now have to have a gap of 3.6 metres.
He told HSJ that NHS finance directors were addressing the issue of estate efficiency, but that the EC Harris research was “helpful”, as it demonstrated “there is scope to improve the use of the estate.”
- The full EC Harris can be viewed at www.hsj.co.uk/estatesreport
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