Why strategic estates partnerships are a big thing

The health service is facing a major challenge. By 2020-21, NHS trusts are required to deliver £22 billion of productivity improvements and savings, at the same time as patient demand escalates. This pressure to achieve year on year sustainable efficiency savings, without impacting front line services is placing greater and greater strain on an ageing trust estate.

Yet, Sir Robert Naylor’s recent review has stressed that the NHS estate holds the key to helping trusts to respond to these challenges – meeting modern standards of healthcare, as well as delivering the necessary cost savings.

Strategic Estates Partnerships – a new approach to NHS estates strategy – are at the vanguard of the response to these challenges. Through SEPs, NHS trusts have started to successfully collaborate with private sector firms, forming partnerships which generate savings, drive efficiencies and identify new ways to earn income from their estate, bringing trusts in line with their clinical strategy and integrating services.

A promising model

Since the initial SEP was established in 2010, eight plus SEPs have started operating in the UK, realising significant estate and clinical efficiencies. The outlook for the model is very promising, with several SEPs at preferred bidder stage and a healthy pipeline of forthcoming bids, indicating that 2017 will see an acceleration in the number of trusts taking heed of Sir Robert’s review and turning to this approach.

SEPs are offering trusts a new, more effective and transparent method of public private partnership, with inherent flexibility and giving access to private sector skills, finance and resources

The ability to increase efficiency and deliver cost savings are critical benefits attracting a greater number of NHS trusts to SEPs, empowering trusts to reduce operating costs, generate additional income and identify surplus property, the sale of which allows for reinvestment in the estate and a reduction in backlog maintenance.

The recommendations of the Naylor Review are further spurring this attitude, calling for the NHS to adopt a more “commercial approach”, stating that the NHS can raise nearly £6bn itself by selling land and buildings. Given that the NHS estate is the third biggest expense after staff and drugs and in England totals 6.9 million hectares – an area that would cover the City of London 10 times over – the rationalisation of this estate must play a crucial role in delivering the required cost efficiencies.

SEPs are also a catalyst for the sharing of property, particularly with social care and the wider public sector and are bringing trusts in line with One Public Estate, driving efficiency and creating savings through bringing together health and social services, improving service quality and freeing surplus estate for disposal.

The model’s ability to help reconfigure the NHS estate to better meet commissioning needs and to deliver this more integrated service is increasing their popularity amongst NHS trusts. As Clinical Commissioners increasingly look to implement Sustainability and Transformation Partnerships, many of which look to reshape the nature of operational estate, SEPs will empower trusts to move services closer to the community and to integrate services.

The health sector is undergoing change, with initiatives such as vanguards and accountable care organisations driving a new approach toward collaboration and service delivery, requiring an estate capable of meeting these new models.

At a time of transformation, the model also offers the NHS access to much needed resourcing and private finance. By sharing the responsibility and risk with the private sector partner, SEPs are enabling trusts to bring forward innovative developments, whilst retaining strategic control of outcomes.

Where the Private Finance Initiative has been seen as inflexible, SEPs are offering trusts a new, more effective and transparent method of public private partnership, with inherent flexibility and giving access to private sector skills, finance and resources. The model is a 50:50 strategic partnership that requires both partners to agree on strategy, priorities and outcomes and typically agreements are for an initial 10 year period.

Also attractive to trusts is the fact that SEPs are quick to implement, typically around nine months with a “light touch” legal documentation consisting of a partnering agreement, managing services agreement and an LLP agreement.

To meet the challenge of tightening purse strings whilst simultaneously evolving standards of care, the NHS must be bold and innovative in its approach. Spurred on by growing calls for the NHS to look to its estate to address these challenges, trusts will increasingly turn to SEPs as the model has the potential to help trusts deliver on this task by unlocking value and driving efficiency and savings, producing a more clinically focused, flexible and modern service.