Strategic estate partnerships: Maximising the value in NHS estate

Since their inception in 2010, strategic estate partnerships (SEPs) or strategic infrastructure and efficiency partnerships (SIEPs) as they are also known, have really started to gain currency as a way of maximising value and aligning the estate more closely with clinical and commercial strategy.

These arrangements involve a trust entering into a strategic partnership with the private sector to provide estate, infrastructure and service transformation solutions to generate value and savings, in
line with clinical strategy.

The model is a flexible, 50:50 strategic partnership that requires both partners to agree on strategy, priorities and outcomes. They are ‘non-exclusive’ arrangements over 15 years allowing the most appropriate partner to be selected to deliver estate and service transformation solutions over time that reflect changes in clinical strategy, service transformation and estate priorities. And they are quick to implement, typically around nine months with light touch legal documentation too. The best way of illustrating the model’s potential is through the real experiences of a number of those that have entered into them.

Red Rose Corporate Services

Red Rose Corporate Services (RRCS), the first strategic estates partnership of its kind, was established in 2010 between Ryhurst and Lancashire Care NHS Foundation Trust (LCFT) to align the trust’s clinical and estates strategies through smart asset management, and open up new ways of securing funding for capital projects.

Since establishment, RRCS has delivered:

• £5 million revenue savings
• Successful project management of the Harbour, a state of the art 154- bed residential mental health facility in Blackpool
• A £20 million saving on the cost of the Harbour through renegotiating an existing ProCure21+ capital project
• Management of the estates and facilities function for LCFT with year-on-year successful delivery of cost improvement programme (CIP) targets
• Successful management of LCFT’s minor capital works programme with an annual spend of between £3 million and £5 million
• £2.1 million savings against overheads, cost avoidance, lease and maintenance costs and 40% reduction in space via a space utilisation programme across the estate
• Planning approval for a new 72-bed residential facility in Blackburn with the planning submission made in 12 weeks from a standing start
• Improved rates of statutory compliance across the estate from 45% to 98%
• Reduction in facilities management costs on a PFI contract through contract enforcement, saving £300,000
• A care hotel facility to support frail and elderly ‘step-up/step-down’ care
• A programme to integrate estates, health informatics and clinical services to improve productivity

In May 2014, the management of LCFT’s estate was transferred to RRCS, along with a number of Ryhurst’s dedicated senior operational team.

RRCS has full estates and facilities budget responsibility and an obligation to achieve CIP targets. It is now the only part of the trust’s activity where there is true financial accountability for delivering savings.

RRCS is also generating an income through delivering services to other organisations, such as Burton Hospital NHSFT, eLIFT Cumbria and Fylde & Wyre clinical commissioning group.

University Hospital Southampton NHS Foundation Trust Commercial Estates Development Partnership (UHS CEDP) joint venture

The UHS CEDP is a joint venture (JV) between UHS and Interserve Prime (IP) incorporated in May 2014 to enable the trust to develop a varied programme of facilities at pace through flexible contract and funding options.

The initial programme of new facilities identified in the procurement, includes a welcome centre with main entrance and retail area (MERA), a new car park, a patient hotel and a private patient treatment centre.

The MERA was first of these to financially close in March 2015. IP was able to secure some of the biggest names in retail, providing a sound and attractive prospect to investors.

Following consultation in March 2015, plans for a new multi-storey car park and improved access arrangements have been submitted for planning approval.

The partnering agreement is based on a principle of non-exclusivity, which means the trust retains flexibility to decide the appropriate partner for its estate projects in the future.

A clear mandate and a programme to deliver have been key to making this partnership work and UHS was careful
to do the necessary groundwork prior to procurement; investing time at board and staff level, as well as with governors and external stakeholders, to secure buy-in for the partnership and the projects to be delivered through it.

Nick Johnson, development projects director at UHS, said: “In common with other trusts, we need to develop our infrastructure to improve patient, visitor and staff experience but face challenges of limited capital, capability and capacity. IP is already helping us realise the commercial opportunities of key aspects of our estate to begin to transform our site and raise income, which can be invested into patient care.”

Yeovil Estates Partnership JV

The JV between Yeovil District Hospital NHS Foundation Trust (YDH) and Interserve Prime (IP) was created in November 2014 to develop and deliver a master plan to achieve YDH’s strategic vision.

Yeovil is one of NHS England’s 29 vanguard areas and YDH is working with local GPs, other providers and commissioners to become a multispecialty community provider (MCP), with the rural district general at its heart. Six months in, the partnership is already helping to unlock the opportunities within the hospital site to transform service delivery, optimise capacity and improve the patient, staff and visitor experience.

Key projects already underway include detailed plans for a multi-storey car park and link road to increase parking capacity, improve accessibility and release land for further development, including a potential primary and community care facility with on-site GPs.

Other current projects include exploring options to improve main entrance and retail facilities; new facilities for a potential healthcare careers college, and reconfiguration of the special care baby unit.

The 15-year partnership is enabling the trust to fully explore all its options based on a complete understanding of the trust’s individual financial, strategic, operational and clinical requirements. This ensures any options put before the trust board are realistic and fundable, as well as identifying opportunities for the trust to earn income, which can be reinvested into frontline services.

The partnership is managing all development, design, construction and FM services, as well as identifying the best value funding solutions for new developments.

Tim Newman, chief finance and commercial officer, said: “We are delighted to be working with IP who were appointed following a competitive tender process, and are already helping us progress opportunities to unlock value in our site.”

Wight Life Partnership LLP

In the future, the Isle of Wight (IoW) NHS Trust will deliver less healthcare from the St Mary’s Hospital site and more in community buildings and patient homes across the island to meet local need. The trust has recognised it does not have the expertise and capital funding to manage the significant changes that are required across NHS buildings and land to enable it to deliver the vision of ‘quality care for everyone every time.’

The partnership between the trust and Ryhurst was created in November 2014. Wight Life Partnership LLP is the first non-foundation trust SEP of this type to be agreed, paving the way for other non-FTs. Non-FTs need the Trust Development Authority’s approval, although the Department of Health confirmed in January 2009 that the secretary of state would be supportive of joint venture solutions. Ryhurst’s approach helped the Isle of Wight NHS Trust overcome these challenges.

Working with Ryhurst will give the trust wider and more flexible access to the capital needed to develop its buildings and land. Ryhurst additionally brings expertise to enable the trust to exploit commercial and service development opportunities as well as providing strategic advice and support. Karen Baker, trust chief executive, said: “We took our time to select Ryhurst as a partner for our organisation as this will be a long term relationship. We needed to be sure that working through this Joint Venture will deliver state of the art services for our patients.”

Ryhurst has developed the concept of SEPs with other NHS partners and can help IoW improve performance and efficiency by bringing new ideas and lessons learnt from work delivered elsewhere with other trusts.

At Bevan Brittan, we have advised on five SEPs established nationally (advising either the public or private sector), including the partnership between Ryhurst and Cheshire & Wirral Partnership NHS Foundation Trust. We are also actively involved in advising on other SEPs/SIEPs in procurement.

I believe that the model offers significant, positive opportunities for FTs and non-FTs to deliver genuine efficiencies and support service and estate transformation driven by clinical strategy. They are something that a wide range of trusts may want to carefully consider, alongside other procurement options available, including NHS LIFT.