Properties of a prosperous estate

Although only high-level details on the government’s decision to establish a new publicly owned company to manage the majority of the primary care trust estate are available, this new entity could present one of the biggest opportunities for the NHS to modernise the way it runs its vast property portfolio.

Not only will NHS Property Services (Propco) be responsible for more than two thirds of the entire PCT holdings - around 3,500 of 5,500 properties - it is also set to be a driver for greater efficiency in the estate, freeing resources to improve properties and invest in frontline services.

A timetable is emerging that anticipates the first stages of the property transfer by the end of the year, with the final parts of the estate changing hands on 31 March 2013.

But how will Propco manage such a large portfolio? How will it manage the properties with a level of dynamism that exploits these assets, while reacting to the changing needs of health providers? Particularly at a time when healthcare provision is responding to huge change as well as unparalleled financial pressures. How will it balance its strategic national view while still reacting to local needs?

Propco is expected to introduce a new discipline into NHS estate management and be a more demanding landlord for its many provider tenants. This makes some sense. On the one hand, greater discipline in ensuring proper rents are paid could encourage a more economical approach to the use of resources. It will not necessarily bring in additional income as, ultimately, most rents are paid from NHS funding. But it will level out the playing field for other providers and may help foster more imaginative and cost-effective use of floor space.

Local authorities and GPs in health accommodation have already been warned to get their leases in order and prepare for rent increases. Some of this may be scare mongering, but it points to the way that Propco can strive to be a more commercial and effective landlord than PCTs could be. Their hands were tied, since they also commissioned health services from tenants.

Windfall

The data collection exercise on surplus NHS estate also painted a revealing picture of where greater efficiency may lie. Some 150 PCT-held sites were identified, of which about a half were on the market or in the process of being sold. The data excluded sites under 2,500m2, houses and agricultural land.

A number of these disposals will fall to Propco to see through to completion, given the speed with which sales often progress. This will not only give Propco an initial windfall, but also an opportunity to prove it can add value by accelerating the disposal process and in targeting improvements financed by the capital released.

Many personnel involved in estate management could transfer to Propco, which will reach out to the health community from local hubs at what is currently PCT cluster level. Estates decisions are already being taken at this level, in the transition to abolition of PCTs. No doubt the government is already learning lessons that should ensure a seamless transition into Propco.

This geographical re-balancing of management and the critical mass of the estate should provide a multidisciplinary workforce that can push through projects in a way that small manpower units never could. But is this just a little more localism than was achieved when the health secretary held all NHS property and managed it through regional health authorities?

The most intriguing aspect about Propco is that it is entirely property focused and could set its own agenda - and standards. Local Improvement Finance Trusts have done sterling work raising the standards of urban primary care accommodation and keeping the estate maintained, but now is the time to look at neglected areas and bring further improvement to the estate. As energy costs spiral, it would be a sound investment for Propco to set itself targets for improving energy efficiency in the estate. It will have the economies of scale and income streams to roll out a significant improvement programme.

One logistical challenge will be to ensure that Propco enables local initiatives and does not block service provision. Will Propco’s interest as a landlord wanting to achieve full occupancy clash where service provision planning suggests the benefits of relocation of a particular service/provider? How will Propco prioritise new developments? Will it initiate change or react to requests from commissioners or providers?

Realising the possible savings and receipts may be difficult to achieve, but a philosophy that challenges old methods and invests in new concepts will hopefully be Propco’s gift to property management.

There are still more questions than answers, but Propco and the future environment for NHS estate is now at last beginning to take shape.

Graham Dupree is head of healthcare property at Mills & Reeve.