NHS Property Services is an organisation with 10% of the NHS estate and a primary focus on property management. It has a chance to provide leadership to the healthcare sector. A key challenge is how best to structure the estate in order to promote the delivery of high-quality patient care in the most flexible and efficient way.
NHS Property Services’ £3bn estate, inherited from 161 primary care trusts and strategic health authorities, was previously in a structure where landlord, funder and commissioner were the same entity.
As a result, many occupations were allowed on a casual basis and the portfolio presents unique challenges and opportunities.
Extent and priorities
The estate amounts to 3,100 sites with over 3,700 holdings and with 7,375 occupations. Alongside offices are hospitals, health centres and GP practices, all delivering vital patient services.
If informed decisions are to be made about the most effective and efficient ways to deliver better healthcare, this estate must be managed professionally and strategically, in partnership with commissioners and in line with the property priorities set out in NHS England’s Five Year Forward View.
NHS Property Services’ priorities for the first year of operation were to stabilise cash flow, improve rental recovery and achieve value through the disposal of assets deemed surplus by the NHS. By December 2014, 113 properties had been disposed of, providing land for 1,567 new homes, and over 50 new developments had been managed. Efficiency savings of £55m should be achieved by March 2015, with all operational cost savings returned to the NHS.
Documentation and clarity
By the end of 2014, a programme to document every occupation in the estate had been accelerated, applying industry best practice to all. The inherited business was redesigned to ensure that the organisational structure and skills were in place to deliver an intensified programme, along with the right quantity and distribution of skilled professionals.
A panel of solicitors was needed with the experience and capacity to roll out nearly 5,000 commercial heads of terms and, eventually, a similar number of leases. The panel of 11 firms was announced in May 2014. Its central property adviser is now at an advanced stage in consulting and drafting.
Although high levels of standardisation are a necessary aim, terms for each occupier will depend on whether it has a freehold or leasehold interest, whether the occupation is of the whole or part only, and on the type of occupier.
GP practices will not have the same terms as office occupiers and publicly funded occupiers will not have the same terms as privately funded. Individual tenant reviews will continue looking at the space they occupy and heads of terms will be tailored to the circumstances of occupiers.
Despite a previous culture of casual occupations, there is demand for greater clarity. Many occupiers understand that documentation is the bedrock of the landlord-and-tenant relationship; it provides clarity about responsibilities and liabilities on both sides, backed up by legal assurance. It provides certainty: everybody knows where they stand from the start, as matters progress and in the event of any change of ownership. It informs the ongoing dialogue between landlord and tenant and leads naturally to better relations.
However, legal documents are only part of the process. The aim is to produce such an accurate picture of the holdings that the estate can be managed in a strategic way and investment prioritised. Alongside an existing programme of valuation the following will be carried out:
• property surveys of all buildings and production of accurate floor plans where none exist;
• verification of all information held about individual properties and storage in a consistent way;
• reaching agreement for space used and the basic terms on which it is occupied, such as the appropriate level of rent and the length of a tenancy.
Partnership
As custodians of a tenth of the NHS estate, NHS Property Services can focus on providing the best environments for care while doctors, nurses, managers and other colleagues across primary care and the wider NHS concentrate, undistracted, on clinical priorities.
Simon Holden is the immediate past chief executive of NHS Property Services
