The EG Interview: NHS Property Services’ Martin Steele

Martin Steele, chief executive of NHS Property Services, tells Emma Rosser how the Covid-19 crisis has given his business a chance to reset – and how he plans to grasp that opportunity. “There was a moment of clarity. You do some quick maths and you think: blimey.” Martin Steele, chief executive of NHS Property Services, is recalling the moment in mid-February when he was told of a worst-case scenario of peak Covid-19 cases that would outstrip the health service’s bed capacity 25 times over. “I remember that day vividly, thinking we need to do something differently here, and it all changed at that point,” he says. “It was all hands to the pump. It became all-consuming.” NHSPS is the largest single owner of NHS property. The private limited company, owned by the Department of Health and Social Care, owns around 10% of the NHS estate – some 3,300 individual buildings, largely in primary care. Steele, who was then the company’s chief operating officer, took the chair of its coronavirus incident team, as well as joining other task forces, and NHSPS roared into action. Extra capacity At the start of March, the NHS had just over 4,000 intensive care beds. NHSPS identified 41 sites with capacity for around 1,400 more, including out-of-action locations and other space that could be freed up by working with local NHS trusts. To date it has transferred sites for more than 630 beds. “Everything we could lay our hands on, we would convert,” says Steele. “Rather than waiting for a grand plan, we knew it was in our gift to do it, and we took a decision.” But it is arguably people rather than places that have been NHSPS’s biggest contribution during the pandemic, thanks to its 5,000 front-line workers. They started at Arrowe Park Hospital in Wirral, deep cleaning and preparing the site for the quarantine and testing of 32 passengers of the Covid-19-struck Diamond Princess cruise ship. And with NHSPS hit by an absence rate of 17% owing to the pandemic, the company hired more than 400 temporary employees, with its job ads receiving 1,800 applications. NHSPS has shouldered much of the cost, with deep cleans and site closures paid for via a central Covid-19 fund. Steele says the company tracks the costs “religiously”. While the organisation is under huge pressure to reduce outgoings, he says he wants to maintain this pace and use it to change the business: “I see this as a reset point.” On the ground Steele is a facilities man. He spent nearly a decade at BT focusing on property services, the final five years of which he was managing director of facilities services. His appointment as COO at NHSPS in 2017 marked a shift for the company as it focused on services. His promotion to chief executive at the start of April this year is a further commitment to that. Since 2015, NHSPS has grown from 3,500 to 5,600 direct employees, with plans to reach around 6,000 by the end of the year through a switch from outsourcing to in-house facilities providers. That has reduced costs and means the company can respond more quickly in emergencies such as the Covid-19 crisis. It has also introduced new technology to track and measure services. “Every single day, as an organisation, we deliver between 3,000 and 4,000 planned and reactive routines,” Steele says. “Imagine controlling that activity on spreadsheets. You couldn’t tell what levels of service you were performing at, jobs got lost – they weren’t tracked.” Problems over a lack of data have been a running theme for the company, causing issues across the estate since its inception in 2013. A scathing public accounts committee last November reported that NHSPS had been “set up to fail”, with 70% of tenants lacking rental agreements, leading to disputes over bills and soaring debt. In its most recent full-year accounts, to the end of March 2019, the company said: “Debt recovery remains problematic… Occupational data which drives billing and NHS system constraints continue to be issues impacting payment.” NHSPS has £700m in unpaid rents, with £110m already written off, legal challenges on further sums, tenants in dilapidated buildings unable to agree and pay their rents and an estate that is rapidly depreciating in value. In the red Steele pauses when asked what NHSPS is doing to get out of the red. “There are some things within our organisation that I think we ought to have fixed before now and are in our gift to fix,” he says eventually, quickly shifting the conversation back to facilities management, where the company saved £38m in the last year. “There are other areas – occupancy and documenting the estate – where it is not quite in our gift to do that,” he adds. “There are a number of parts that have got to come together to make that happen.” NHSPS appears to be no closer to overcoming legacy issues that have hindered its asset management ambitions. Last year, tenants took an average of 214 days to pay their bills. “Not having a lease in place is quite a challenge,” Steele says. “Do you force a lease or get some different type of an agreement?” The challenge means discussions over debt have now had to be separated from property development and disposal strategies. In the past six years, NHSPS generated £347m through selling property that clinicians have deemed surplus, generating gross receipts of £38m in 2018/19. During the Covid-19 crisis, the portfolio optimisation team was scouring the country for every scrap of space it could convert to critical care beds, but now the focus is turning back to disposals. “Coming into the public sector, I’ve learnt that the pace of change can be a bit pedestrian,” says Steele, referring to the real estate strategy. As well as beefing up the facilities management business, he would also like to see real estate activity ramp up: “What is changing is our approach to that, trying to expedite and accelerate those decisions and not letting historical legacy items get in the way.” A new strategy While firefighting during the pandemic, NHSPS has simultaneously rolled out a new strategy to cut costs and expand its operations. The year before last, the business shaved £36m from costs. Last year the figure was £48m, and this year it has a target of £33m. “It’s the best part of £120m non-recurring costs, every single year,” he enthuses. “We’ve got to get our bills right – we’ve never got them right properly,” says Steele. He has earmarked measures such as switching the estate to a broker model and the use of renewable fuels, and is now considering cutting back on NHSPS’s own headquarters leasing arrangement, following a flexible workspace initiative launched last year. A new three-year strategy will ultimately see NHSPS grow its services across a larger share of the health service, including acting in a consultancy role to support property that is outside its ownership. At the start of the pandemic NHSPS loaned the Royal Devon and Exeter NHS Trust one of its property experts to help advise on a transaction with a private landlord that converted a former Homebase store into NHS Nightingale Exeter. “One of the brilliant things to see was the collaborative effort, everywhere, when something needed a change,” says Steele. “We are not going to go back to bringing all those bureaucratic layers back in.” As the NHS is prepared for a second or even third wave in the pandemic, so too is NHSPS. “The machine is working,” Steele says. “If there is a second spike in Covid-19, we are in a much better position than when it came around first.” After a decade of warring with customers over leases, it is using the experience to change this and drive forward the renewed real estate strategy. “Paradoxically, the Covid-19 situation has enabled us to develop many more deep-seated relationships with our customers. We’re not going to lose that.” To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette