Building the NHS

Providing services to the NHS can be bewildering. It’s a vast organisation that uses its own jargon and procedures. Building guidance and standards are described in health technical manuals and building notes that are often incomplete and poorly aligned. But it’s an expanding global market where the UK commands respect and the people are mostly highly committed to improving care and wellbeing.

Compared to healthcare systems in 10 other countries (Australia, Canada, France, Germany, Netherlands, New Zealand, Norway, Sweden, Switzerland and USA) the NHS was judged most impressive overall by the Commonwealth Fund in 2014. It was rated the best system in terms of efficiency, cost-related problems and effective, safe, co-ordinated and patient-centred care. It also came second for equity. 

However when it comes to buildings and infrastructure the NHS fares less well. The last 20 years have seen major capital investment in many large acute hospitals through the Private Finance Initiative (PFI) and Local Investment Finance Trusts (NHS LIFT and LIFT Express), but much of the infrastructure is in poor condition and many buildings predate the foundation of the NHS in 1947. There are about 2,300 hospitals and 8,000 GP practices in the UK, plus services delivered through other community based accommodation and care homes.

Same but different

At national level, the NHS is managed by different organisations. Although priorities and standards differ, Scotland, England, Wales and Northern Ireland have many commonalities. The overall NHS budget is just under £110bn: despite a significant increase in expenditure over the last 20 years the UK spends a broadly average proportion of its GDP on health in European terms – 9.4 % of GDP in 2011. This compares to 17.7 % in the USA, 11.9 % in the Netherlands, 11.6 % in France and 11.3 % in Germany.

The annual NHS construction budget in a steady state is likely to be around £2bn, although the recently published UK National Infrastructure pipeline identifies £1bn to £1.4bn a year on major healthcare projects.

Selling to the NHS client requires an understanding of the service structure and management organisation. In England, the concept of the market has introduced Community Commissioning Groups as purchasers and the primary care management layer; they in turn purchase services from secondary and tertiary services. This is not problem-free.

The problems of the NHS are less the capacity of the infrastructure, than its efficiency and effectiveness. The financial climate across the NHS suggests internal inflation will continue to outstrip funding, so year on year savings will be needed. ‘Efficiency savings’ have limits and we are moving towards possible service mergers and hospital closures.

The capability of many NHS organisations to implement change is doubtful amid economic and regulatory pressures. The NHS Confederation says the average length of tenure for an NHS chief executive these days is 20 months and leadership turnover is clearly a factor in some of poor performing trusts. Although there is evident need for strategic estates planning only the stronger and more stable  organisations will be able to plan effectively.

There are three broad areas the construction industry should consider when making an offer: asset utilisation, sustainability and operational efficiency.

Several recent reports have noted that the NHS has capacity to dispose of land and buildings, although historically there have been well publicised examples of NHS land being sold for poor value. There are evidently opportunities for development partnerships with the private sector, such as local asset backed vehicles.

Although many activities make acute hospitals high energy users, the sustainability performance of the estate is poor. It emits   2,840m kg/y of CO2 – equivalent to 550 Boeing 747s crossing the Atlantic and back every day. The big gains are in rationalisation and improved utilisation, where savings in energy costs can help deliver a more resilient core estate. The impact of climate change is poorly appreciated but can affect the whole system performance. Experience from other countries, for example deaths at the Memorial Medical Centre New Orleans after hurricane Katrina or the Paris heat wave of August 2003 that led to 14,800 excess deaths, point to a need for a strategy for climate change equivalent to pandemic planning.

Fragmented finances

Utilisation levels are often poorly reported and there is often a fit between the efficiency of the estate and the value in terms of clinical impact and staff cost. The capital cost of a hospital department represents about 2.5% of its operational cost over 30 years.

In the past, capital investment was detached from revenue impact and determined by Capital Investment Manual procedures and central capital allocation. Now procedures in England are fragmented with financial control governed by a variety of bodies including NHS Monitor, the Trust Development Authority (TDA) and the National NHS bodies. Increasingly investment must be justified directly in revenue terms, which can be short-life.

Over 80% of NHS interactions with the public take place in primary care, mainly GP surgeries and health centres. The investment cycle of the 1970s and more recently through NHS LIFT and HUB has provided some impetus, though the results have been varied. Capital commissioning structures are weak, particularly in England. However, the shift towards a primary care-led service and the prospect of structural stability will see increasing demand for integrated primary health and social care facilities.

Health boards, NHS Trusts and Foundation Trusts dominate the provider side and act as client for larger healthcare projects. They own the bulk of the estate; employ most staff and have most room to improve operational efficiency. Trends worldwide mitigate towards fewer, larger and more specialised acute hospitals serving larger populations and offering better care more efficiently with fewer staff. The design and construction challenges are in consolidating and adapting hospitals to do more with less.

Construction procurement can be messy and deliver poor value. Frameworks are proliferating fast. There is concern to drive down cost and often poor definition of scope or overarching objectives. Frameworks such as NHS SBS or LPP are used by firms needing an undertaking for payment of a percentage of design or construction costs from participating consultants.

The Public Private Partnership (P3) investment and development vehicles PFI, PF2, and NPD are all still active despite a public sense that they give poor long term flexibility. UK procedures are mature but there are high entry barriers to the market where construction companies carry substantial risks and consultants must demonstrate a wide array of prior P3 success. This has become an increasingly small pool in what has been a difficult market place.

The smaller developer frameworks of Express LIFT and LIFT are coming to an end. NHS frameworks were established when securing a construction partner was difficult. These frameworks have brought together experienced consultant and contractor teams: Procure21+ in England, Hub (Scotland), Design4Life (Wales) and Performance Related Partnering (Northern Ireland). At face value they should be closed to the established teams but consultants are regularly novated into the framework. This undermines framework coherence benefits but can give smaller consultants a way in.

For a new market entrant the best approach is to establish a relationship with the Estates Team at your local NHS Health Board or Trust. Expect not major commissions, but to consult with a wide range of project stakeholders rather than a single client. Look for opportunities to work across the NHS and third sector charities or private health providers. 

Christopher Shaw is senior director of Medical Architecture and chair of Architects for Health