1 Healthcare The role of real estate June 2014
2 Background 1. The British Property Federation (BPF) is the voice of real estate in the UK, representing businesses owning, managing and investing in real estate. This includes a broad range of real estate developers and owners including public and private companies and fund managers, as well as financial institutions and those professions that support the industry. In the context of health and care, this includes investors in the full spectrum of healthcare infrastructure, from GP surgeries and other primary care facilities, through to hospitals, care homes, and a range of developments that facilitate retirement living. 2. We submit that private sector expertise and investment in healthcare infrastructure will be an integral part of the forward-thinking, joined-up estates strategy that will be necessary to adapt to the dramatically changing healthcare needs of the future. We would be pleased to elaborate on any of the points below and to provide additional information as required. Executive summary 3. The health and care services that we need have changed dramatically since 1948. We are living longer, our population is larger, and as medicine has advanced our healthcare needs have evolved. Reforming health and care to match these needs will be all the more difficult in an era of constrained public finances. 4. Private sector investment in healthcare infrastructure will be vital to meet these challenges, in terms of updating our existing property, much of which was in use when the NHS was founded 66 years ago; in delivering a new generation of healthcare facilities with the ability to realise the vision for 21st century healthcare, improve patient outcomes and generate savings for the public sector; and by helping the NHS to manage its surplus estate for the benefit of patients, local communities and the wider economy. 5. In light of this we would urge that: Politicians of all parties recognise that we face a crisis of healthcare infrastructure, and in response develop a strategic vision for healthcare estates that is used to guide local decision making and help bridge the many silos within the health and social care sectors. Greater attention is paid to the optimisation of the existing healthcare estate, which at present is hampered by its fragmentation amongst many different bodies whose goals are local and who often have no incentive to use surplus land and buildings to benefit other parts of the community. Any future government takes care not to further change the structure of organisations responsible for commissioning new healthcare facilities. There has been paralysis of decision-making with regard to upgrading primary care s infrastructure capacity, and we fear that further structural reform may prolong this paralysis.
3 Healthcare - the role of real estate The urgent need for private sector investment in our healthcare infrastructure 6. As the number of elderly people grows in the coming decades we face a crisis of healthcare infrastructure that is not yet recognised by any party. While major transportation and energy projects are feted by politicians, the need to rebuild our health and social infrastructure around the needs of our communities is entirely missed. Without appropriate facilities for primary care and elderly care, in the form of fit-for-purpose medical centres, retirement developments and care homes, it is inconceivable that we will adequately manage the future volume of people being cared for in the community and solve the vicious circle where patients inevitably seek care in hospitals which are not designed for their needs. In the primary care sector it is estimated, for example, that half of all surgeries have asbestos, and that around 4,000-5,000 GP surgeries are unfit for purpose. Similarly, much of the care home sector is of poor quality and faces obsolescence it is thought that 70% of stock is over 20 years old. 7. To tackle this, there needs to be a strategic vision for healthcare estates that is used to guide local decision making and join together the many silos within the health and social care sectors. This requires real expertise in property management, strongly guided by clinical and care needs as articulated by medical professionals. 8. The healthcare infrastructure needs of the country will take many decades to fulfil at the current decision-making speed. There is a strong argument for accelerating this investment so the primary and social care sector can get ahead of the curve and create real benefits for the wider healthcare estate, rather than be forever playing catch up. More efficient premises make for a less expensive service. Making better use of the NHS estate 9. There is a huge opportunity to release value from the surplus healthcare estate and to invest these receipts in health and care infrastructure. However, the optimisation of the existing healthcare estate is hampered by its fragmentation amongst many different bodies, whose goals are local and who often have little or no incentive to use surplus land and buildings to benefit other parts of the community for example, in providing assisted living accommodation, or mental health facilities. Good practice of course exists, but there is no single expert organisation taking on the task of challenging the clinical and care organisations in their use of redundant facilities or to release value by relocating services. To achieve this government will need to establish a strategic vision of and accountability for the healthcare estate. The need for certainty in commissioning primary care facilities 10. We would caution against introducing a further change to the structure of organisations that the Health and Social Care Act 2012 (England) created. The move from Primary Care Trusts to Clinical Commissioning Groups has created paralysis in the commissioning of new healthcare facilities, as well as causing expertise and value to leak from the system. The CCGs have still to deliver their five-year strategies some 15 months after they were formed. It would be disastrous to start all over again, further delaying action.
4 11. This paralysis of decision-making has been particularly acute in regard to upgrading primary care s infrastructure capacity. New primary care facilities have the potential to realise the vision of integrated, whole-person care, and to deliver services at less cost while improving patient experience and health. This paralysis may well be prolonged if decision-making bodies are changed again. 12. As many GPs recognise, we need larger facilities capable of handling the more diverse services than doctors surgeries have traditionally delivered, such as diagnostics, outpatient consultations and other procedures that at present are located, needlessly, in hospitals. The development of such facilities is all fundable out of savings achievable elsewhere in the system, but achieving these savings will require collaboration between all the health and care bodies as well as local authorities. 13. At present, primary care premises are supposed to be funded by Local Area Teams, but they have no specific ring-fenced monies for this. Without greater clarity and direction on estate policy from NHS England this situation is unlikely to result in constructive activity. Additionally, because of silos in budgeting across primary care, secondary care and social care, there is no organisation with the clear line of sight to make investment decisions which save costs and improve efficiencies overall, but where the benefits arise in a different part of the system. It is not clear to us that CCGs have the necessary visibility even though they were created with this intent. The benefit of private sector expertise and investment 14. There is extensive private sector expertise in working with the NHS and local authorities to deliver what the local health and care community requires, on an affordable basis. The private capital often comes from long-term investors such as pension funds, who are willing to invest over 20 or 30-year timeframes. There are different models for this investment and numerous examples of where private sector investment has ultimately ensured a better use of public funds, which we would be happy to share. 15. Increased private sector investment in healthcare real estate would help to unlock larger portfolios of investment grade assets, allowing greater investment in the sector that would deliver further benefits to communities and to government, and would help the sector to become an ever more mainstream asset class. 16. It could also assist NHS Property Services in managing and disposing of its surplus estate. NHSPS owns a portfolio of about 4,000 buildings. It is important that this portfolio is assessed and managed quickly and effectively both in order to assist with wider restructuring in the NHS, and for the development/ regeneration opportunities that disposals will create. A joined-up approach to health and social care 17. We strongly believe that, from an estates perspective, this will be vital if reform of health and social care is to be successful. In the care home sector, this will mean greater numbers of spaces for convalescence/rehabilitation and would particularly help move the treatment of the elderly from hospitals to care homes, where this would be more appropriate to their care needs. Certainty of funding for care 18. We would strongly support the development of a consensus on the funding of social care. There is a
5 pressing need for clarity in this area, as the prevailing uncertainty has constrained investment in new property. This has been exacerbated by several years of below-inflation rises in the amount that local authorities are prepared to pay to care home operators towards care home fees. Proper funding is vital to create a sustainable solution in this sector. Planning issues 19. A number of planning issues are constraining the necessary provision of healthcare real estate. The most pressing include: The reluctance of planning authorities to see care homes as significant generators of employment. Local authorities often prefer to consent office and industrial schemes due to the perception that these create proper jobs. There are also concerns that care homes could be registered as community assets, potentially restricting the future use they could be put to and impairing capital value. While we understand that communities might wish to recognise the value that care homes bring to a locality, we would be concerned at any policy that had the unintended consequence of restraining new investment in to the sector. The Community Infrastructure Levy raises particular issues with regard to the need, benefits and economic viability of retirement apartments. Investors have raised concerns that charging schedules that have come forward could disproportionately affect the viability of their developments given that they fail to properly consider the impact of CIL on the retirement housing market, which in turn will mean that local older home-owners will be denied the opportunity to live in specialist housing that better meets their needs and aspirations in later life. Local authorities need to better understand the retirement living sector in order to make a more sophisticated appraisal of the viability of these schemes, particularly compared with other site uses. Charging schedules should also pay heed to the effect of CIL on the supply of housing for the elderly including the wider benefits that this provision can bring, as set out in national planning policy. The Help to Move campaign 20. We support the Associated Retirement Community Operators campaign to increase the supply of suitable and specialist retirement housing provision in the UK. Help to Move is calling for three main changes to policies that impact housing in the UK: the suspension of Stamp Duty Land Tax (SDLT) on purchases of specialist retirement community properties; greater public funding for the construction of specialist retirement community properties in the affordable and social housing sector; and for local authorities to adopt a consistent approach to planning for retirement community schemes. 21. There is an additional need for an information campaign in the sector. Most people currently have little knowledge of the full range of retirement living options that are available to older people either for themselves or for family members. A targeted public information campaign would help to inform consumers and policymakers alike. For further information: Please contact Patrick Clift, Head of Communications and Public Affairs, at pclift@bpf.org.uk.
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