UK: Sell The Family Silver? Yes, If It Means A Better Health Service.

Last Updated: 25 September 2008
Article by Marisa Broadhurst

The concept of healthcare free at the point of delivery, which underpins our National Health Service, is one, I believe, that should never be altered. This fundamental concept is, however, one that will come under increasing pressure, as the NHS struggles with the increasing costs associated with an ageing population, deteriorating facilities, a greater number of illnesses and a corresponding rise in the number and cost of drugs available to treat them.

The potential to raise its own additional funds, from less obvious sources than government funding – in other words, taxation – or grants, should, surely be welcomed. It is a continued mystery to me, then, that the health service is still not making better use of the valuable asset it possesses in its estate; its property and buildings. According to the National Audit Office, the total NHS estate was, in 2002, valued at around £23 billion. With land prices having soared in the past six years, this figure can only have climbed significantly.

Yet an incredible proportion of this is surplus land, either unused or used inefficiently, and converting that into useful capital through disposals or leaseback schemes would, in any commercial sector, be a priority. So why has similar action been so slow in the NHS?

At this point, I should add that things are beginning to change. I have certainly noted a change in the number and willingness of Trusts to gain a fuller understanding of the nature of their estate, and how it could be better utilised – either to improve service or generate capital. But even this change represents a ripple in the health service ocean. There is much more Trusts can do.

Until experienced facilities managers and estate managers are appointed at board level, as they frequently are in commercial sectors, so that they have to report in the same way other executives do, the pace of change will remain slow. At present, property is simply not a priority for health service decision-makers. It needs senior people on the board to make it so.

When the National Audit Office, in 2002, published a report that revealed that if sales which took 24 months to complete had been speeded up by just six months, £80m of investment could have been ploughed into the NHS more quickly, it prompted much excited discussion. The imperative was clear: Trusts needed to sell surplus property more efficiently to speed up the input of profits from sales into the NHS.

Yet, despite the fact that more Trusts are now hearing the message than was the case in 2002, and even perhaps a year or so ago, and many more executives in the NHS are aware of the value of their real estate, we still have a situation where effective disposals of surplus property take an excessively long time to both identify and push through.

Clearly, there is still work to be done to raise awareness and understanding of just how valuable a nest egg the health service is sitting on – and just how that nest egg can be utilised. It is one thing to be aware of the value of your estate; it is quite another thing entirely to know how to go about realising that value.

Estate professionals need to be talking to clinicians and ascertaining their future needs and then assessing exactly what property is or is not required. Many Trusts are now appointing surveyors to perform this work, but many of these are from within the NHS and will, quite naturally and understandably, look at things from an old 'NHS' point of view. Sometimes, an outside view can be beneficial, and, while appointing an outside estate expert on a retained basis might not be viable for many Trusts, there is certainly an argument for engaging someone on a project basis, to give you an informed overview of what your estate is, what it comprises and what can be done with it. Often, an outside view will cast a different light on accepted wisdom.

As one example, there is a commonly held belief that NHS Trusts need to own the freehold of their estate. I'm not sure this is necessarily true. If a hospital can honestly claim it will be sited at location X forever, then there's a case for owning the land. But how often is this true? The answer is rarely. There is no reason a Trust should not release its freehold, thus meaning it no longer needs to pay capital charges, but lease the land on a long basis – say a century or two. In most cases, this will be more than adequate to allow for long-term planning, while making your land more cost efficient.

This is where one might normally cue a few outraged cries of how we mustn't sell the family silver. But, to be frank, such a reaction wholly misses the point. Heirlooms are not, sadly, what the NHS desperately needs. Hard cash is. Realising the value of those inherited assets – effectively, and quickly – offers, quite simply, the best viable injection of finance into our health service possible.

We need open minds about how much land the NHS actually needs. And, with the resulting freedom to employ a little innovation, we might even realise a few more tangible benefits: a Trust could free up some of its surplus land for residential development, generating capital in the process, and agree that a proportion of the development must be for key workers, thus providing adjacent, affordable homes for its own employees – which, in turn, would positively impact productivity and morale.

This is not about selling assets to pocket the profit. It's about a hard-nosed analysis, involving clinicians, of what the future needs of the service are going to be to ensure there is no wasted space.

First published in Building Better Healthcare

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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