Capital planning and Carter – what next?

Jackie Hadwen, Senior Manager, Attain, talks about the challenge of capital planning in the NHS…

The 2015 spending review made it clear that the NHS is still expected deliver efficiencies of 2-3% per year to meet a 10-15% real term trust cost reduction expectation by April 2021.  Lord Carters’ independent report entitled Operational Productivity and Performance in English NHS Acute Hospitals: Unwarranted Variations, (published February 2016) makes 15 recommendations to release £5bn of efficiencies from the NHS Trust’s over the next three to four years.

The report places a greater emphasis on the regular reporting of relevant and streamlined metrics including some for estates. Lord Carter believes that some £1bn per annum could be saved on total estates and facilities running costs if Trusts can achieve a median benchmark of £320/m2 – the variation reported being between £105 and £970/m2. Lord Carter proposes two new benchmarks for acute sector estate performance:

Capital planning and carter image

In the short-term Trusts are required to produce strategic estates and facilities cost reduction plans for 2016/17 based on the ‘model hospital’ data and benchmarks. In the longer term by April 2017, a plan for estate investment and reconfiguration will be required based on future service requirements. One of the first tasks NHS Improvement has been given as it comes into being in April 2016 is to publish NHS estates and facilities benchmarks. Lord Carter recommends that all Trusts are to perform at or above the benchmarks by April 2017.

Consider this alongside the latest Kings Fund quarterly monitoring report [1] which demonstrates a substantial and widely reported decline in the projected financial out-turn for the NHS in 2015/16. According to the Kings Fund survey of Trust Finance Directors carried out after the 2015/16 spending review and NHS planning guidance publication, 89% expect to be in deficit at the end of the financial year.  In some cases, asset sales are playing a crucial part in balancing the books with one finance director stating ‘we will break even only if a property sale of approximately £6.5million goes ahead’. That should help with the Carter benchmarks might be one thought. Another is what is happening to capital planning and capital availability in the NHS?

The NHS planning guidance for 2016/17 came with the warning that capital scarcity should be expected in the short to medium term. Capital scarcity tends to present most NHS organisations with some stark choices that can range between ‘make do and mend’ to ‘radical reconfiguration’. As new models of care are forged the need for early consideration of the estates issues is critical. It stands to reason that shifting more care out of hospital and into the community means that capacity in the community needs to be there and capacity on hospital sites may need to reduce commensurately if the cost of care is not to increase. If this needs to be estate capacity what next?

The current lack of agility between organisations in relation to estate and capital funds is likely to come under sustained pressure. In many health and social care economies just in relation to the NHS there may be two or three NHS Trust, NHS Property Services and in LIFT area’s Community Health Partnerships all managing property assets.  Then there is PFI and LIFT to consider. The problems of working through this appear complex and many. Place based planning is arguably the next hopeful step for NHS capital planning. It’s not new, many will remember the Total Place initiatives and indeed the current One Public Estate initiatives generally led by local authorities and established in some parts of the country.

Now though more than ever, the conditions are set so that an ability to agree a place based estate strategy is likely to be essential if health and social care economies are to successfully access funding through programmes such as the Sustainability and Transformation Fund to support new models of care.

Estate is a key enabler for service and system change and yet it’s notably absent from the latest Sustainability and Transformation Plan guidance. Finding a way forward at this stage is likely to be subject to local determination. ‘Local Estate Strategies – A Framework for Commissioners’ published by the Department of Health in June 2015 does advise that Local Estates Forums should be established and encouraged the completion of strategies for community care estate and non-clinical estate by December 2015. The move to systems based approaches means that strategic estates planning will need to transcend organisational boundaries.

‘Local Estate Strategies – A Framework for Commissioners’ Department of Health (June 2015)

Achieving the efficiencies required by the Five Year Forward View will mean all parts of the health service will need to work with greater agility and co-operation. Good quality strategic estates planning is vital to making the most of these changes and will allow the NHS to:

  • Fully rationalise its estate
  • Maximise the use of facilities
  • Deliver value for money
  • Enhance patient’s experiences

At Attain we have assisted organisations to mobilise and progress capital planning on a system or place based basis. Some basic principles for progress include:

  • An agreement between organisations to share information relating to costs, staffing and estate metrics.
  • A willingness from estates professionals to engage with each other and consider the ‘art of the possible’ in order to achieve the best outcomes for patients.
  • A detailed understanding of the service strategy and its potential impact on estate.
  • A move away from a traditional strategic estate options appraisal into high level scenario modelling assessing the wider impacts on each partner organisation.
  • Strong system leadership with a determination to see it through and ‘make it happen’.

To learn more about the work that Attain have undertaken to date and how they can support you, please contact Jackie Hadwen

Some examples of our work

Hull 2020 – Attain programme managed the mobilisation of a nine public sector partnership programme across the city. This included the establishment of an ‘estates collaborative’ that has gone on to consider becoming a ‘One Public Estate’ initiative. This involved:

  • Securing partner commitment to share detailed cost information and metrics.
  • Setting up governance arrangements including agreeing the terms of reference for the group.
  • Developing and agreeing the initial scope of work.

Outputs included:

  • A joint strategy between the NHS and Humberside Fire and Rescue Service to consider estate rationalisation and reconfiguration in East Hull culminating in the proposed development of a new Integrated Care Centre incorporating facilities shared between the organisations and supporting new models of care in which both are involved.
  • An agreement to transfer land between the Council and the NHS for public sector use.
  • An associated social housing development proposal alongside the proposed Integrated Care Centre.

[1] www.kingsfund.org.uk/blog/2016/02/story-behind-QMR-figures