Update &Strategic Estate Partnerships

Lester WagmanHealthcare Environment & InfrastructureSouthampton, September 2013

PropCo

NHS PropCo – Principles (recap)• Presumption that assets will be transferred to relevant NHS service providers:- Foundation NHS acute/MH Trusts- Aspirant Community Foundation NHS Trusts

• Full lists of property for proposed transfer to these organisations currently under consideration by DH but some Transfer Orders made

• All other estate to be transferred to NHS Property Services Ltd.

• Likely to include assets formerly held/controlled by PCTs/SHAs: - Administrative/support services buildings - Operational community care property: - in multiple occupation - where the NHS provider is a minority occupier - where the community provider is a non-NHS provider

- Operational primary care property, e.g. some GP surgeries - NHS interests in established JVs such as LIFT Cos- Surplus property (Trusts encouraged to release this ASAP to support HCA new homes initiative)

2

What needs to be done (recap)?

Nationally

• Structure of eventual PropCo(s)- Role of LIFTcos- Governance arrangements- Interim resource planning

• Procurement process

• Transfer orders

Locally/Regionally

• Housekeeping- Compliance/Backlog maintenance- Transfer/novation of contracts- Lease management issues

• Strategic estate planning- JVs & SEPs- Shared/divided sites- Capital programme- Transfer valuations

3

Update Nov 2012Letter from Simon Holden (CEO)‘Core’ landlord and advisory services that Primary Care Trust estates teams currently provide or manage:

• Strategic estates management

• Property management advice �• The operational delivery of

[property] services:

• Refurbishment and maintenance

• Emergency/on-call repairs

• Quality assurance

• Compliance with statutory regulations (such as fire,

asbestos)

• Non-urgent breakdowns (electrical, mechanical, building)

• Planned preventative maintenance

• Health and safety, fire safety and risk assessment (landlord only)

• Mechanical and engineering services

4

• Charles Howeson, Chair�• Simon Holden, Chief Executive�• Caroline Rassell, Finance �

Director

• Pamela Chapman, Acting �Director of Asset Management

• Alan Farmer, Director of �Corporate Services

• Andrew Millward, Acting Director �of Communications and

Business Services

• Chief Operating Officer, Vacant�• Kathryn Berry, Regional �

Director, North

• Martin Royal, Regional Director, �Midlands and East

• Tony Griffiths, Regional Director, �London

• James Wakeham, Regional �Director, South

5

Update April 2013Leadership team in place:

Update 2 April 2013Letter from Peter Coates (on behalf of Secretary of State)To: landlords, sponsors and/or funders

Setting the Scene

• On 31st March 2013, Primary Care Trusts ceased to exist

• A significant number of properties previously owned or leased by Primary Care Trusts (together with all resulting liabilities) will transfer to NHSPS

• The Secretary of State for Health holds all of the shares in NHSPS

Statement of Principle

• SoS acknowledges fundamental importance of…good quality premises [for primary health]

• enshrined in NHS Constitution pledge :

• “services provided in clean and safe environment that is fit for purpose, based on national best practice”.

6

Update 2 April 2013Letter from Peter Coates (on behalf of Secretary of State)To: landlords, sponsors and/or funders

NHS PS Role & Responsibility

• NHSPS to manage NHS' interest in large number of properties as best way of ensuring a coherent strategy during the period of transition

7

Mixed Message

• NHSPS is not subject to s.70 of NHS Act 2006 (any outstanding liabilities of a PCT would survive dissolution) – Gulp!

• “However, it would be wrong to think that this signifies any reduction in the commitment of SoS to the assets and liabilities that NHSPS will inherit”

Update 2 April 2013Letter from Peter Coates (on behalf of Secretary of State)To: landlords, sponsors and/or funders

SoS Role & Responsibility

• SoS is sole shareholder in NHSPS - role taken very seriously

• Departmental director appointed to the board - governance protocol requires approval of director to all board resolutions

• SoS will continue to ensure the continued good running of NHSPS & responsibility of directors

8

“Untenable” that SoS would:

a) Allow NHSPS to run at risk of administration/insolvency

b) Not take any action to remedy administration/insolvency

c) Wind up NHSPS without first transferring assets to “entity of equal covenant strength” (i.e. another NHS company, NCB or CCGs)

Update 2 April 2013Letter from Peter Coates (on behalf of Secretary of State)Explanation of funding for NHSPS

• PCT PFI properties yet to transfer but interim budget funding arrangements now in place - NHSPS entitled to receive any

sub-lease income- NHS CB or relevant CCGs to

meet any funding shortfall

• Post 2015 Primary Care PFIs “will be funded increasingly directly by the occupants”

• “It is recognised that the occupants' contracts for providing services to the NHS will need to be funded appropriately”

• “The anticipated move towards payments flowing increasingly through occupants is to incentivise the system to optimise property utilisation and value for money”.

9

The official view

10

From the coal face

• Land registry transfers went “eerily quietly”

• Some anomalies have emerged - some things may have gone to wrong place

• Little or no activity on disposals or asset management

• Estates services still being provided to NHSPS by some transferor (acute/MH) Trusts

• Resourcing - area team leaders in place but NHSPS still recruiting

11

From an outsider’s perspective

• Capacity Struggle

• 30-40 Local Area Team Co-ordinators appointed by NHSPS

• Interaction with NCB & CCGs still unclear

• GPs rushing to get leases in place [or not in some cases]

• DH focus on making sure Transfer orders in place

• Traffic light triage of transfer risk issues: 1st 100 days, 2nd 100 days etc.

• CHP has similar issues with LIFT estate

• NHSPS likely to be looking for ‘quick wins’ but

• Nothing controversial expected pre-election!12

All Going Well?

• Some assets may have gone to wrong place

• Some sweeper provisions in place

• Legal charges vis a vis capital grant agreements

• Option to tax (VAT)?

• SDLT?

• Interim funding announced for 2013/4 but funding gaps emerging - commissioners to take on in short term

• HCA Public Land Programme

• Funding of GP premises impovements13

What is a Strategic Estate Partnership?• No single definition

• Often whole estate PPP principle

• Can be specific assets with option to widen scope

• Assets taken off balance sheet but can be just contractual

• Often includes asset management and [some] FM

• Can also include healthcare & support services

• Private sector partner brings development skills & finance

• With agreement can be extended to include other public sector assets

14

SEP spectrum?

• Contractual/framework (e.g. Lancashire)

• Limited asset (e.g. Southend, Yeovil, Salisbury)

• Scheme specific (e.g. Cambridge, Kings College)

• Sample scheme led (e.g. CWP, IoW)

15

Southampton CEDP

• MERA

• Parking

• PPU

• Patient Hotel

16

Patient Hotels

• Planned early admissions

• Patients waiting discharge

• Relatives and friends

17

Patient Hotels

18

• Should there be any ongoing nursing care be provided?

• If so, who should provide this and what should be their responsibility?

• Should an emergency call button be provided?

• If so, who should respond and what should be their responsibility?

• How long should the patient be allowed to stay

• What happens at the end of this period?

• Who will pay for their accommodation, meals and care (and for how long)?

• Who will be responsible for the maintenance of the environment?

• Who will be responsible for the provision of hotel services?

• Under what circumstances and who decides if the patient should be readmitted to hospital?

Commercial Option

• Forecast room commitment

• Fixed discounted day rate

• Accounting period adjustment

19

Discussion

COPYRIGHT © JONES LANG LASALLE IP, INC. 2011