Healthcare revamp opens up market
The increasing privatisation of healthcare presents developers and suppliers with new opportunities to win business, according to industry experts in the North West.
Denise Walker, partner and head of corporate in Liverpool at Brabners Chaffe Street, said: "The private sector will play a greater part in the future of medicine. Despite the fact that the Government has committed to the National Health Service, the cutting of budgets in areas considered to be 'non-essential' for example in fertility treatment will cause an upsurge in private medicine. Already we are seeing signs of collective groups of doctors and surgeons who are banding together to provide private medical services in partnership with private hospitals and clinics. This in itself could produce an upsurge in new build opportunities as private medical institutions will be eager to take up opportunities to fill in the gaps left by lack of NHS funding."
One developer already embracing the change to the joint venture approach emerging from NHS trusts is Ryhurst, which was selected in 2010 to as preferred bidder to establish a 50:50 JV with Lancashire Care NHS Foundation Trust. The 25-year partnership will deliver estates management services, fund and develop new in-patient accommodation and reduce the number of sites the trust uses and dispose of surplus sites.
John Keys, director at DTZ in Manchester, said: "As trusts come under pressure to rationalise their estates in an era when there are no more PFIs and no capital funding from government there will be more joint venture companies coming along. They will have to be more creative."
Trusts are also expected to take better advantage of procurement rosters such as the government's Buying Solutions or the NHS-specific Procure 21+ to save time and money on awarding new contracts. Framework agreements can reduce transaction costs and risk by creating long-term relationships with contractors.
Last year, the NHS announced the members of its six-year, £4.5bn Procure 21+ framework: Balfour Beatty Group, Healthcare Partnership Solutions, Integrated Health Projects, Interserve Project Services, Kier Regional and Willmott Dixon Holdings. The NHS said it will save £200m in procurement costs over the lifetime of the framework. Procure21+ can be used by any NHS organisation or non-NHS organisation collaborating with an NHS organisation providing a facility with a health component.
Steven Jenkins, partner at property consultancy Rider Levett Bucknall, said: "RLB is starting to put more work through the Buying Solutions framework. It's available to all public sector organisations and it removes a large amount of cost and uncertainty from the procurement process, for both the client and the providers. By using Buying Solutions the average saving, per procurement process, is £85,000 and 77 days. This is a much more efficient and lower cost alternative to putting things out to tender and provides clients with a better integrated project team."
Brabners' Denise Walker added: "The move to streamline the procurement processes is excellent as those processes have become far too bureaucratic and unwieldy and have massively slowed down construction/development activity. The NHS has been required to spend too much of its precious resources on satisfaction of a system largely created by Europe. The new Royal Liverpool Hospital development has been a very long time in the planning and the speed of its development has, in part, been hampered by the 'red tape' surrounding procurement issues."
Place's Healthcare Property Forum , sponsored by Brabners Chaffe Street, Rider Levett Bucknall and Taylor Young takes place on 26 January at Cube in Portland Street, Manchester.
