Making estates more commercial and sustainable

Conor Ellis, national head of Healthcare at independent construction, property, and management consultancy, Rider Levett Bucknall (RLB UK), says that despite the Wave Four funding offered last December to NHS Trusts, ‘we are now in an era where there is less real healthcare capital expenditure in the UK’. With ‘a relatively modest public capital’ of around £1 bn per annum for new buildings, no announced successor to PF2, and, as he puts it, ‘fresh from the debacle of Project Phoenix three years of pain’, the clear tenet for all healthcare providers will, he believes, be increasing self-reliance for project capital.

We all know that the demand for healthcare greatly exceeds the funding available in the state health sector today. Total healthcare expenditure in the UK for 2017 was 9.6% of gross domestic product (GDP),1 compared with 9.7% in 2016, which was the second lowest of the seven nations in the G7,2 a position that has remained unchanged since UK health accounts were introduced for 2013.3 It is estimated that for OECD (Organisation for Economic Co-operation and Development) countries, both health and long-term care will be driving up public spending, with an average public healthcare expenditure projected to increase from 5.5% of GDP in 2010 to 8% in 2060, and long-term expenditure estimated to rise from 0.8% to 1.6% of GDP by 2060.4

The economic gap is already being demonstrated by less, or longer, access to care, and the reduced scope of our healthcare services. This budgetary deficit is also reflected in the poor condition and unsuitable buildings of our healthcare portfolio, with a £5.55 bn in backlog in building facilities that need to be brought up to the required standard. We now have many Trusts that have declared £50 m or more in high risk/significant capital backlog.