Getting the best value out of PPP assets

There are an estimated 156 PPP (public private partnership) healthcare schemes expiring in the next 24 years. These assets will effectively move back into NHS estate managers' portfolios, with the necessary asset management, maintenance, and lifecycle replacement commitments that other parts of the NHS estate warrant.

For many NHS Trusts who have worked with private partners in the last 30 years, the assets — which are valued at billions of pounds — are often maintained to a better condition than other NHS properties. This is in part due to the stringent maintenance and lifecycle replacement requirements imposed by sometimes very onerous PPP contracts. With contracts in place for long periods, (typically 20-40 years), there has often been a reduced focus on the optimisation of these PPP assets to align with overall NHS estate objectives and deliverables which have evolved over time. By not engaging with these projects, NHS teams are ultimately missing opportunities to achieve the best value, and failing to unlock a PPP project's full potential ahead of contract expiry, when all legal responsibility for the project transitions from the private to public sector.

The Infrastructure and Projects Authority (IPA) recommends that 'expiry and transition planning should commence at least seven years before the expiry date'. It thus follows that establishing transition teams 5-7 years before a contract expires, or even earlier, should help to facilitate a smooth transition. It can also allow Estates teams more time to build trust and confidence in the process. Without proactive planning, NHS teams may struggle to address changes in service requirements, or fully understand the implications of asset transition back to public ownership.
At RLB, we would argue that this should be taken a step further, and that the transition team should include a much greater focus on portfolio-wide asset strategy and optimisation methodologies to drive greater value and better patient outcomes.