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The money is there – but how will the six new hospitals promised be delivered?

Met midland hospital edward williams
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HKS London director Paul Sawyers wonders whether the government has the capability to deliver on its billion-pound cash pledge to build the hospitals of the future

The £2.7 billion committed by the government to a new hospital building programme was arguably the headline of the Tory party conference. Initially trumpeted as funding 40 hospitals, it soon became clear that the ring-fenced capital funding was for six projects, while a further 34 would each receive £100 million to kick-start work – or in some cases, I suspect, restart projects that had previously stalled.

On the face of it, we have to welcome this announcement. £2.7 billion seems a reasonable amount of funding to cover the capital costs of six new hospitals, particularly as there is likely to be an element of refurbishment in at least some of these.

But there’s a long way to go from a headline-grabbing, pre-election announcement to even starting on site, let alone treating patients in a new facility. As my own experience working on the two major projects (Midland Metropolitan and Royal Liverpool Hospitals) that stalled following the collapse of Carillion last year shows, designing, procuring and building a new hospital is an extremely complex process.

The need for high-quality, flexible, adaptable space cannot be sacrificed in the pursuit of a lowest-cost solution

Put simply, the current options for procuring large capital projects in the health service have, I believe, considerable limitations and I have doubts about whether any of the potential routes to market will be fit for purpose for projects of this scale without a significant overhaul.

Frameworks have been heralded as a faster, more efficient way for public-sector organisations to buy the services they need and achieve cost savings. There are several active in the NHS – some trusts have their own, whilst ProCure22 and NHS Shared Business Services (SBS) are being widely promoted as the way to successfully procure healthcare facilities.

My concern is that none of these frameworks have been specifically devised to deliver a major acute hospital project of the £300 to £400 million-plus scale. The argument for the use of frameworks is that it balances choice with relative speed as the (usually) six firms on the list have already been vetted for financial stability, experience and so on. A main contractor – who will lead the project once the business case has been approved by the Treasury – can, therefore, be appointed without the need for a lengthy, openly competitive process such as OJEU.

But what if one or more of the six doesn’t have the capacity to take on a multi-million-pound project with a high level of complexity? And one or more other isn’t active in the right geographic region? Or hasn’t delivered a major acute facility before? None of these are particularly far-fetched scenarios given the relatively small number of projects of this type that have been completed in recent years.

One alternative is an open OJEU tender (let’s assume that this is still an option post 31 October). While it does have its limitations, the advantage for a scheme of this scale is that it promotes real competition, opening it up to large contractors right across Europe and potentially resulting in better value for money for the trust – and us the taxpayers, who are the ultimate funders.

A major issue historically with non-framework procurement has been the time and cost of this process. It was not unusual for teams to spend £3 to £5 million over the 18 months or so from shortlist to tender award, and a number of major firms have simply lost their appetite for this kind of expenditure, especially if there is only around a 33 per cent chance of winning. Serious concerns regarding the allocation of risk within PFI contracts has also led to a loss of interest from all parties in pursuing this type of procurement route.

It’s clear that the abandonment of the Private Finance Initiative and its successor PF2 has left a gap in the procurement model that will need to be considered if the £2.7 billion is to be spent wisely. And, while PFI and PF2 had flaws, there were also advantages for hospital trusts to have a third party responsible for facilities management and maintenance.

The money that has been pledged will cover the building programme of these new hospitals, but the costs of running and maintaining will need to be looked at closely so we don’t end up back where we are today, with crumbling facilities and spiralling maintenance costs. It’s unrealistic to expect a major overhaul of the NHS estate without some element of private investment, but new models for this are needed.

Whether it is public or private investment, or a combination of the two, what is absolutely key is balancing the drive for ‘value for money’ with ensuring that the buildings and facilities delivered aren’t obsolete almost as soon as they’re completed. With technology changing so rapidly, it’s almost impossible to predict what advancements in healthcare may be made over the next decade and the way in which services are delivered could change fundamentally.

Design for adaptability and flexibility has been a major focus for us and a topic we have invested a great deal of time researching and exploring to answer the question ‘are we doing enough as an industry to futureproof the buildings we design?’ (Spoiler alert: the answer is no).

It would be fantastic to see 40 major hospital projects delivered, but if they are it will be a once-in-a generation opportunity, so the need for high-quality, flexible, adaptable space cannot be sacrificed in the pursuit of a lowest-cost solution. This is our chance to create healthcare fit for the 21st century … let’s not waste it.

Paul Sawyers is director of UK Healthcare at HKS London and is involved in the design and delivery of the Midland Metropolitan and Royal Liverpool Hospitals, as well as the recently completed Proton Beam Therapy Centre in Manchester.

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