Table of Contents
AMA Research are pleased to announced the publication of the 2nd edition of the report 'LIFT and P21 Procurement in Healthcare Construction Market Report - UK 2014-2016 Analysis', which reviews the major changes currently taking place within the NHS, specifically reviewing the future of key construction programmes and procurement routes under the new NHS structure.
Key areas in the report:
• Government reform of the NHS – analysis of new Operating Structure.
• Implications of the Health & Social Care Act for the Construction Industry.
• LIFT/P21 Procurement - programmes, capital values, consortia - forward project pipelines.
• Analysis of NHS Revenue and Capital Funding to 2016 and capital funding arrangements under the new NHS Structure.
Areas of particular interest include:
• Review of main procurement routes and construction programmes used in the healthcare sector and their future under the new NHS structure, focusing on: LIFT and ExpressLIFT; Hub Initiative in Scotland; Procure21/Procure21+; Designed for Life: Building for Wales (P21 in Wales) and Frameworks Scotland
• Key schemes - capital budgets, status, consortia/contractors.
• Review of major contractors and consortia, PSCPs (key contractors/framework partners). Key developers and investors involved in the healthcare sector - future opportunities for healthcare work and key issues for the construction industry.
• Future Prospects – impact of a more rationalised estate and a move away from large healthcare developments, towards upgrading, refurbishing and extending the primary healthcare estate.
• Forward project pipelines - schemes, capital values, key players etc.
Key areas covered in the report include:
PUBLIC SECTOR HEALTHCARE IN THE UK
• Overview of the new Structure of the NHS – England, Scotland, Wales.
• Legislative drivers and Government reforms in the NHS – Health Care Act 2012.
• New Providers and Clients under the new NHS Structure – timetable, Clinical Commissioning Groups, NHS Commissioning Board, Independent Providers.
• Estate Rationalization with the NHS – size of estate, £4bn maintenance backlog value, future of GP Premises - developments, funding issues etc.
HEALTHCARE SPENDING IN THE UK
• NHS Funding in England, Scotland and Wales, Primary Care Spending.
• Capital Spending in the NHS – England, Scotland and Wales – budgets 2011-2016, key projects.
• Construction Output in the Healthcare Sector - forecasts to 2018. Healthcare RMI spending.
PROCUREMENT OF HEALTHCARE CONSTRUCTION WORK
• Procurement routes for GPs and PCTs - Future of Procurement under the new NHS Structure.
• NHS LIFT – Overview, investment 2004-14, scheme update & progress to date (waves, construction values etc.). Forward pipeline to 2016 (schemes, capital values, players etc.)
• ExpressLIFT – overview, investment, scheme update & progress to date. Principal Consortia and LIFT Partners, review of 49 LIFTCOs - schemes, capital expenditure 2011-15. Future of ExpressLIFT under the new NHS Structure.
• Procure21 – overview, investment, scheme update, project pipeline, PSCPs (capital values of current schemes 2011-2020).
• Procure21+ - overview, investment, scheme update, project pipeline.
• Future of Procure21+ under the new NHS Structure – preferred route?
• PSCPs - key players and partners.
• Procure21 in Wales – Designed for Life 2012-2016. Framework partners.
• Frameworks Scotland /Hub Initiative in Scotland - HUBCOs, projects, values, status - development pipeline by region.
• Other finance and procurement options for NHS clients – LABVs, Joint Ventures, Surplus Land (review by strategic authority - area, future use, date of disposal).
CONSTRUCTION SUPPLY IN THE HEALTHCARE SECTOR
• Key Construction Companies and Consortia in the Healthcare Sector - estimated project values won in 2013/14.
• Primary Healthcare Developers and Investors - by no. of primary care premised owned.
• Major Consortia and Supply Chain/Framework Partners in the Health sector - by procurement scheme.
• Healthcare Opportunities - key projects in the pipeline.
Under reforms in the health and Social Care Act, the NHS has undergone major structural change, with the management of the NHS, including the estate, decentralized as more power is handed to Clinical Commissioning Groups (CCGs).
In addition, with/span> NHS capital spending now drastically reduced, the process of funding new hospitals and primary care facilities has also changed. For procurement purposes the most significant change for the NHS comes in the transfer of commissioning functions from PCTs to GP-led CCGs and NHS England, which has lead to the increased provision of services in the primary care setting.
With more healthcare services being driven out of the acute setting and into the primary sector, many GP practices are already expressing concern about how they can comply with the CQC requirements and where funding for property alterations may come from. In February 2014, NHS England announced that it had put the vast majority of GP premises investment on hold while it develops a national framework to evaluate bids for funding. The broader policies of developing GP-led commissioning have undoubtedly lead to greater co-operation between the private and public sectors and more work with private providers and their construction teams.
A further driver of increased partnership with the private sector is also taking place in the acute healthcare sector with the creation of NHS Foundation Trusts, under which hospitals can generate their own income. As a result, there has been a rise in private providers refurbishing part of existing hospitals, adding extensions, new-build facilities or even taking on the full operation of an NHS hospital. Foundation trusts are expected to be a popular target for construction companies as they tend to be more commercially aware and are usually more financially robust. Furthermore, Foundation Trusts are moving towards more longstanding, partnership-style relationships with the construction supply chain, with the focus on building up long-term relationships with one particular firm.
As a result of these reforms, the nature of future work in the healthcare sector is changing to reflect a more rationalized estate, with the majority of healthcare clients reviewing their healthcare estates in a bid to achieve efficiency savings. The transfer of the NHS estate to NHS Property Services in April 2013 amounts to some 4,000 sites and a maintenance backlog of around £4bn. The future focus of NHS services will be on moving care within or closer to home, more regional services and the closure of some hospitals. A capital programme is being developed, which is likely to see more healthcare work coming through at local level. In the months during which the PCTs were abolished a number of healthcare projects were put on hold, but over the next 18-24 months opportunities for work in the sector are likely to re-emerge.
The healthcare industry is continuing to see a move away from secondary healthcare developments such as large PFI hospitals, towards upgrading, refurbishing and extending the primary healthcare estate, with more emphasis on improving existing healthcare premises rather than building new ones.
The joint venture structure as seen in PF2 and ExpressLIFT to replace the traditional PFI model now seems to be the way forward for privately financed development in the NHS. LIFT also has experience of bringing in capital investment into rundown areas. As public spending tightens the shared use of buildings with other public sector bodies may be the only way that investment into new facilities can be achieved.
In the years ahead, NHS trusts and hospitals are expected to focus on the maintenance of their estates with refurbishment programmes and on improving staff and patient facilities. Projects are likely to continue at the smaller end of the scale in value terms, but there will be a high volume due to the need to improve the condition of the healthcare estate and most of these will be procured under P21+.
The main challenge for contractors will be to reduce build costs and develop standardised designs and techniques. The current economic climate has focused all NHS trusts on capital efficiencies – how to achieve more for less. The construction industry will be looking to work closely with newly formed Foundation Trusts and CCGs in the primary care sector with advice and ideas on how to utilize existing assets to reflect the changing nature of health care needs within their area.
Despite reforms and austerity measures, investment in the NHS still remains a priority for the Government, with revenue funding for the NHS protected until 2016, and increasing to £115.1bn in 2015-16. At the same time, NHS capital funding will rise to £4.7bn a year by 2015-2016, around 4.1% of total NHS spending. The Government has indicated that it may need to extend its austerity measures beyond 2016, which will mean further funding constraints for the NHS. The potential for a change of government in 2015 could also change the focus for health sector capital expenditure – though this is not likely to be implemented quickly.
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