The government’s New Hospitals Programme aims to deliver new hospital buildings without relying on a PFI-style model, but where is the money going to come from, and how can it deliver those new facilities at the pace that is now required?
Chancellor of the Exchequer Rachel Reeves has already confirmed that the investment for 250 new Neighbourhood Health Centres will be delivered through public-private partnerships (PPP) forming one of the key elements in the government’s 10 Year Health Plan headlined in July last year.
NHS leaders are encouraging a new model of co-investment where significant financial benefits can be realised with a more timely, intelligently designed, and better controlled project model that can outweigh any financing costs.
New alternatives will be essential to support the estimated £14bn NHS estate maintenance backlog and outdated estate, while also shaping a working model for neighbourhood health centres, acute hospitals, and decarbonisation projects for the next decade.
MTX has been exploring and developing a solution as an evolution of its successful Pre-Construction Service Agreements (PCSA).
A consortia of disciplines
The PCSA often involves bringing together a consortia of disciplines, including architects, structural pre-construction service engineers, planners, MEP, fire and medical equippers.
MTX teams are responsible for managing risk, cost, and programme — ultimately ensuring their projects can be delivered within a cost envelope on time and with minimal risk.
We adopt an industrialised construction approach to improve productivity through increased mechanisation and automation throughout the construction process. This adoption ensures a faster programme, reduced disruption, increased productivity, and less impact to the environment.
Following construction and soft landing, our facilities management team then provides transparent planned and preventive maintenance ensuring the building remains fit for purpose — this can also include both hard and soft FM disciplines.
A balanced approach to risk
So far, no-one knows what that PPP model will really look like. But there is a general perception that the healthcare sector needs a more sensible, balanced approach to risk, through a genuine long-term partnership which spans the whole life of a project.
The government has already taken the first steps with its NHS Long-Term Plan and the infrastructure plan, pointing the way it wants the system to work in the future. Now it needs to move forward by identifying systems that are already working and adapt those systems; less Big Bang — more Evolution.
“Neighbourhood Health Centres fundamentally reimagine how the NHS works — bringing care closer to home and making sure the NHS is organised around patients’ needs, not the other way round,” said Health Minister Karin Smyth.
Perhaps the government needs to apply the same logic to its reinvention of the National Health Service — and discover what the Trusts want and need for their staff and their patients.
Proof of concept
MTX has already created a version of PPP and is currently delivering multiple projects utilising an alternative to traditional capital funding.
We are working with several NHS trusts to provide a complete solution from conception through to design, funding, construction, and facilities management.
In the absence of NHS capital, we raise the funds in conjunction with a third party bank, enabling construction to take place without any capital outlay by the client NHS Trust.
Only when the building is completed and handed over does the NHS Trust commence maintenance inclusive rental payments which take place over an agreed period. During the rental period, we then provide both hard and soft FM.
At the end of the Managed Services contract period (typically between five and 15 years) the ownership is transferred back to the Trust.
There is no capital outlay, and VAT can be recovered on the rental payments. This provides significant financial benefits to the Trust, and MTX shares with the Trust the risk inherent in any new project.
It is a true partnership designed to deliver new projects quickly and overcome the current project finance shortfall, which is limiting implementation of the ambitious new hospital programme, and delaying plans for urgently needed new NHS facilities.
We believe that we have created a new approach to NHS capital projects which is flexible, collaborative, and transparent, with no hidden costs or complicated ownership models. It is simply a ‘pay as you go’ solution, and importantly is an off balance sheet solution.
It is innovative and DOH-approved funding models such as these that I believe will support the government’s drive to improve the NHS estate.