Dementia Centred

By Peter Molyneux

September 8th, 2014

Dementia, Land and Change – New Models? (Part 2)

Creating value from the NHS Estate

Although NHS Foundation Trusts in England have considerable freedoms when it comes to owning property and sub-contracting to third parties they are still subject to the same requirement to deliver best value from their assets. In parts of the UK where the market is over-heating there is a strong imperative to achieve this through a straightforward sale.

Much of the public sector land that has currently been identified for disposal will be released for housing development [1]. The priority for Government is to create new homes on sites previously owned by NHS Trusts and investment and technical support is being provided to them to help facilitate disposals of surplus land [2].

More Value?

It is worth asking whether there is more value that could be created either by developing the accommodation necessary to provide for an ageing population and to provide for those people with dementia who wish or need to move into a more supported environment whilst maintaining a degree of independence.  

In areas of high land value, Trusts may decide to go for a straightforward disposal. However, many NHS Trusts now recognise that they can invest the land in a joint venture that delivers both a developer’s return and develops the accommodation necessary to help provide the necessary finance and supply of accommodation to help with care pathway redesign and deliver their cost improvement programmes.

This is even more the case in areas of low land value. Here there may be no market for the land and developing housing designated as being for older people or people with mental health problems may be the only realistic way of realising any value from the land. It may also help to reduce health inequalities and support the management of dementia as a long-term condition as well as helping to prevent admissions into institutional forms of provision [3]

Joint Ventures?

Some Trusts are forming joint ventures with housing developers, including housing associations, to support capital input to re-provision and refurbishment. This way they can develop their supply-chains to deliver new facilities, create public assets that strengthen the balance sheet and contribute to deficit reduction, and deliver a model that uses the public estate in both a more commercial and creative way [4]

By creating a third party vehicle any NHS land is invested rather than disposed of. A housing association puts in an equal amount of equity. The NHS has 50% of the seats on the Board and can determine what return it wants and what form of accommodation will create the most value. This could be with a private or for-profit developer or with a housing association or not-for-profit developer.

Housing Associations

Housing associations buy land in the same market as do private housing companies. In contrast to private investors where profits go to deliver shareholder value, housing associations are likely to have discussions with local authorities about providing a proportion of the development at an affordable rent. Housing associations can offer to provide the same high value housing scheme but would put all profits into the scheme. This would increase the social benefit of schemes with all profits going back to support, say, the transfer of care from institutional settings.

A site could be used for housing for sale and housing with support. The housing for sale provides the funding to cross subsidise the supported housing and so “replaces” the grant funding. The NHS gets a return due to it from investing its’ land. Provided that this can be structured correctly many housing associations can deliver an accelerated process by making use of scheme specific development finance with no call on the public purse.

Change Built In

If we are going to change thinking and consider land disposal as a lever in delivering service transformation, this needs to be built in from the outset. At the point of conception there needs to be a clear service plan that delivers the necessary service changes and includes some clarity about who will deliver what and where – whether that is a care provider, a support provider or an advice provider. There also needs to be the willingness to sell the idea to the public pre-planning and some thinking on not just how to dispose of land, but also how to use it.

Conclusion

The disposal of land and of buildings is highly political and often highly emotive for the communities concerned. There will be strong views held on all sides of a proposition and this makes decision-making difficult. In a fast changing health and social care landscape it is often the buildings that provide a sense of continuity and hence take on far greater importance than is perhaps justified. Any disposal requires a broad range of stakeholders with a broad range of interests to agree and a considerable amount of time and effort. By thinking more creatively there is a potential win – win that is to everyone’s benefit.


[1] NHS foundation trusts: correspondence from Monitor

[2] Brownfield and public land

[3] Beirne and Molyneux (2012) Making creative use of the NHS estate

[4] Unblocking care pathways - One Housing Group