Pushing up the cost of Clinical Services; Backlog maintenance a priority for NHS PS

The DOH issued the latest guidance on the transfer of PCT estate to NHS Property Services Limited (NHS PS) on 30 July in the form of a frequently asked questions (FAQ) sheet. The sheet confirmed that NHS PS will be entitled to make use of the NHS LA's pooled insurance scheme. Whether it will choose to do so is another matter but by sticking with the scheme NHS PS will spare its tenants and occupiers the blow of any new insurance rent obligation based on the cost of commercial insurance. However questions remain over whether the cost occupying NHS estate will rise under NHS PS including how the new company will approach the thorny issue of backlog maintenance.

Estimates of the total cost of backlog maintenance around the country vary. Figures released before the last general election suggested a total running to £4billion including NHS Trust sites and PCT properties which will not transfer to NHS PS. There are different measures of what amounts to backlog maintenance. Some PCTs may have measured their performance against an exemplar standard resulting in overestimates. On the other hand if the latest detailed assessments are not very recent further deterioration and inflation may not be factored in.

Following completion of the estate transfers (if not before) the board of NHS PS will have few more immediate priorities than the need to identify the scale of any backlog maintenance affecting its newly acquired estate and to develop a strategy in relation to it. The challenge facing NHS PS in this regard is not new but whereas PCTs have always juggled real estate priorities with wider health and policy goals NHS PS will have a narrower remit focused on estate issues. NHS PS will therefore wish to grapple with longstanding backlog maintenance issues but what choice will it have and where will any funding come from?

The new company may not be able to attract tenants to some properties (and may drive existing occupiers away) if it is obliged to finance the repair of backlog maintenance through lease service charge payments from occupiers. NHS PS may therefore require additional support whether financial or otherwise and whether directly or indirectly from the DOH. That support may take the form of commissioners being obliged or incentivised to procure that clinical service providers continue to occupy the NHS PS estate thus enabling the new company to impose its preferred lease terms on occupiers. Clinical service providers would then look to recover the increased costs of occupation from their service commissioners.

Whatever legal structures or mechanics are ultimately settled upon the cost of NHS PS adopting a stricter approach to backlog maintenance than their PCT predecessors will almost certainly impact the cost of commissioning affected clinical services.

The DOH has indicated that NHS PS is working on a lettings policy and is considering developing a standard lease. We will report on any such developments in future blogs.

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