NHS could save £2.3 billion on estate costs

25 April 2013

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25 April 2013 | Helen Gilbert

The NHS could save nearly £2.3 billion annually on estate procurement and facilities management (FM) running costs, according to research.

EC Harris's fourth annual report into the efficiency of the NHS estate found that the National Health Service had made improvements to ensure better use of its property, procurement and FM management by reducing unutilised accommodation by more than 50 per cent since 2009 from more than 3.34 million square metres.

However, it also acknowledged that wasted or under-utilised space in the NHS estate is still equivalent to 157 hectares – larger than London’s Hyde Park and estimated that £2.3 billion worth of annual savings could be made through the adoption of “better facilities management and procurement practices”.

The Delivering Better Healthcare Outcomes More Efficiently report recommended removing much of the 12.8 per cent “functionally unsuitable” parts of the NHS Estate, which it said is hampering efforts to deliver high-quality and lower-cost facilities.

It said significant annual savings could be made if the worst performing trusts copied some of the best performers by adopting a better understanding of healthcare redesign and implementing better management and logistic practices.

“Many trusts are actively managing their estate and benefits can often be seen in the same financial year. A good example of this improvement is Mid-Essex Hospital Trust, which reduced its floor area by nearly 10,000 metres-squared in just eight months and reduced estate revenue costs,” the report said.

The document called on trusts to embrace new alliances and partnership working, particularly in procurement and FM outsourcing, which are “typically volume and performance-related deals”.

It stated: “We have several examples of trusts who continue to have annual savings in large seven-figure numbers, who by utilising a ‘should cost’ methodology and truly understanding performance can achieve better outcomes more cost effectively.”

Conor Ellis, author of the report and EC Harris health sector leader, said in a statement: “The NHS has improved year on year, however all organisations should be cognisant of the opportunities presented through cost efficient, safe, estate facilities management and procurement.

“In the decentralised NHS world, this means collaborating with other trusts, local authorities and other parties to form partnerships not only to improve outcomes and risk, but to clearly reduce cost via scale and standardised performance.”

SM is awaiting a response from the Department of Health.

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