Health Service Focus

Moving away from tradition

Charles Hollwey, chief executive of Hampshire LIFT, spoke to NHE about the future of financing for the health sector.

LIFT is no longer a simplistic model aimed just at funding new construction – increasingly LIFTCos are striving to provide flexible solutions to a health service looking to rationalise its estate, not extend it.

NHE spoke to Charles Hollwey, chief executive of Hampshire LIFT, about the need for financing arrangements to change with the times.

Hampshire LIFT was created as a joint venture this April between Solent Community Solutions and South West Hampshire LIFT, covering areas across Southampton and Gosport.

The move “made more sense” to give economies of scale, avoid duplication of work and enable the company to create a critical mass, Hollwey said.

Since he was appointed last November, there has been progress on capital works, with local GPs on developments, as well as collaboration with councils and community trusts.

The company is planning to go beyond the original remit of LIFT. Hollwey explained: “We’ve got a series of projects we’re planning to take forward and we’re aiming to do much more: we’re trying to get away from the traditional LIFT model, so its more than just delivering lease plus agreements about health centres. It will mean doing consultancy work around health planning, utilisation reviews, community hospitals and project managing capital works on behalf of the PCT.”

It is important for the LIFT to work with the PCT on developments, to ensure building is appropriate and fits into their service plans, he added.

The evolution of development

Financing arrangements in the NHS are sure to evolve and change with the new environment, especially with less funding to spend on capital projects.

Hollwey gave us his views: “I think it’s going to be varied. Trusts may prefer to just use us for project managing capital schemes on their behalf; in other areas where the capital may be scarce, we might go for lease agreements but they might not be to traditional lease-plus agreements.

“It might be more like third party development, where effectively we would be borrowing the money on behalf of the NHS provider, providing the capital scheme and them effectively paying it up over a number of years.”

Rationalising the estate

Discussing the use of PFI, something which has been increasingly criticised for leading trusts into long-term debt, he suggested that they were not necessarily the best approach for the future.

“We’ve got to look at more innovative solutions. Particularly going forward, it’s going to be much more about rationalising the estate rather than building new facilities.

“That’s very much what we’re trying to do working with the PCT; thinking about solutions which give them savings rather than additional commitments. That may mean that what we’re doing is refurbishing a building on their behalf, enabling them to close another building.”

He called LIFT a much more “partnershiporientated” approach to bringing in private resources to deliver improvements in the estate and said: “LIFT is very much structured to not just be there to deliver one particular scheme or hospital but to be a long-term partner.”

This means that LIFTs could be required to take on a much wider portfolio to be successful in the new NHS. Integrated solutions and flexibility will be key to delivering this, Hollwey highlighted.

He said: “If we just think we’re in the business of providing lease-plus schemes for the NHS then I don’t think LIFT has got particularly much of a future.

“[If] we’re much more flexible, meeting the needs of what the NHS requires from us, we’ve got more of a variety of things we can offer in terms of estates issues, then I have a feeling we’ve got quite a good future.

“We must get up to that degree of being competitive, making sure we’re delivering value for money, focused on what the client wants, rather than expecting there to be a chain of developments on the plate for us.”

A wider view of construction will also be necessary, considering NHS buildings in relation to the whole public sector, Hollwey said. “One of the things this government’s got a view around is to look at the public sector estate together rather than in individual silos.”

Keeping pace

Key challenges, he added, were obviously around finance and resourcing. The introduction of QIPP targets and reduction of available spend means that it is a very different environment from when the LIFT model was originally introduced.

Hollwey explained: “LIFT has to bend with that and what we’re doing here is working out how you rationalise the estate rather than how you add to it. Obviously the changes which are happening in the NHS are a challenge – it can be an opportunity as well.

“In the past, LIFT has worked very closely with PCTs and PCTs won’t exist from April 13, so how we engage with people like NHS Property Services Ltd, the community trusts, the GPs, clinical commissioning groups, is absolutely crucial. It’s very important that we work with them.

“The other challenge is of course we need to keep pace with modern technology and how that moves on and we need to think about innovative solutions, rather than just replicating what we’ve done in the past.”

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