The Naylor Review “NHS Property and Estates : Why the Estate Matters for Patients”
An Independent Report by Sir Robert Naylor for the Secretary of State for Health,
published 31 March 2017
Sir Robert Naylor was announced as the Government’s estates “czar” in February 2016, and then asked by Jeremy Hunt to advise the Department of Health how to make the NHS estate (all of the sites and buildings owned or used by the NHS) fit for delivery of the “Five Year Forward View” (5YFV). The “Naylor Review” report which covers the whole NHS “estate” (all the land and buildings used in the NHS) was published at the end of March 2017. During the General Election campaign Theresa May said that the Tories backed the report - but since the Election result nothing more formal has been heard from Government.
Sir Robert Naylor was particularly asked to look at the possibility of achieving targets of finding £2bn to support the NHS by selling off surplus NHS property and building 26,000 homes on this land. However, he went a lot further in researching the issues affecting NHS property and came up with a series of very significant comments and suggestions.
Among the key points, Naylor says that at least £10bn needs to be invested in NHS property, both to meet a backlog of insufficient maintenance and to provide new or improved facilities. In fact, the text of the report suggests that this is a serious underestimate, as £8bn - £10bn may be needed to support the cost of implementing the 5YFV (5 Year Forward View) vision to 2020 and significantly more than £5bn is needed to address inadequate healthcare buildings (often old and outmoded) and to tackle a significant backlog of maintenance. Note that these figures to do not  include the investment necessary in the primary care “estate” (because data is not available), though Naylor thinks that the age and condition of property in this sector is no better than in the NHS provider trusts. The report concludes that “Without adequate capital investment, the 5YFV cannot be delivered; backlog maintenance will continue to increase with the inevitable consequence of a deteriorating NHS estate increasingly unfit for purpose.”
Naylor looked at the implications of 5YFV with its vision of improving public health, patient centred care and integration of services across health and social care, and the process of developing this vision by local STPs. Naylor comments that “it will not be possible for the NHS to achieve its vision without changes in the estate.” National transformation strategies including general practice, the Multi-Speciality Community Providers model and mental health, as well as maternity and the integrated Primary and Acute Systems (PACS) model will have a high impact on estate planning. Naylor expects reorganisation of primary care to create a network of large primary care partnerships, with commensurate realignment of community nursing, particularly in urban areas - but accepts that smaller practices may be appropriate in rural areas. Overall, though  the pattern is very variable and data is not collated, the review concluded that major investment is required to develop new models of care that will be capable of dealing with the growing numbers of older patients with chronic diseases and with the increasing problem of delayed transfers of care.
Naylor reviewed the changing demand for services and the potential impact of technology but concluded that there is no evidence to support a reduction in acute hospital capacity with fewer acute beds and little evidence that emerging IT schemes will reduce the need for buildings in the NHS. In a time when it is not clear how both patients and NHS will embrace new technology, Naylor says that it will therefore be critical for the NHS to ensure that future estates are flexible and can take account of new opportunities.
The Review pointed out also that the situation is now very complicated as ownership and management of property used in the NHS is highly fragmented - between individual GP practices, individual hospital trusts,  and a range of other national and local agencies - and, partly because of that fragmentation but also a history of reorganisations, there is now a serious lack of skills and expertise in managing NHS property which leads to inefficiencies and a loss of potential value to reinvest in facilities.

Naylor says that all planning for NHS property - and any decisions about “disposals” or, alternatively, new investment - should be made in the context of STP planning, and not as a separate exercise. The clear intention is that integrated, strategic “place-based” thinking about provision of health and social care comes first, and decisions about what should be provided where will then drive the local “estates strategy”. A robust Business Case, developed in the context of STP priorities and processes, is required both for the overall strategy and for individual projects.
In relation to the question of achieving a target of £2bn from sale of property, Naylor says that releasing land which is no longer required to deliver health and care services is a major opportunity, potentially achieving £2.7bn. This figure is based on work by Deloitte for acute services, using a theoretical approach of “benchmarking” NHS Trusts. By comparing the Trusts amounts of floorspace and land against national averages they estimated the total amount of land which might be sold for development and the potential value of that land. (separate analysis was completed for London, urban and rural groups of Trusts, because of the different circumstances and values in each type of area). Naylor added further estimates for mental health and community estate, and then looked at the distribution of this total between different areas.
Not surprisingly perhaps, the analysis shows that the majority of the value to be “released” is found in London (57%), and the median average per STP area is £40m. The detailed estimates have been shared with STPs and providers but are not included in the report. It seems reasonable to assume that the amount which is estimated for Cornwall will be substantially less than £40m - and Naylor also points out that these “opportunities” will only arise over a longer time period than the current spending review, particularly for schemes involving strategic rationalisation.
The critical point about these estimates is that they involve trade-offs between objectives, for instance between maximising the value of the land or maintaining quality of the environment - and Naylor is clear that “radical reconfigurations of services should not be undertaken simply to release additional land but must be based on a full clinical case for change.”
Later in the report Naylor suggests that the land sold by the NHS should be prioritised for development of residential homes for lower paid NHS staff, particularly where there is a need because of affordability issues. This proposal has been discussed with housing associations who have been asked to put submit ideas, working with the NHS Property Board. (Note, though not discussed in the report, the use of land for staff housing does not necessarily imply any loss of capital income to the NHS, and in some circumstances could maximise the value achieved. For instance if a specialist housing association purchased the land from a provider trust at housing market value the trust would not lose anything from the capital income and at the same time housing for NHS staff would be provided - however this would depend on the particular local circumstances, the ability if the housing association to finance its own developments, and an  agreed principle that trust will receive the full value through such deals.)
Rationalising the estate and releasing value may also result in revenue cost savings. Naylor expects that a national total annual saving of between £0.5bn and £1bn may be achieved. This could be used to support private capital investment or to improve patient care, but the actual savings will depend on local factors.
Naylor looks at ways to encourage and incentivise NHS providers to release land. The report places STPs as the decision-making and planning units. “STPs should develop affordable estates and infrastructure plans, with an associated capital strategy, to deliver the 5FYV and address backlog maintenance. These plans should be supported by robust business cases.” STP estates plans and their delivery will be assessed against targets and benchmarks, and those STPs and their providers which do not meet planning targets should not be granted access to any capital funding, on the other hand those land disposals which flow from STP plans will receive a 2-for-1 offer in which public capital funds match the disposal receipt.
Naylor also suggests that NHSE (NHS England) and NHSI (NHS Improvement) should provide guidance and support to STPs and NHSE and NHS Property Board should ensure primary care facilities meet the vision of 5FYV, including support to GPs.
The report does conclude that, over time, a total if 40,000 homes could be built on land released from the NHS, though this is still substantially focussed on London. The median average per STP
is estimated at 465 units, and it is reasonable to assume that the theoretical number in Cornwall would be substantially less than this. As noted above, Naylor recommends that this land should be prioritised for the development of residential homes for NHS staff where there is a need.
In terms of processes, Naylor recommends establishment of a national NHS Property Board as a new national strategic planning and delivery unit, bringing together functions of NHS PS (NHSProperty Services), CHP (Community Health Partnerships), and “other fragmented NHS property capabilities). This unit would provide leadership to the centre and expertise and delivery support to local areas, providing guidance on estates planning, disposals and building standards, and improving the collection and use of data. Naylor recommends that the majority of the Board staff should be based in regional arms. Assets and functions which have been inherited from the abolition of PCTs should be divested back to local providers. Naylor acknowledges that there is potentially a “conflict of interest” between 5YFV and STP ambitions to integrate primary, community and secondary care and the interests and responsibilities of individual providers. Naylor wishes to see providers incentivised to support integration, and looks to the establishment of ACOs (Accountable Care Organisations) to deal with this. (Full implementation of the ACO model for the NHS would require primary legislation, which has been delayed following the last General Election, but the principles of the model are apparently being applied with the encouragement of the Department of Health - it is not clear how this will work out in practice, particularly in the pooling or transfer of assets or resources). Other than this, the proposals for structures and funding which Naylor recommends would all appear to be possible within existing legislative and budgetary mechanisms.
On the need for investment, and the development of the case to support funding bids, Naylor’s timetable has already slipped, as it expected STP plans to support a national capital investment plan by summer 2017. However, Naylor is clear that there is an urgent need for additional capital to address backlog maintenance and deliver the 5YFV, referring again to a total of £10bn - which would have to be identified in Government/Department of Health budgets. Naylor says that “there should be a discontinuation of the practice of using NHS capital budgets to support current activity.”
STP plans should take account of the estate required to deliver modern healthcare services and address backlog maintenance - and STP plans provide the case for investment. Estates strategies must align with robust clinical plans. The report concludes :
“A strong signal from government that high quality plans will be supported with capital is a vital step to building momentum at a local level. The challenge is now for the NHS supported by the new NHS Property Board to produce these high quality STP plans which maximise the release of surplus land.”
JF, WCHW
September 2017