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hdm magazine digital edition - November 2017

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mental health and dementia facilities magazine (mhdf)

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The Market

Market overview

Over the past 15 years the healthcare sector has seen major investment, with the replacement of many hospitals up and down the country with new, state-of-the-art, purpose-built facilities, largely funded through multi-million-pound PFI deals.

In the past five years the scale of projects has declined, with work concentrating instead on the less-costly refurbishment and expansion of existing hospital buildings.

The focus has also shifted from the acute sector to investment in primary and community care facilities, including GP surgeries, mental health centres, and specialist care facilities, such as dementia care units.

A huge amount of mostly-private money is also being spent on community care for the elderly, such as the development of extra care units, nursing homes, supported living schemes, and dementia care facilities.

Moving forward

According to construction market analyst, Barbour ABI, levels of construction activity in the medical and health sector decreased by 13.9% in October 2016 compared to the previous month, with the total value of contracts awarded £120m based on a three-month rolling average. This is 32.4% lower than the values in October 2015.

The monetary value of contracts awarded also dropped by 17.9% on the previous three months and was 17.3% down on the same period in 2015.

But, despite a drop in activity and the overall value of projects, there are still opportunities within the sector.

The South of England is currently the main focus area for works, with 30.8% of all activity, primarily due to awarding of the St Wilfred’s Hospice contract in Chichester, valued at £11m; and a new £5.3m administration wing at the Royal Sussex County Hospital in Brighton.

According to the figures, public hospitals currently remain the dominant sub sector, accounting for 66% of the value of contracts as of October this year, up 23% on the same time in 2015.

This is good news for architects, construction companies and other professionals, with an impressive pipeline of projects coming through over the next five years.

Barbour ABI figures show 178 confirmed projects across the medical & healthcare, surgeries and medical centres, private hospitals, secure hospitals, hospices, and nursing and psychiatric home sectors. A further 120 projects are at the outline planning stage and will be coming through in the next couple of years. And 209 projects are at the pre-tender stage, including the £190m Phase 4 redevelopment at Great Ormond Street Hospital for Children.

93 dementia projects are shown as being at various stages of development and tender, and there are more than 5,000 mixed-use residential projects which include an element of elderly care accommodation.

The care sector is particularly buoyant as the returns are attracting high levels of private investment.

Government investment

The Government Construction Pipeline (GCP) and the National Infrastructure Pipeline (NIP) are now combined into a consolidated National Infrastructure and Construction Pipeline.

A recent report from analysts at KPMG reveals a £38.9billionjump in the value of the pipeline since March 2016.

Worth £502billion overall, 60% of this money is predicted to be spent within this term of Parliament - by 2020.

The pipeline contains over 700 projects and programmes across 15 sectors and 14 regions.

Of the 15 sectors £2.9billion is earmarked for the health sector and £12.9billion for housing and regeneration, with a proportion of this including community supported living schemes.

Of the £2.9billion being spent on the healthcare market, £1.3billion is allocated to Procure21+/Procure22 projects. The upcoming Procure22 framework has just been announced and this will see £4billion invested into the health sector in the four years from October 2016.

General practice

The recently-launched General Practice Forward View set out the importance of investment in premises and technology to enable transformation in general practice.

In 2015/16, NHS England began a multi-year £1billion investment programme as part of the Primary Care Transformation Fund to support general practice to make improvements across a range of areas, including in premises and technology.

This programme included both capital and revenue funding, and will continue to 2019.

Additional capital investment will also be going into general practice beyond this programme, worth around £900m over the next five years.

In June this year, local clinical commissioning groups (CCGs) submitted recommendations to NHS England for further investment in line with their local estates and digital plans. This will include new buildings and technology schemes.

In 2016/17 nearly 300 schemes will be supported and further schemes are planned for future years, providing much-needed opportunities within the market.

Typical construction schemes include improvements or extensions to existing facilities, refurbishment of unused or underutilised premises to increase clinical capacity, construction of new premises including the relocation of facilities to improve access to services or to accommodate a wider range of services, and the implementation of supportive IT systems.

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