Nuffield Trust calls for capital overhaul ​

The trust’s discussion paper, Lessons from the last hospital building programme, and recommendations for the next looked at the hospital building programme for 1997 to 2010 – which was mostly built under the private finance initiative – and the HIP. The latter includes six new trust building schemes in the first five-year phase, with a further 21 projects receiving seed funding.

The paper said the capital approvals process seems to have developed as a way of rationing capital and delaying decisions by emphasising a high degree of scrutiny at the stages of the approval process. While the report acknowledges this may have been in response to a lack of quality in planning locally, it insisted the scrutiny had neither solved the issues nor fully corrected them.

Nuffield Trust chief executive Nigel Edwards (pictured) wrote the discussion paper following interviews with a range of experts involved in the earlier phase of building. While the experts believed there were helpful elements in the review process, overall the system was bureaucratic, slow, included a lot of duplication and was less helpful that it was designed to be, he said. The volume of material needed was huge and the value of much of it was questionable.

The financial model and cost forecasts often had to be reworked due to frequent delays in approval and multiple requests for information. This required a lot of managerial and advisor time, adding to costs for little or no benefit, the briefing said.

Mr Edwards called on NHS England to radically streamline the approval process. He said it should consider a modernised outline ‘approval in principle’ element to the process, which would reduce the amount of detail on the content of the scheme, but focused more on the need for the scheme, together with the broad economics of the proposal. He added there should also be an element that recognises a system-wide approach to development.

He added that it should work with the wider government and industry to reduce the high cost of healthcare construction and consider pooling the funding for risks associated with optimism bias and construction rather than attaching risk funding to each scheme.

Capital constraints and the setting of affordability limits meant schemes were developed to suit the budget rather than what is best for the organisation or system. Uncertainty over future capital spending levels is an obstacle to long-term commitments.

Experts told Mr Edwards that in the earlier building programme planning did not fully consider the potential emergence of new diseases or new treatments. However, their biggest concern was planners’ tendency to make overly optimistic assumptions about future demand and performance, which was often driven by pressure to reduce capacity to fit the finances available. Covid-19 had exposed weaknesses in the way hospitals have been designed and equipped, including lack of beds and single-bed rooms.

‘This meant that there was no real strategy for replacing assets. The cost implications of replacing a fully depreciated asset, such as a workhouse hospital, with a modern highly engineered building were not recognised by the financial regime, creating a pressure to reduce costs.

‘If this pandemic has shown us anything, it brought home the importance of having flexible capacity inside hospitals and a more holistic view of the ways in which hospitals interact with the wider health and social care system. The success of the hospital infrastructure plan will depend on how well it heeds the lessons of the past and ensures we avoid the pitfalls of poor planning and inadequate hospital design that have plagued the NHS for so long.’