Strategic Estates Partnerships – investing in challenging times: a briefing

A Strategic Estates Partnership (SEP) helps to resolve the challenges of investing to improve patient experience despite tight financial constraints. A SEP helps you to make the most of your powers and autonomy.  Is a SEP what you are looking for?

A SEP is…

  • A SEP is long-term, but it is not PFI.  It is an equal partnership; it is non-exclusive; it is less expensive than PFI to procure and less expensive to operate.
  • A SEP is strategic, not just a single project.  A SEP can deliver high value capital projects, but it has wider strategic objectives.  It is an estates-led, multi-project and multi-service approach to improvement.  It helps to meet wider needs across the wider local health and care economy
  • A SEP is a partnership, but it is not LIFT.  It is document-light and enables Trusts to make the most of their powers and their autonomy.  It delivers new schemes quickly and cost-effectively.
  • A SEP is a proven partnering model.  The SEP model enables Trusts to partner with advisers, developers, contractors and investors with confidence.  The SEP’s legal structure requires the SEP to develop and deliver projects and services that meet the Trust’s objectives.

Distinctive SEP Principles

The Strategic Estates Partnership model was introduced to the NHS in 2010 when Lancashire Care NHS Foundation Trust was the first to procure a partnership with Ryhurst Limited.  Each SEP is slightly different, because each one is set up to meet the objectives of the Trust that procures it (some are not even called SEPs), but at root it is a robust partnering model with distinctive principles. These principles set it apart from traditional approaches to engaging private sector involvement in NHS estates development and NHS estates management.

What a SEP can achieve

An NHS organisation can procure a SEP to deliver a very wide scope of activities. The Strategic Estates Partnership model will not only modernise the estate; it will enable service transformation.

A SEP unlocks opportunities for Trusts to generate capital receipts and revenue returns. It creates opportunities to work with private health providers, to develop housing and to launch new retail opportunities. A SEP brings additional resources and expertise to busy Trusts. It is an ideal platform for resolving the conflicting demands of living within tight financial constraints, whilst investing to improve patient experience.

A SEP enables Trusts to make the most of new opportunities. Live SEPs are engaged in:

  • Masterplanning
  • Improved space utilisation
  • Savings from PFI variations
  • New Main Entrance and Retail areas
  • Multi-storey car parks
  • Mental Health units
  • Support for Trust estates management
  • Savings and improvements through facilities maintenance contracts
  • Patient hotels
  • Private patient treatment centres
  • New and improved IT services
  • Disposals and acquisitions

In many cases these have already been delivered.

Running a SEP

A special benefit of the SEP model is that there are clear and accountable processes for running your SEP energetically and transparently; in ways that enhance the Trust’s own good governance, and business planning.

SEPs are set up to identify and propose best value solutions for Trusts. Trusts gain access to the supply chain management skills and funding opportunities of their SEP partner, but the SEP does not commit Trusts to proceed with the opportunities proposed by their private sector partners. This balance makes the partnership dynamic.

Procuring a SEP

As contracting authorities, NHS bodies need to follow an OJEU compliant process to procure a JV partner, with whom to form the 50/50 JV partnership.  This takes time and resources, which some may query, but there are compelling reasons why both are easily recovered once the SEP is formed, as demonstrated by live SEPs.

Engagement with the competitive dialogue process supports and improves your strategic planning. The diagram below shows an indicative programme, including a procurement process of around seven months from OJEU notice to contract award. The dialogue phase may be longer or slightly shorter. The optimum duration will partly depend on  the Trust’s own focus and resources.

Once the SEP partner has been procured with a sufficient scope of action, the SEP is a quick and efficient way to deliver projects without further recourse to OJEU processes. The SEP need not limit your own access to NHS frameworks; a SEP can use Procure 21+ to deliver capital projects.

Using a SEP to develop New Projects and New Services

The SEP will be formed with an initial business plan and a strong incentive to start delivering. The SEP will work up the proposals already discussed in competitive dialogue to early financial close through the New Projects Approval Process (NPAP).

As a 50/50 partnership the SEP will operate under the mutual control of the Trust and the partner, both of whom will be financially motivated to present a workable submission for the Trust. Nevertheless, the projects that the SEP proposes will still need to meet the Trust’s approval criteria. These are refined by the Trust and confirmed in the NPAP on a case-by-case basis.

The NPAP process is proportionate and flexible;  it is a methodology that makes projects happen.

Find out more

This briefing is just an outline summary.  We would be happy to explore with you if a SEP is right for you. We can support you to appraise your options and engage with the market.

For further information please contact Crispin Pettifer.