Strategic Estates Partnerships: investing in challenging times

Trusts are increasingly turning to partnerships with the private sector to develop their estates at a time of financial constraint. Hempsons partner Crispin Pettifer looks at some of the benefits they offer.

A strategic estates partnership (SEP) can help to resolve the challenges of investing to improve patient experience despite tight financial constraints. A SEP may help you to make the most of your powers and autonomy.

Unlike many projects with the private sector, a SEP is intended to be long term and strategic rather than focusing on a single project. That means it can look wider than a single building or improvement and can start to meet wider needs across the local health and care economy.

From a trust’s perspective, it can be easier and less expensive to procure than a series of smaller deals. Once a joint venture partner has been selected, the JV can be used for a wide range of projects and service initiatives and they will only be delivered through the SEP if doing so will be better value than other alternatives – such as via other existing frameworks or stand-alone procurement.


Distinctive SEP principles

The SEP 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 which 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.



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


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

NHS bodies need to follow an OJEU compliant process to procure a partner, with whom to form the 50/50 joint venture 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 a proportionate and flexible process. It covers the ground the trusts anyhow needs to cover to meet business planning and project approval good practice and it supports the trust’s own regulatory compliance. By transferring the project development responsibility to the SEP, and part of the cost and risk that goes with it, the NPAP methodology makes projects happen.










Is a SEP for you?

SEPs work for trusts with multiple and long-term needs and objectives, especially those with the potential to convert under-used or tired premises into revenue-generating developments. A SEP is not the only route to delivering investment and development solutions, but as it is a non-exclusive partnership having a SEP does not close down any of your other options.

A SEP may be less attractive to a trust contemplating one fully-formed and single-stage project, or to a trust with the staffing capacity and working capital to plan, develop, deliver and co-ordinate its own projects in-house, or through a wholly-owned subsidiary. Realistically, the market of willing partners may be less attracted to investing in long-term relationships with Trusts with minimal estates needs or whose estates needs cannot be partly resolved by helping Trusts to seize realistic commercial opportunities.

A SEP will focus on meeting the needs of your trust. This includes supporting your trust to take a more integrated approach to the development and operation of the health and social estate across your STP footprint, but doing so from a commercially-sound perspective. It boils down to making the most of your powers and autonomy to seize opportunities, and keep your options open.


Find out more

This briefing is just an outline of how SEPs work. 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.


Key points:

  • Strategic estates partnerships offer an easier and potentially less expensive way to procure estates improvements

  • Trusts need to use OJEC only once – to appoint a partner


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