A study of the threefold increase in productivity in the US industrial sector over a 50-year period up to 2004 concluded that 40 per cent of the increase was down to sustained and well-focused capital investment. Productivity in the NHS, on the other hand, is flat-lining. We have failed to make the connection between investment and productivity.
This may hold a clue to answering the question in the paper: can re-thinking the way that the NHS uses its estate can be a catalyst for change in the way we provide care? While health care needs continually change, as do the service's response and clinical advances, infrastructure investment tends to move from one fixed point to another. This means that, too often, the buildings call the tune when shaping, or more accurately cementing, services in place. Territorialism among stakeholders has not helped either. Health is often described as an evidence-based service industry, but we rarely apply this mantra to the environment in which care is delivered. There is plenty of evidence about health care environments; we are just not very good at recognising it, let alone acting on it. We need a more focused approach.
Perhaps two words hold the key – flow and relevance. How can we improve the flow of patients through the system and how can we ensure that we make and sustain relevant investments in buildings, technology and workforce to support the continuous evolution of care?
The primary purpose of an NHS building is to enable staff to work more effectively. Should we be reappraising connectivity? Perhaps by placing new emphasis on the synergy between our two most valuable assets – buildings and the workforce – can we stimulate new innovations in capital strategy to match the innovation seen on the service side of the NHS?
There are some useful illustrations from mainland Europe. Rhoen Klinikum, a large private hospital group in Germany, buys failing public hospitals as going concerns, and, under licence, promises to deliver the same level and quality as public services. It has a startlingly successful track record. One of its key success factors is lifting the re-investment level in annual capital (building and technology) from around 9 per cent of operating cost (the average public hospital ratio) to 20 per cent as a means of ensuring their infrastructure and technology supports the continual evolution of clinical and care practice. In essence the company aims to almost completely refurbish/rebuild its hospitals on a seven- year cycle – and it still makes a profit.
The Netherlands has also revolutionised its strategy on infrastructure. Most hospitals there had a not-for-profit, charitable status and were responsible for raising their own capital on the commercial market, relying on government underwriting that guaranteed them very low interest rates. But this safety net has been swept away in the emerging market reform model, with harsh lessons learned from major projects being suspended and hospitals having to fight their own way out of capital debt. They now pay the going market rate for finance, understand and apply the principles of return on investment, match infrastructure investment to service need, and ensure affordability before commitment. This has accelerated investment in new design and construction concepts – they are no longer constrained by strong central agencies trying to control infrastructure policies and portfolios. The Netherlands swept away their central agency as part of their market strategy. It may have been high risk, but it seems to have worked: hospitals have learned the hard way to stand on their own feet.
In Finland, the Coxa hospital in the Tampere Region grew tired of waiting for approval to leave the state system and set up as a public-private partnership. It now has the power to raise capital commercially without strings and operates a service-led capital organisation. According to their board of management, Coxa is now, 'a modest, adaptable, but above all affordable and sustainable hospital.' It is no coincidence that the new hospital coincided with a surge in productivity.
The consistent factor in all of these examples is that the boards of management have a good strategic grasp of the real cost of capital; understand the importance of return on investment; know how to future-proof their investments with new innovations in building and construction design; show a willingness to pay a premium price for adaptability, and above all can adopt an affordable service-led capital and technology strategy. One final but important ingredient is the freedom to get on with it, a so-called 'capital autonomy' in which the NHS falls well short.
Talk to some of the hard-edged managers around Europe and there is another difference. For them, buildings are tools, not temples to be revered. For the NHS to get there will require political will to be prepared to take risks and innovate.
Read the paper: NHS buildings: obstacle or opportunity?
Barrie Dowdeswell is Director of Research for the European Centre for Health Assets and Architecture and is a guest blogger for the Time to Think Differently programme.