Retail centres - a remedy for the NHS estate?

Convening voices from the NHS, real estate and infrastructure sectors, our breakfast roundtable in London debated whether vacant units in town centres and shopping malls are the answer to reducing patient waiting lists.

Can the UK's shopping and town centres host more community diagnostics, improving both health and wellbeing for users who do not need to attend a main hospital site, in turn increasing capacity within hospitals and bringing footfall back once more to our high streets?

The short answer is, yes, they are!

The establishment of integrated care systems - local partnerships that bring health and care services together - is prioritising need. It's helping define what needs to be delivered in a hospital, and what does not.

The opportunity is clear. Research published in early 2023 by one of our guests, ADP Architecture, along with partner bodies, demonstrated the potential to 'lift and shift' 1 million sqm of out-patient services from hospitals into the community, alongside the need for 250,000 sqm of space for future clinical roles. Data at that point revealed the availability of 1.6 million sqm of vacant space in shopping centres.

Our debate covered the positives and the challenges:

Positives:

• Removes pressure from existing hospital sites.
• Takes diagnostic and non-acute care into more accessible places in the community.
• Easier access to public transport to reach this care, which in turn reduces carbon emissions.
• Better working conditions for staff directly delivering these services, in modern, urban environments, away from the critical care pressure of a hospital.
• Brings new footfall to the surrounding retail offer.
• NHS is a good and trusted covenant for the landlord.
  

Challenges:

• Affordability for the NHS, both in terms of prime rent, and IFRS 16 (International Financial Reporting Standard) accounting rules.
• Ownership of high street units is sliced and more complex than shopping malls.
• Scepticism from communities as to whether these facilities are free at point of use.
• Healthcare design guidelines are inflexible for facilities outside of hospital environments.
• Poor quality of vacant units and complex and expensive fit-outs required.

Our panel agreed that less acute health provision is being moved into community settings. This is especially notable in retail and leisure malls owned and managed by a single institutional landlord that is better placed to balance a long-term lease with a financial contribution to the required fitout.

However, the speed of this change is impacted by two major issues:

Accounting processes

The rapid upscaling of Community Diagnostic Centres (CDCs) has been achieved because it's a nationally funded capital programme, However, bringing other healthcare initiatives to communities is much more challenging if only 'local' Trust funding is available.

Firstly, there's the additional cost to finance space that is not currently part of the Trust's estate, and secondly commercial rents tend to be higher than the NHS would normally encounter.

However, the elephant in the room is the internationally recognised accounting standard, IFRS 16.

Put simply by our roundtable guests, even if a Trust can afford the annual rent on a retail facility, the requirements of IFRS 16 is for the value of the whole term of the lease to be immediately placed on the Trust's balance sheet.

Trusts operate with a Capital Departmental Expenditure Limit (CDEL). This means a Trust has to have that capital in their budget to cover the full lease, even though they aren't paying it in full, upfront.

These CDEL controls, plus the adherence to IFRS 16, are perceived to be linked to historic funding challenges. Only the Treasury can relax the rules to enable Trusts to explore these lease options if they don't have that capital readily available.

Our guests recognised that real estate funders want to offer the opportunity, and that vacant premises are available, but accounting practices are preventing the NHS from seizing the initiative.

Design guidelines

Another argument for fresh thinking on long-established practices revolves around the application of the Health Technical Memoranda (HTM) and Health Building Notes (HBN).

These guidelines are important in ensuring the highest quality and safety standards are applied to the design and construction of high-risk, patient-critical hospital settings.

However, they are 'guidance', and their application to lower-risk, community health provision is restricting the speed at which decisions are being made and costed for these types of facility. The guidelines were first developed based on a limited number of room-use types. The scope and extent of facility now used, including for mental health provision which is not covered by HTM, has changed out of all context in the modern era.

Consensus at our roundtable was that the standards need to be updated to cover more circumstances, and that a more pragmatic, but still safety-first approach is required for engineering design of community-based health facilities. The opinion is that it is important to understand the type of patient using the facility, and profile the risk and design accordingly.

A variety of other challenges were noted in the debate, and it's worth highlighting a few to recognise what's at stake and how to overcome them:

• Clear communication to overcome public misconceptions

It's widely acknowledged that time spent queuing at community centres and in car parks to receive a COVID-19 vaccination changed public perception as to where and how they can access medical care.

However, it's also recognised that many people still don't realise that a variety of health provision is available locally. Despite seeing an NHS sign on the building facia, some people believe these facilities, including CDCs, are private, and will result in a charge.

Community engagement and communication is widely regarded as vital to the successful roll-out of localised healthcare. Helping people understand that access is easier, the facilities are nicer, and the care is just as good, is critical.

• Eyes open on the complexity of repurposing

There is a reason the NHS likes to take on new projects - new hospitals, new care facilities - and it's because there is less risk and it's simpler.

Ownership of assets on a high street is sliced and diced amongst many smaller landlords, which makes these units harder to take on.

Shopping centres are easier, as engagement is often with one institutional landlord. However, evidence suggests that the upkeep of redundant department stores is not as good as might be imagined. Equally, if a medical practice and a supporting pharmacy need to operate longer hours, that might impact the centre's standard opening hours.

Landlords may offer to support the fit-out in return for a long lease and the covenant of the NHS. But all parties need to recognise the power demands and level of equipment needed in these facilities, which will be far different to a normal retail use.

• Involve the private sector and fold-in wellbeing

The direction of travel is to help people, especially with an ageing population, stay fit and prioritise their wellbeing.

This lessens the strain on the health service, but also supports the provision of more community-based health services.

Live Well Centres are increasingly popular facilities that can be incorporated into communities or major new residential centres. With a range of services under one roof, aimed at helping people to 'be well', they are an example of how the private sector can make a financial contribution to an overall wellbeing offer that also includes NHS delivery.

The opportunity exists to support NHS facilities in the community by joining with providers delivering social services, or private enterprises such as gyms, physiotherapists or health education.

Our roundtable guests concluded that there is a desire to increase the pace of change in what is delivered in a hospital and what is not, and through the collaboration of the NHS, local authorities, and real estate investors, change is possible, - but existing financial and design challenges need to be overcome.

With thanks to: Candace Dixon, LCA; Hannah Brewster, ADP Architecture; Jo Shepherd, The Manser Practice; Liam Sayers, Archus; Marc Sansom, Salus Global; Matthew Tulley, Imperial College NHS; Nicola Theron, North Central London ICS; Rupert Long, BKL; Vivienne King, Impactful Places.

Hydrock, now Stantec was represented by: Mark Walker, with Alan Rowell, Charlotte Graimes, Gary Powell and Tim King.