HEALTHCARE PLANNING SYSTEMS Figure 1: Rethinking care pathways using Acuity.


‘More than just bricks and mortar’ Paul Fenton’s next focus was ‘System- Wide Economic Modelling’. The Department of Health & Social Care was, he noted, ‘explicit’ that health infrastructure was ‘more than just bricks and mortar’, and hospitals, ‘more than land, equipment, and maintenance budgets’. In addition to being ‘the embodiment of improved care pathways and technological innovation, and enablers of staff development’, they should be ‘integral partners of local health systems, supporting the delivery of community and home care systems, and pivotal in the efforts to integrate tertiary, secondary, primary, and social care services’. The hospital thus had a social and economic value to the wider community far beyond the land, buildings, and equipment, it owns. If hospitals are to be ‘embedded partners in a fully functional integrated care ecosystem’, the Working Group believes their value should be assessed through some form of System-Wide Economic Modelling. “Hospitals are centres of knowledge, expertise, and the latest technologies, richly made up of high- quality staffing resources, and usually highly capital- intensive,” Paul Fenton said. “However, ultimately in an integrated health system, the overall operation and efficiency of the system should take precedence over one individual hospital.”


Rigorous assessment For these reasons, investments in new hospitals should be rigorously assessed ‘through the lens’ of ‘What does this investment and design add to the overall system capacity to address the local,


‘‘


strategic, or national population and health needs?’ Paul Fenton elaborated: “Crucially, System-Wide Economic Modelling introduces the notion of ‘trade-offs’, i.e how to reconcile the competing demands of the brief, also taking into account new priorities such as carbon reduction, budgetary constraints, and increased infrastructure resilience post-COVID.” Returning to a point made earlier by


his co-speaker, Paul Fenton said that ‘for many decades’, decisions about healthcare capital asset investments had been driven by business cases linking planned activity to a cost per /m2


(‘mostly based on


historic values’), and ‘a standard capital envelope’. The result was ‘an inflexible, highly risk-averse’ cost ceiling, ‘focused only on the hospital as a standalone entity, and unlikely to take account of factors such as coming changes in clinical models mostly driven by emerging technologies and changing epidemiology/demography, a need for rapid adaptation of the physical estate, and different modes of governance and public accountability’.


Need for capital headroom Without some capital headroom to build in significant capacity to ‘flex’ the estate, and ensure robust, future-proofed, high quality design and construction, new hospitals would always struggle to achieve sustainability targets, and to offer patients and staff an environment conducive to the highest care standards. Paul Fenton said: “The focus on capital cost, here and now, is all the more puzzling given that the value of the capital is negligible, when compared – as it should be – with the through-life cost of running the facility.”


Our evaluation of previous successful hospital investment programmes suggests the greatest success comes when all key stakeholders share a common language of understanding


26 Health Estate Journal November 2022


He continued: “By far the biggest cost of running a hospital is that associated with the human capital – the staff who make it work. Preliminary and simplified Discounted Cash Flow modelling undertaken for this bid (the Working Group’s proposals were the focus of an entry to the Wolfson Economics Prize 2021*) – based on data for an existing English NHS hospital business case – suggests a hospital with a capital expenditure of around £250 m will have a discounted lifetime Net Present Value of cost, mainly of clinical and associated services, of well over £4 bn.” It was thus ‘more important to ensure that the billions are spent efficiently and productively over the hospital’s lifetime, than to play around with a few millions on the capex number now’. Equally, a small productivity enhancement enabled by new buildings and equipment ‘well aligned with the business model and health system’, with productivity change designed in from the start, would ‘rapidly, quantifiably, and provably, recompense any required associated uplift to the upfront cost’.


Flexibility to accommodate ‘game-changing advances’ There was ‘a cost, but also an opportunity’, in allowing some additional capital budget to accommodate ‘highly innovative and potentially game-changing’ advances in construction techniques and emerging technologies (e.g. AI, robotics, and telehealth) during planning and design. Nevertheless, Paul Fenton acknowledged, there was an imperative to ensure value for money in all public procurement projects, and the two speakers would later describe ‘a systematic, highly integrated means to marry cost savings at the design and construction phases, with a lifecycle approach to hospital capital investment’.


The question of capacity A hospital’s capacity was, the IHEEM President told delegates, ‘categorically not well captured by the number of beds’; capacity was the ability to do work, and what a hospital does could only be evaluated in the context of the system it is embedded in. He said: “What matters then is the capacity, cost, and performance of the system, with and without the hospital concerned. Equally, the accepted desirability of having extra ‘flexibility/ adaptability’ could be cogently addressed as the need for extra buffer capacity. A system-wide modelling framework can create scenarios to tackle the question over the size of the premium worth paying to retain spare capacity needed to meet future contingencies.” Paul Fenton said the key aim of


developing an Integrated Healthcare Infrastructure Planning Framework was to ensure that future healthcare investment plans were primarily being decided,


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