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Healthcare Construction Market Report - UK 2017-2021 Analysis

Published: 09/05/2017 / Number of Pages: 103 / Price: £795.00

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Introduction and Overview

The 7th edition of the 'Healthcare Construction Market Report - UK 2017-2021 Analysis' focuses on key market trends and major structural changes within the NHS and private sectors, which should be of particular interest to construction professionals involved in or targeting the healthcare sector.

Key issues covered in the report:

  • Government reform of the NHS and implications of the Health & Social Care Act for the construction industry.
  • New providers and clients under the new NHS structure.
  • Analysis of capital funding to 2021 and capital funding arrangements under new NHS structure.
  • Major contractors, consortia, developers and investors involved in the healthcare sector - construction pipelines, budgets, key schemes and players.

Areas of particular interest include:

  • Review of primary healthcare and GP estate and Government funding to upgrade premises - GPs now firmly at the core of the NHS.
  • Review of future of main procurement routes and construction - PFI and Private Finance 2 (PF2), LIFT and ExpressLIFT, Hub Initiative in Scotland, Procure21+, Designed for Life: Building for Wales and Frameworks Scotland - construction pipelines, budgets, key schemes and players.
  • Shift away from major new build hospital schemes towards local and primary health facilities and refurbishment schemes. ExpressLIFT and P21+ construction pipeline.
  • Review of growing involvement of private sector and commercial providers in the NHS primary care provision.
  • Detailed market data and insight on the healthcare construction market by AMA Research, a leading UK provider of construction market intelligence.

Some of the companies included:

Balfour Beatty, BAM, Bowmer & Kirkland, Bouygues, Bovis, Carillion, Eric Wright Group, Galliford Try, Graham Construction, ISG, Laing O'Rourke, Kier, Interserve, John Laing, John Sisk, Laing O'Rourke, Lend Lease, McLaughlin & Harvey, Midas Construction, Mitie, Morgan Sindall, NG Bailey, RG Carter, Robertson Construction, Rydon, Seddon Group, Sir Robert McAlpine, Shepherd Building, Skanska, Simons Construction, Vinci, Willmott Dixon.


Public Sector Healthcare in the UK

  • Overview and new structure of the NHS - England, Scotland, Wales - Government reforms of the NHS and implications of new Health & Social care act.
  • New providers and clients under new NHS structure - CCGs, Foundation Trusts, NHSCB.
  • Size and condition of NHS estate in England, Wales and Scotland - impact of reforms on NHS estate rationalisation and upkeep.
  • Healthcare spending and investment - primary care spending, NHS funding in Wales, Scotland and Northern Ireland, forecasts 2017-2021.

Private Acute Healthcare Sector in the UK

  • Private partnership with the NHS and analysis of private and corporate providers in the NHS.
  • Acute private hospital provision and leading providers - number of facilities, key contracts.
  • Private healthcare companies - key players, market size including major groups, retail outlets moving into primary healthcare, private healthcare groups and property/investment companies - top 25 major players specializing in GP and primary care premises investment and development.
  • Private dental care - major dental companies/practices.

Contractors' Output in the Healthcare Sector

  • Analysis of total new work construction output - output by sector for 2017 and beyond.
  • Construction output in the healthcare sector - 2012-2021 - factors influencing forecasts.
  • Healthcare construction work pipeline - key funding streams (PFI/PPP, P21, P21+), programme budgets to 2021, number of schemes/capital values.
  • Capital expenditure in the NHS - England, Scotland, Wales and N. Ireland - key developments.

Procurement of Healthcare Construction Work

  • Size/value of PFI healthcare market and progress of schemes to date.
  • Future of Healthcare PFI (Private Finance 2) - key schemes, values.
  • Overview of NHS LIFT/ExpressLIFT/Hub Initiative in Scotland/Procure21 & Procure21+/Designed for Life: Building for Wales Framework/Frameworks Scotland - budgets, construction pipelines, progress to date, forecasts.
  • NHS ExpressLIFT and P21+ construction pipelines to 2020 - values, schemes, status, players etc.
  • Other finance and procurement options for NHS clients - LABVs, joint ventures, surplus land - open up the market considerably to smaller firms and suppliers.

Construction Supply in the Healthcare Sector

  • Key construction companies in the healthcare sector - recent projects.
  • Key consortia in healthcare sector - key players.
  • Healthcare developers and investors.
  • Current construction opportunities and tenders in the healthcare sector.

Report Summary

The Government has announced a forward pipeline of around £5.7bn worth of capital projects in the healthcare sector between now and 2020, and beyond. There are nearly 600 individual health projects under almost 100 schemes, which are mainly spread across the English regions, of which there are around 10 large NHS-led capital programmes, in addition to smaller works and capital programmes procured via the Procure 21/Procure21+ frameworks. However, whilst the DH was allocated £4.8bn for capital investment for each year to 2020-21 in the 2016 Budget, this represents a real-terms cut of 1.7% each year.

As a result of GP-led commissioning and financial constraints, the procurement of services to the NHS, including construction, are increasingly looking towards increased partnership with the private sector. A further driver is also taking place in the acute healthcare sector with the creation of NHS Foundation Trusts, under which hospitals can generate their own income. As a result, there has been a rise in private providers refurbishing part of existing hospitals, adding extensions, new-build facilities or even taking on the full operation of a hospital. Foundation trusts are expected to be a popular target for construction companies as they tend to be more commercially aware and are usually more financially robust.

Health sector construction output peaked in 2008, followed by a decline of around 50% to around £2.9bn in both 2015 and 2016. Despite 4 years of declining output between 2011 and 2014, the outlook for health construction output remains steady, if moderate, into the medium-term, with annual rates of growth of 3-5% currently forecast to 2021 as work on small hospital projects is boosted by privately-funded projects under PF2. The moderate forecast is based upon the steady level of health new orders over the last 2-3 years, and the focus on delivery of local services and chronic disease prevention initiatives put forward by successive Governments. Health RMI into the medium-term is also likely to remain positive but moderate and there are likely to be significant regional differences, especially where demand for key services is high.

Going forward the key construction opportunities in the healthcare sector are likely to be in the primary care sector - including GP surgeries and community health centres - and this may entail further opportunities for the development of hub facilities and integrated GP premises. In the acute and secondary sector, much of the medium-term is expected to lie in refurbishment and extensions, with very few big, brand new hospitals planned for development. The introduction of P22 should mean a continued focus on partnerships to drive increased efficiency and productivity, whilst lowering construction and maintenance costs. Contractors will also be waiting to see how new procurement routes and private finance initiatives will be used to procure work in the health sector in 2017 and beyond, with the expiration of the Express LIFT framework and both the DH and CHP currently working to explore future options for health PPPs.


List of Report Contents

  1. Contents Listing
  2. 1. INTRODUCTION 7
  3. 2. SUMMARY AND FUTURE PROSPECTS 9
  4. 3. ECONOMIC ENVIRONMENT 13
  5. 3.1 GDP 13
  6. 3.2 INFLATION & INTEREST RATES 15
  7. 3.3 UNEMPLOYMENT 16
  8. 3.4 HOUSEHOLD CONSUMPTION 16
  9. 3.5 HOUSING & CONSTRUCTION 17
  10. 3.6 STERLING 18
  11. 3.7 POPULATION PROFILE 19
  12. 3.8 CONCLUSIONS 19
  13. 4. CONTRACTORS OUTPUT IN THE HEALTHCARE SECTOR 21
  14. 4.1 TOTAL CONSTRUCTION OUTPUT 21
  15. 4.1.1 Construction New Work and RMI - Value of Output to 2021 21
  16. 4.1.2 Non-Residential Construction Output by Sector in 2016 22
  17. 4.2 CONSTRUCTION OUTPUT IN THE HEALTHCARE SECTOR 25
  18. 4.2.1 Outlook for Healthcare Construction Work 25
  19. 4.2.2 Healthcare Construction Pipeline 27
  20. 4.3 CAPITAL EXPENDITURE IN THE NHS 29
  21. 4.3.1 England 29
  22. 4.3.2 Scotland 29
  23. 4.3.3 Wales 31
  24. 4.3.4 Northern Ireland 31
  25. 5. PUBLIC SECTOR HEALTHCARE IN THE UK 33
  26. 5.1 OVERVIEW AND STRUCTURE OF THE NHS 33
  27. 5.1.1 NHS Reform 33
  28. 5.1.2 Providers and Clients in the NHS 36
  29. 5.2 HEALTHCARE SPENDING IN THE UK 39
  30. 5.2.1 NHS Funding - England 41
  31. 5.2.2 NHS Funding - Scotland 43
  32. 5.2.3 NHS Funding - Wales 43
  33. 5.3 NHS ESTATE RATIONALISATION 44
  34. 5.3.1 England 44
  35. 5.3.2 Scotland 45
  36. 5.3.3 Wales 48
  37. 5.3.4 Northern Ireland 48
  38. 5.3.5 Future of the NHS Estate 49
  39. 5.3.6 GP Premises 52
  40. 6. PRIVATE ACUTE HEALTHCARE SECTOR IN THE UK 54
  41. 6.1 OVERVIEW & SIZE 54
  42. 6.1.1 Partnership with the NHS 56
  43. 6.2 LEADING PRIVATE HEALTHCARE PROVIDERS 58
  44. 6.2.1 Private Healthcare Companies 60
  45. 6.2.2 Private Dental Care 66
  46. 7. PROCUREMENT OF HEALTHCARE CONSTRUCTION WORK 68
  47. 7.1 PFI 68
  48. 7.1.1 PF2 69
  49. 7.1.2 PFI in the Healthcare Sector 70
  50. 7.1.3 Alternative Models to PFI in the Healthcare Sector 72
  51. 7.2 PROCUREMENT ROUTES FOR GPS AND CCGS 72
  52. 7.2.1 Future of Healthcare Procurement 73
  53. 7.3 MAIN HEALTHCARE CONSTRUCTION PROCUREMENT PROGRAMMES IN THE UK 74
  54. 7.3.1 NHS LIFT 74
  55. 7.3.2 HUB Initiative Scotland 76
  56. 7.3.3 Procure21+/Procure22 81
  57. 7.3.4 Designed for Life: Building for Wales (Procure21 in Wales) 84
  58. 7.3.5 Frameworks Scotland 85
  59. 7.3.6 Other Finance and Procurement Options for Healthcare Clients 88
  60. 8. CONSTRUCTION SUPPLY IN THE HEALTHCARE SECTOR 90
  61. 8.1 OVERVIEW 90
  62. 8.2 LEADING CONSTRUCTION CONTRACTORS IN THE HEALTHCARE SECTOR 93
  63. 8.2.1 Overview 93
  64. 8.3 LEADING CONSORTIA IN THE HEALTHCARE SECTOR 97
  65. 8.4 HEALTHCARE DEVELOPERS & INVESTORS 101
  1. Tables & Charts
  2. TABLE 1: SUMMARY OF MAJOR HEALTHCARE CAPITAL SPENDING PROGRAMMES 2016-2021 BY PROGRAMME VALUE (£BN) 9
  3. TABLE 2: GDP DATA - 2013-2016 - KEY CONSTITUENT ELEMENTS 14
  4. CHART 3: INTEREST RATES AND INFLATION (CPI) FROM 2000-2021 15
  5. CHART 4: PDI & SAVINGS RATIO AT CURRENT PRICES 2000-2021 17
  6. TABLE 5: EXCHANGE RATE FLUCTUATIONS 2012-2019 - STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 18
  7. CHART 6: VALUE OF TOTAL CONSTRUCTION OUTPUT 2011-2021 BY VALUE (£BN AT CURRENT PRICES) 21
  8. CHART 7: VALUE OF NON-RESIDENTIAL CONSTRUCTION OUTPUT NEW WORK BY SECTOR - % BY VALUE 2016 23
  9. TABLE 8: CONTRACTORS OUTPUT IN THE HEALTHCARE SECTOR (PUBLIC & PRIVATE) 2011-2021 (£M) 25
  10. CHART 9: HEALTHCARE CONSTRUCTION OUTPUT FORECASTS 2016-2021 BY VALUE (£BN AT CURRENT PRICES) 26
  11. TABLE 10: HEALTHCARE PROJECTS: FORWARD CONSTRUCTION PIPELINE 2016-2020 BY SCHEME STATUS AND VALUE (£M) 28
  12. TABLE 11: NHS CAPITAL SPENDING 2015-2020 (£BN) 29
  13. TABLE 12: TOTAL HEALTHCARE SPENDING SCOTLAND 2011-2017 (£M) 30
  14. TABLE 13: WALES - HEALTHCARE CAPITAL SPENDING 2011-2021 (£M) 31
  15. TABLE 14: NORTHERN IRELAND - HEALTHCARE CAPITAL SPENDING 2011-2017 (£M) 32
  16. TABLE 15: STRUCTURE OF THE REFORMED NHS 2016 35
  17. TABLE 16: MAIN NHS FUNDING SEGMENTS 2016-17(£BN) 40
  18. TABLE 17: NHS ENGLAND SPENDING REVIEW SETTLEMENT 2015-2021 (£BN) 41
  19. TABLE 18: CCG FINANCIAL ALLOCATIONS 2015-16 TO 2020-21 (£BN) 42
  20. TABLE 19: TOTAL HEALTHCARE SPENDING SCOTLAND 2015-2017 (£M) 43
  21. TABLE 20: ENGLAND - TOTAL SIZE OF NHS ESTATE (SQ. M.) 2012-2016 (£M) 45
  22. TABLE 21: SCOTLAND - TOTAL SIZE OF ESTATE (SQ. M. MILLIONS) 2015 46
  23. CHART 22: NHS SCOTLAND - BACKLOG MAINTENANCE BY NHS BOARD (%) 47
  24. CHART 23: NHS SCOTLAND - AGE PROFILE OF THE ESTATE (%) 47
  25. CHART 24: PRIVATE ACUTE HEALTHCARE MARKET - VALUE OF SERVICES BY SECTOR 2015-16 £BN) 54
  26. TABLE 25: MAJOR NHS HEALTHCARE CONTRACTS AWARDED TO THE PRIVATE SECTOR 57
  27. TABLE 26: LEADING UK PRIVATE HOSPITAL PROVIDERS 2016 - NO. OF HOSPITALS, BEDS AND OVERALL MARKET SHARE 59
  28. TABLE 27: TOP PRIMARY HEALTHCARE PROVIDERS BY NUMBER OF SURGERIES OWNED 2017 64
  29. TABLE 28: LEADING UK PRIVATE DENTAL COMPANIES BY NO. OF PRACTICES IN 2015 AND 2017 67
  30. TABLE 29: CURRENT PFI INVESTMENTS BY GOVERNMENT DEPARTMENT (BY NUMBER AND CAPITAL COST £M) 69
  31. TABLE 30: PFI/PF2 HEALTHCARE SCHEMES - BY SCHEME STATUS AND VALUE (£M) (AS AT APRIL 2016) 71
  32. TABLE 31: NHS LIFT FORWARD PIPELINE - BY SCHEME STATUS AND VALUE (£M) 2017 76
  33. TABLE 32: HUB INITIATIVE SCOTLAND - HUBCOS (AREA, CAPITAL VALUES, AND SUPPLY CHAIN PARTNERS ETC) 77
  34. TABLE 33: HUB INITIATIVE SCOTLAND - KEY HEALTH PROJECTS IN DEVELOPMENT: 2016-2020 BY VALUE (£M) 79
  35. CHART 34: P21/P21+ - CAPITAL VALUE OF SCHEMES IN DEVELOPMENT 2012-2020 (£M) 82
  36. TABLE 35: PROCURE21/P21+ FORWARD CONSTRUCTION PIPELINE 2016-2020 BY SCHEME STATUS AND VALUE (£M) 83
  37. TABLE 36: DESIGNED FOR LIFE: BUILDING FOR WALES: FRAMEWORK PARTNERS 85
  38. TABLE 37: FRAMEWORKS SCOTLAND - KEY HEALTH PROJECTS IN DEVELOPMENT: 2016-2020 BY VALUE (£M), DATE AND CONTRACTOR 87
  39. TABLE 38: TOP PUBLIC SECTOR CLIENTS - KEY CONSTRUCTION PROJECTS BY VALUE 2015-2021 (£M) 92
  40. TABLE 39: HEALTH SECTOR ANALYSIS - TOP CONTRACTORS IN THE HEALTHCARE SECTOR: KEY PROJECTS IN 2016, FRAMEWORKS AND PREVIOUS HEALTHCARE EXPERIENCE 94
  41. TABLE 40: HEALTH SECTOR ANALYSIS - MAJOR CONSORTIA AND FRAMEWORK PARTNERS 99
  42. TABLE 41: PRIMARY HEALTHCARE DEVELOPERS & INVESTORS BY NUMBER OF PRIMARY CARE PREMISES OWNED 2017 102

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