Healthcare Construction Market Report – UK 2019-2023
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The 8th edition of the ‘Healthcare Construction Market Report – UK 2019-2023’ focuses on major construction projects and market trends in both the public and private healthcare sectors, which should be of particular interest to healthcare providers and construction professionals in the healthcare sector.
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Key issues covered in the report:
- Analysis of continued Government reform of the NHS including a review of funding, measures and new models of care outlined in the NHS Long Term Plan.
- Major construction contractors, developers, primary care property companies and investors involved in the healthcare sector.
- Healthcare funding – analysis of both resource and capital spending levels to 2024, including the long-term funding settlement for the NHS.
- Detailed assessment of healthcare construction output, new orders and projects together with estimated forecasts for growth to 2023.
Areas of particular interest include:
- Future opportunities for healthcare sector work and key issues for the construction industry. The Government’s forward pipeline includes £4.9bn worth of healthcare capital projects taking place between 18/19 and 2020/21.
- The NHS will be driven by the development of Primary Care Networks (PCNs) – multi-disciplinary teams of health professionals working at a local level to deliver patient care. We review the GP estate and funding options to upgrade premises.
- The NHS continues to see a shift away from hospital-based provision towards a community-based model of care.
- following the Government’s announcement that it will no longer use PFI and PF2 contracts to fund infrastructure projects, we assess the implications for the NHS and Healthcare Procurement.
Some of the companies included:
Aspen Healthcare, Aspire Defence, BAM, Barnet Enfield and Haringey Mental Health NHS Trust, BMI Healthcare, Benenden, Brymor Construction, Chelsea & Westminster NHS Trust, Circle, Classic Hospitals, Defence Infrastructure Organisation, Fairfield, Galliford Try, Great Ormond Street Hospital NHS Trust, HCA International, Hospital Management Trust, HUB North Scotland, IHP, Interserve, John Graham, John Sisk, Kier, Laing O’Rourke, Liverpool City Council, Liverpool Women’s NHS Foundation Trust, Manchester University NHS Foundation Trust, McLaughlin & Harvey, Milton Keynes University NHS Trust, NHS Greater Glasgow and Clyde Health Board, NHS Scotland, Nuffield Health, One Healthcare, Plymouth Hospitals NHS Trust, Ramsay Healthcare, Robertson Construction, Royal Liverpool and Broadgreen Hospital NHS Trust, Sandwell & West Birmingham NHS Trust, Spencer, Spire Healthcare, St Bartholomew’s Hospital, St. Hugh’s, The Cleveland Clinic, University Hospital Southampton NHS Trust, Vinci, Willmott Dixon, York Teaching Hospital NHS Foundation Trust, and more.
Construction Output in the Healthcare Sector
- Overall Construction Output – Total Construction Output to 2023; Construction Output by Sector.
- Value of Construction Output and New Orders in the Healthcare Sector.
- Market Prospects for Healthcare Construction Output.
- Overview of the UK Healthcare Planning & Development Pipeline.
- Healthcare Contracts – Analysis of healthcare contracts at all stages of the construction pipeline; contracts awarded by Region in 2018.
- Regional Healthcare Activity and Development Pipeline – South East; London; Scotland; North West; East Midlands; South West; West Midlands; Yorkshire & Humber; East England; North East ; and Wales.
Public Sector Healthcare in the UK
- Overview & Structure of the NHS in England, Scotland, Wales and Northern Ireland.
- Analysis of the NHS 5 Year Forward View/NHS Long Term Plan.
- Analysis of the size and state of the NHS estate in England and Scotland.
- The Primary Care Estate – a shift towards primary care.
- Analysis of the size and state of GP Premises and Funding available for premises development.
- Review of NHS Surplus Land.
- Healthcare Funding in the UK – NHS Funding Resource & Capital Allocations for England, Scotland, Wales & Northern Ireland.
Private Acute Healthcare Sector in the UK
- Overview, size and value of the Private Acute Healthcare Sector in the UK.
- Private Healthcare Providers – Partnership with the NHS.
- Analysis of leading private healthcare providers; private healthcare companies and GP surgery providers.
- Private Dental Care.
Procurement of Healthcare Construction Work
- Use of PFI/PF2 in the Healthcare Sector.
- Axing of PFI/PF2 – Implications for the NHS and Healthcare Procurement.
- Procurement Routes for GPs and CCGs.
- Analysis of main healthcare construction procurement programmes in the UK – NHS LIFT/ExpressLIFT; HUB Initiative Scotland; Procure 21+/Procure22; NHS Building for Wales Frameworks; Frameworks Scotland 2/3.
- Future of Public Procurement and Brexit.
- Other Finance and Procurement Options for Healthcare Clients – SEPs and Joint Ventures.
Construction Supply in the Healthcare Sector
- Construction Practices – Use of Modular Construction in the Healthcare Sector.
- Leading Clients in the Healthcare Sector.
- Key Contractors in the Healthcare Sector – Contractors’ Market Share in the Healthcare Sector – By Contract Awards .
- Contractor Profiles – John Graham Construction; Kier; John Sisk; Laing O’Rourke; Galliford Try; BAM; Interserve; Robertson Construction ; Willmott Dixon; Integrated Health Projects (IHP); McLaughlin & Harvey; Balfour Beatty; Others.
- Healthcare Developers and Investors.
The NHS continues to see a shift away from hospital-based provision towards a community-based model of care, transforming primary care services in line with the NHS Five Year Forward View and the recently published NHS Long Term Plan. This places greater emphasis on Integrated Care and population health, which has been a defining feature of recent NHS policy.
At the same time, against a backdrop of constrained capital investment in the NHS and rising backlog maintenance costs, the nature of healthcare procurement and construction is also changing, following the chancellor’s Budget 2018 announcement that the Government will no longer use PFI and PF2 contracts to fund infrastructure projects.
The cancellation of PFI and PF2 as a means of delivering new healthcare projects going forward is likely to have significant consequences for health sector construction output, with the emphasis now firmly on publicly funded healthcare projects.
There is now an urgent need for investment across the NHS estate in England to ensure healthcare infrastructure is fit to deliver new models of integrated care and the Government has made it clear that it will need to find funding from a range of sources, including from the private sector to help fund future infrastructure projects and to address the £6bn maintenance backlog.
The value of healthcare contracts awarded remained fairly consistent in 2018, up from 2017, though unchanged from 2016 values. Public hospitals again accounted for the largest share of contract awards in 2018.
Going forward, the planning pipeline remains positive, but operating at a significantly lower level than some other construction sectors and is now mainly concentrated on smaller, lower value extension and refurbishment projects.
Contents Listing
1. INTRODUCTION 8
2. SUMMARY AND MARKET PROSPECTS 10
3. ECONOMIC ENVIRONMENT 14
3.1 OVERVIEW AND OUTLOOK 14
3.2 KEY DATA 14
3.2.1 GDP 14
3.2.2 Inflation & Interest Rates 15
3.2.3 Employment & Wages 16
3.2.4 Household Consumption 17
3.2.5 Sterling 18
4. CONSTRUCTION OUTPUT IN THE HEALTHCARE SECTOR 19
4.1 OVERALL CONSTRUCTION OUTPUT 19
4.1.1 Total Construction Output to 2023 19
4.1.2 Non-Residential Construction Output by Sector 20
4.2 CONSTRUCTION OUTPUT IN THE HEALTHCARE SECTOR 21
4.2.1 Overview and Definition 21
4.2.2 Value of Construction Output and New Orders in the Healthcare Sector 21
4.2.3 Market Prospects for Healthcare Construction Work 23
4.3 UK HEALTHCARE CONSTRUCTION DEVELOPMENT PIPELINE 26
4.3.1 Healthcare Construction Pipeline 26
4.3.2 Healthcare Construction Contracts 27
4.3.3 Healthcare Planning Pipeline 28
4.4 REGIONAL HEALTHCARE CONSTRUCTION MARKET 30
4.4.1 Regional Healthcare Contracts Awarded in 2018 30
4.4.2 Regional Healthcare Development Pipeline 31
4.5 REGIONAL ANALYSIS 32
4.5.1 South East 34
4.5.2 London 35
4.5.3 Scotland 36
4.5.4 North West 38
4.5.5 East Midlands 40
4.5.6 South West 41
4.5.7 West Midlands 42
4.5.8 Yorkshire & Humber 44
4.5.9 East England 45
4.5.10 North East 46
4.5.11 Wales 47
5. PUBLIC SECTOR HEALTHCARE IN THE UK 49
5.1 OVERVIEW AND STRUCTURE OF THE NHS 49
5.1.1 NHS in England 49
5.1.2 NHS in Scotland 52
5.1.3 Wales 52
5.1.4 Northern Ireland 53
5.2 THE NHS ESTATE 53
5.2.1 England 53
5.2.2 Scotland 54
5.2.3 Development of the Primary Care Estate 5
75.2.4 GP Premises 58
5.2.5 NHS Surplus Land 60
5.3 HEALTHCARE FUNDING IN THE UK 60
5.3.1 NHS Funding – England 61
5.3.2 NHS Capital Funding – England 61
5.3.3 NHS Funding – Scotland 63
5.3.4 NHS Funding – Wales 64
5.3.5 NHS Funding – Northern Ireland 64
6. PRIVATE ACUTE HEALTHCARE SECTOR IN THE UK 66
6.1 OVERVIEW & SIZE 66
6.1.1 Partnership with the NHS 68
6.2 LEADING PRIVATE HEALTHCARE PROVIDERS 69
6.2.1 Private Healthcare Companies 71
6.2.2 Private Dental Care 74
7. PROCUREMENT OF HEALTHCARE CONSTRUCTION WORK 76
7.1 PFI 76
7.1.1 Use of PFI/PF2 in the Healthcare Sector 76
7.1.2 Axing of PFI/PF2 – Implications for the NHS and Healthcare Procurement 77
7.2 PROCUREMENT ROUTES FOR GPS AND CCGS 78
7.3 MAIN HEALTHCARE CONSTRUCTION PROCUREMENT PROGRAMMES IN THE UK 79
7.3.1 NHS LIFT/ExpressLIFT 79
7.3.2 HUB Initiative Scotland 797.3.3 Frameworks Scotland 82
7.3.4 Procure22 82
7.3.5 NHS Building for Wales Frameworks 85
7.3.6 Future of Public Procurement and Brexit 85
7.3.7 Other Finance and Procurement Options for Healthcare Clients 86
8. CONSTRUCTION SUPPLY IN THE HEALTHCARE SECTOR 88
8.1 CONSTRUCTION PRACTICES 88
8.1.1 Use of Modular Construction in the Healthcare Sector 88
8.2 LEADING CLIENTS IN THE HEALTHCARE SECTOR 89
8.3 KEY CONTRACTORS IN THE HEALTHCARE SECTOR 90
8.3.1 Contractors’ Market Share in the Healthcare Sector – By Contract Awards 90
8.4 CONTRACTOR PROFILES 91
8.4.1 John Graham Construction 91
8.4.2 Kier 91
8.4.3 John Sisk 92
8.4.4 Laing O’Rourke 92
8.4.5 Galliford Try 92
8.4.6 BAM 93
8.4.7 Interserve 94
8.4.8 Robertson Construction 94
8.4.9 Willmott Dixon 95
8.4.10 Integrated Health Projects (IHP) 95
8.4.11 McLaughlin & Harvey 96
8.4.12 Balfour Beatty 96
8.4.13 Others 96
8.5 HEALTHCARE DEVELOPERS & INVESTORS
Tables & Charts
TABLE 1: SUMMARY OF MAJOR HEALTHCARE CAPITAL SPENDING PROGRAMMES 2018-2024 BY PROGRAMME VALUE (£BN) 10
CHART 2: GDP DATA – 2015-2019 – KEY CONSTITUENT ELEMENTS 15
CHART 3: CPI INFLATION AND BANK OF ENGLAND BASE RATE, 2008-2023 15
CHART 4: AVERAGE WEEKLY EARNINGS DATA – GB – TOTAL PAY – 2014-2019 (SEASONALLY ADJUSTED) 17
CHART 5: PDI & SAVINGS RATIO AT CURRENT PRICES 2008-2023 17
CHART 6: EXCHANGE RATE FLUCTUATIONS 2015-2021 – STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 18
CHART 7: VALUE OF TOTAL CONSTRUCTION OUTPUT 2014-2023 BY VALUE (£BN AT CURRENT PRICES) 19
CHART 8: NON-RESIDENTIAL CONSTRUCTION OUTPUT NEW WORK (GB) BY SECTOR 2018 – % BY VALUE 20
CHART 9: HEALTHCARE CONSTRUCTION OUTPUT (GB) BY SECTOR 2018 – % BY VALUE 21
TABLE 10: CONTRACTOR’S OUTPUT IN THE HEALTHCARE SECTOR (PUBLIC & PRIVATE) 2009-2018 (£M) 22
CHART 11: HEALTHCARE CONSTRUCTION OUTPUT AND NEW ORDERS GB QUARTERLY ANALYSIS Q2 2015 TO Q3 2018 – BY VALUE (£M AT CURRENT PRICES) 23
CHART 12: VALUE OF HEALTHCARE CONSTRUCTION OUTPUT 2014 – 2023: BY VALUE (£M AT CURRENT PRICES) 24
CHART 13: NATIONAL INFRASTRUCTURE & CONSTRUCTION PIPELINE: HEALTHCARE PROJECTS REGIONAL ANALYSIS (% BY VALUE) 2018-2021 27
CHART 14: HEALTHCARE CONTRACT AWARDS 2016-2018 BY VALUE (£M) AND NUMBER OF CONTRACTS 27
CHART 15: UK HEALTHCARE CONSTRUCTION CONTRACT AWARDS BY TYPE OF FACILITY 2018 (%) 28
CHART 16: HEALTHCARE PLANNING PIPELINE 2019-2023 BY VALUE (£M) 29
CHART 17: UK HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT END 2018) (%) BY TYPE OF FACILITY 30
CHART 18: UK HEALTHCARE CONSTRUCTION CONTRACT AWARDS BY REGION – % SHARE BY VALUE 2018 31
CHART 19: UK HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE 2018-2023 BY REGION 32
TABLE 20: REGIONAL HEALTHCARE CONSTRUCTION MARKET – HEALTHCARE PIPELINE ANALYSIS 2018-2023 33
CHART 21: SOUTH EAST: HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT END 2018) (%) BY TYPE OF FACILITY 34
TABLE 22: SOUTH EAST HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 35
CHART 23: LONDON: HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT END 2018) (%) BY TYPE OF FACILITY 36
TABLE 24: LONDON HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 36
CHART 25: SCOTLAND: HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT END 2018) (%) BY TYPE OF FACILITY 37
TABLE 26: SCOTLAND HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 38
CHART 27: NORTH WEST: HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT END 2018) (%) BY TYPE OF FACILITY 39
TABLE 28: NORTH WEST HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 39
CHART 29: EAST MIDLANDS: HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT END 2018) (%) BY TYPE OF FACILITY 40
TABLE 30: EAST MIDLANDS HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 41
CHART 31: SOUTH WEST: HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT END 2018) (%) BY TYPE OF FACILITY 42
TABLE 32: SOUTH WEST HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 42
CHART 33: WEST MIDLANDS: HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT END 2018) (%) BY TYPE OF FACILITY 43
TABLE 34: WEST MIDLANDS HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 43
CHART 35: YORKSHIRE & HUMBER: HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT END 2018) (%) BY TYPE OF FACILITY 44
TABLE 36: YORKSHIRE & HUMBER HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 44
CHART 37: EAST OF ENGLAND: HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT END 2018) (%) BY TYPE OF FACILITY 45
TABLE 38: EAST OF ENGLAND HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 46
CHART 39: NORTH EAST: HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT END 2018) (%) BY TYPE OF FACILITY 46
TABLE 40: NORTH EAST HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 47
CHART 41: EAST MIDLANDS: HEALTHCARE CONSTRUCTION CONTRACTS IN THE PIPELINE (AS AT END 2018) (%) BY TYPE OF FACILITY 48
TABLE 42: WALES HEALTHCARE CONSTRUCTION PIPELINE – TOP PROJECTS BY VALUE AND BY CLIENT 48
TABLE 43: STP CAPITAL FUNDING ALLOCATIONS 2018 50
TABLE 44: ENGLAND -NHS BACKLOG MAINTENANCE 54
TABLE 45: ENGLAND – SIZE AND COST OF THE NHS ESTATE (SQ. M.) 2015-2018 (£M) 54
TABLE 46: NHS SCOTLAND -SIZE & CONDITION OF THE ESTATE 2015-17 55
CHART 47: NHS SCOTLAND – BACKLOG MAINTENANCE BY NHS BOARD (%) 2017 55
CHART 48: NHS SCOTLAND – 5 YEAR ASSET INVESTMENT PROGRAMME (%) 56
TABLE 49: NHS SCOTLAND – MAJOR HOSPITAL & INFRASTRUCTURE PROJECTS (% FUNDING BY NHS BOARD) 57
CHART 50: INVESTMENT IN GP PRACTICES: TOTAL AND PREMISES FUNDING (£M) 59
TABLE 51: NHS ENGLAND SPENDING REVIEW SETTLEMENT 2018-2024 & CCG FINANCIAL ALLOCATIONS 2018-19 TO 2023-24 (£BN) 61
CHART 52: NHS TRUSTS CAPITAL SPENDING – BREAKDOWN BY TYPE OF SPENDING 2017/18 (%) 62
TABLE 53: DHSC CAPITAL SPENDING 2015-2020 (£BN) 63
TABLE 54: TOTAL HEALTHCARE SPENDING SCOTLAND 2014-2020 (£M) 63
TABLE 55: WALES – HEALTHCARE CAPITAL SPENDING 2014-2020 (£M) 64
TABLE 56: NORTHERN IRELAND – HEALTHCARE CAPITAL SPENDING 2014-2020 (£M) 65
CHART 57: PRIVATE ACUTE HEALTHCARE MARKET – VALUE OF SERVICES BY SECTOR 2017 (%) 66
TABLE 58: LEADING UK PRIVATE HOSPITAL PROVIDERS 2019 70
TABLE 59: TOP PRIMARY HEALTHCARE PROVIDERS BY NUMBER OF SURGERIES OWNED 2018-19 73
TABLE 60: LEADING UK PRIVATE DENTAL COMPANIES BY NO. OF PRACTICES IN 2017 AND 2019 74
TABLE 61: HUB INITIATIVE SCOTLAND – HUBCO’S (REGION, CAPITAL VALUES, AND SUPPLY CHAIN PARTNERS) 80
TABLE 62: HUB INITIATIVE SCOTLAND – KEY HEALTH PROJECTS IN DEVELOPMENT: 2019 – 2021 BY VALUE (£M) 81
TABLE 63: INVESTMENT IN P21+/P22 UNDER THE NATIONAL INFRASTRUCTURE & CONSTRUCTION PIPELINE (NICP) (£M) 83
TABLE 64: P22 – SCHEMES IN DEVELOPMENT 2017-2023 (£M) 84
TABLE 65: TOP CLIENTS IN THE HEALTHCARE SECTOR – BY NO. & VALUE OF PROJECTS IN 2018 (£M) 89
CHART 66: HEALTHCARE CONTRACT AWARDS 2018 – APPROXIMATE SHARE BY CONTRACTOR 90
TABLE 67:PRIMARY HEALTHCARE DEVELOPERS & INVESTORS BY NUMBER OF PRIMARY CARE PREMISES OWNED 2019 100
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