Mutual Ventures

NHS Estates and Facilities

Setting up a subsidiary company to maximise the value of your estate

The NHS estate is a precious asset. Effective management of land and buildings is critical for delivering high quality patient care, and doing so within the constraints of a limited budget. The 2017 review by Sir Robert Naylor examined how the NHS can make the best use of its estate. It has shined a light on its importance as an ‘enabler’ to health reform and in delivering the ambitions of the NHS’s Five Year Forward View.

An option for NHS bodies seeking to maximise the value of their estates is to set up a subsidiary company.

Under this arrangement, staff and assets are transferred to a subsidary company, owned by a Trust or other NHS body. Services are provided under contract, akin to an outsourcing arrangement. Depending on ownership, any surplus can be reinvested or returned to the Trust as profit. Staff can remain on NHS Terms and Conditions with access to the NHS pension.

Setting up a subsidiary offers a number of opportunities to realise savings, operate more effectively and generate income. The potential benefits include:

  • Reductions in VAT liability – VAT savings may be found where there is a taxable supply of healthcare goods and services. This may include recovery of costs related to the provision of a fully managed service, capital costs for any new and/or refurbished facilities, utility costs, and any business activities
  • Ability to increase income generating activities – for example through subleasing property to third parties or selling facilities maintenance services to other NHS Trusts
  • Savings on staff costs – where appropriate, new staff could be employed on terms and conditions not aligned to Agenda for Change
  • Allowing a focus on estates – as a separate company, the subsidiary can maintain a clear focus on estates. This provides the opportunity to manage services differently, transforming services and reducing running costs, sharing buildings
  • Providing freedom to innovate – the subsidiary provides the opportunity to ‘do things differently’, for example releasing surplus and under-used land for development or reconfiguring buildings.

Our offer

Mutual Ventures can work with you to help you consider the options around setting up a subsidiary company, and implement a solution. We work with partners with expertise in estates, legal and VAT to provide a comprehensive range of support.

Key areas where we can provide support are:

  • Determining service configuration – analysis to determine which mix of services would benefit from being part of a subsidiary company.
  • Options analysis – evaluating the options for organisational design, including legal form, governance and ownership. Ensuring the model to complies with all statutory requirements.
  • Testing your business case – an in-depth assessment of the aims, benefits, risks and sustainability of your preferred option, including financial modelling.
  • Business planning – thinking through the right approach to ensure the chosen model can deliver on its promise, and has the right systems to support it.
  • Stakeholder engagement – working with your partners, staff and patients (as appropriate) to create a shared vision, and address the barriers to working together.
  • Implementing your plan – expert project management support to make the plan a reality, including ensuring legal, contractual, procurement and tax matters are resolved

To learn more about how we could help you contact John Copps on john@mutualventures.co.uk.

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