Publication - Progress report

Annual State of the NHSScotland Assets and Facilities Report for 2012

Published: 11 Jan 2013
Part of:
Health and social care
ISBN:
9781782562993

A review of asset and facilities management performance in NHSScotland, identifying the current state of the estate and facilities management, highlighting areas of best practice and areas for improvement.

92 page PDF

2.3 MB

92 page PDF

2.3 MB

Contents
Annual State of the NHSScotland Assets and Facilities Report for 2012
3.0 The Annual Cost of Assets and Facilities Services

92 page PDF

2.3 MB

3.0 The Annual Cost of Assets and Facilities Services

The revenue and lifecycle costs associated with asset ownership and use represent a considerable burden on NHSScotland budgets. This section of the report provides a summary of the annual cost of asset ownership and associated facilities management services.

3.1 Property Assets and Facilities Services - Annual Costs

There are significant annual revenue costs that are directly associated with property asset ownership including:

  • Property Maintenance (regular day to day maintenance - excluding capital expenditure on upgrading/refurbishment and backlog works)
  • Energy
  • PFI Facilities Management Costs (primarily Hard FM)
  • Rent and Rates
  • Cleaning

There are also a range of facilities management services costs that are closely associated with property asset ownership including:

  • Catering
  • Portering
  • Laundry and linen
  • Waste disposal

The table below provides an analysis of these costs for the Hospital Sector of NHSScotland (250 hospitals) in 2010/11.

Annual Property Asset and Facilities Services Costs
Expenditure £ 2010/11 Percentage of Total
Property Maintenance (capital and revenue costs) 113,949,249 18%
Cleaning 117,128,872 18%
PFI Facilities Management Costs 101,674,478 16%
Catering 80,866,039 13%
Energy 72,311,800 11%
Rent and Rates 60,303,082 9%
Portering 47,285,685 7%
Laundry and linen 34,164,405 5%
Waste Disposal 10,022,261 2%
Total 637,705,871 100%

Notes:
1) Excludes capital charges and depreciation on property asset
2)Excludes costs associated with Community and Family Health Services
3) Energy costs exclude costs associated with environmental taxes and levies e.g. EU ETS Payments

The table below shows the distribution of these costs across Boards and clearly demonstrates the differences in the size of Boards.

Board Annual Property Ownership and Facilities Services Expenditure £ Board total as % of overall NHSScotland total expenditure on Property Asset and Facilities Services
NHS Greater Glasgow 173,062,909 27%
NHS Lothian 113,731,540 18%
NHS Lanarkshire 62,635,015 10%
NHS Grampian 52,158,776 8%
NHS Tayside 51,833,210 8%
NHS Ayrshire and Arran 41,036,177 6%
NHS Highland 32,387,108 5%
NHS Forth Valley 30,469,941 5%
NHS Fife 29,369,235 5%
NHS Dumfries and Galloway 15,665,212 2%
NHS Borders 11,618,164 2%
Golden Jubilee 8,309,824 1%
State Hospital 5,017,206 1%
NHS Western Isles 4,715,299 1%
NHS Shetland 3,434,590 1%
NHS Orkney 2,261,665 0.4%
Total: 637,705,871 100%

Interestingly, further analysis of these asset ownership and facilities services costs shows that, irrespective of the Board's size and other unique features, on average they represent around 11% of each Board's total hospital sector operating costs.

3.2 Property Assets - Lifecycle and Backlog Maintenance Costs

In addition to the regular day to day maintenance costs included in the annual property maintenance figures shown above, property assets require regular expenditure on lifecycle replacement of building and engineering elements of the estate. Historically, NHSScotland has invested too little on these lifecycle replacements, hence the build up of a significant backlog maintenance expenditure requirement (currently £948 million). However, over recent years Boards have had a particular focus on reducing backlog through targeted expenditure on high and significant risk backlog and rationalisation of the estate. This has resulted in a £62 million reduction in the backlog expenditure requirement since 2011.

In addition, NHSScotland's substantial capital investment programme over recent years has reduced the backlog expenditure requirement through new-build projects which replace old buildings and refurbishment schemes which incorporate backlog within the works.

Estimates of the future expenditure required on backlog maintenance and replacement of the estate are provided later in this report (Section 5: Future Asset Investment Requirements).

3.3 Vehicles - Annual Costs

NHSScotland's estimated annual expenditure on its vehicles assets is shown in the table below.

Annual Capital and Revenue Expenditure on Vehicle Assets
Description £ % of Total
Leasing costs - Cars £20,000,000 36%
Fuel £18,000,000 32%
Maintenance - owned vehicles £ 8,000,000 14%
Insurance ( including brokerage and accidental damage) £ 7,000,000 13%
Leasing costs - Commercial vehicles £ 3,000,000 5%
Total £56,000,000 100%

Note: excludes capital charges and depreciation on owned fleet.

In addition to the above, many NHSScotland staff use their private vehicles for official business and claim fuel and running costs through expenses claims.

3.4 Medical Equipment - Annual Costs

The annual expenditure (capital and revenue) on medical equipment by Boards is shown in the table below.

Annual Capital and Revenue Expenditure £ on Medical Equipment Assets
Description High Value
Equipment
(>£150K)
Low Value
Equipment
Total £ % of Total
Maintenance and servicing 5,639,329 15,178,286 20,817,615 33%
Leasing and revenue expenditure on equipment 3,996,802 2,870,364 6,867,166 11%
Capital expenditure in year on equipment replacement and acquisition 8,028,685 26,876,758 34,905,443 56%
Total 17,664,816 44,925,408 62,590,224 100%

Note: excludes capital charges and depreciation on owned equipment

As with property assets, there is a need to invest in the lifecycle replacement of medical equipment, particularly as equipment life is relatively short (often less than 15 years). Technical obsolescence can reduce the operational life of equipment even further because new technology can often offer improved patient care, reduced radiation doses and reduce costs. However, equipment vendors do now offer technology refresh pathways at the time of initial purchase of the equipment. Annex J provides more detail on the national medical imaging programme.

3.5 IM&T - Annual Costs

The annual expenditure on IM&T equipment is shown in the table below.

Annual Expenditure (Capital and Revenue) £ on IM&T Assets
Description Infrastructure -
cabling networks,
servers,
communications systems
Equipment - Desktop and mobile Total £ % of Total
Maintenance and servicing 12,278,295 8,947,000 21,225,295 54%
Leasing and revenue expenditure in year 1,865,966 1,258,375 3,124,341 8%
Capital expenditure in year 12,941,632 1,992,000 14,933,632 38%
Total 27,085,893 12,197,375 39,283,268 100%

The above costs exclude any backlog maintenance expenditure requirement in respect IM&T infrastructure such as cabling and servers.

3.6 Summary of Total Annual Asset and Facilities Costs

The chart below provides an analysis of the combined total asset and facilities annual expenditure.

Analysis of Total Asset & Facilities Annual Capital & Revenue Expenditure (£796 Million)

Notes:
1) Excludes capital charges and depreciation costs associated with asset ownership
2) Excludes any annual expenditure on lifecycle replacement and backlog maintenance


Contact

Email: James H White