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2006, but sensed that a “log-jam” effect had been created and was
confident this would be released in fiscal year 2007/08. Another
chose its words carefully when it said “There are signs of an
upturn in activity levels in the sector, certainly in the context of a
requirement for lease advisory services which may foreshadow a
corresponding upturn in leasing volumes although this upturn is
not consistent across the sector.” Richard Bate, director of Healthcare Finance at Close Brothers, feels that while volumes had been static, some Trusts might have been delaying transactions until the new Framework Agreement for Leasing was in place, while some Trusts may also be preparing to convert to Foundation Trust status and don’t want to take on any more commitments until the status had been granted. He added: “Close Healthcare Finance is a niche player with financial muscle and a long track record. We take our own residual value risk, and are happy to continue developing our relationships with chosen advisers and existing Trusts.” The flavour of the year from the NHS as regards procurement has been Collaborative Procurement Hubs, which were introduced as a follow up to the pilot schemes/first wave Confederations. The principle is to generate economies of scale in procurement, Confederations typically represented a dozen or so Trusts, while Hubs represent even more Trusts, typically c.30-80 Trusts. Unfortunately economies of scale do not necessarily translate directly into economies in leasing rates; in fact the opposite is true initially as there is a substantial workload in identifying existing leases in all the Trusts and recording them in one place, which requires the extra expense of a lease co-ordination person. Early experiences with Confederations led to identifying the usual tendering process as a bottleneck in lease procurement, so the concept of a Framework Agreement for leasing has been put into place. Framework Agreements bring a number of providers through the tendering process at once, so that the chosen group can, for a period of two years, quote on transactions as they come up without having to tender from scratch each time. |
The advent of the Framework Agreement for Leasing points to a
period of continuous stability for lessors in the NHS market, as
all the major players are thought to have “thrown their hats into
the ring”. Lessors might be forgiven if they get frustrated because they find it difficult to form relationships with individual Trusts, as they can only get to them via a leasing adviser, or via a public tendering process. They can’t even send their client a bottle of wine at Christmas because of the NHS rules. When lessors do win the transaction some used to feel that if they had been given the opportunity to get involved earlier, they wouldn’t have structured the lease transaction in the way they had been asked to. But this arms-length approach has always been a characteristic of the NHS market, and lessors now remark that advisers are doing a good job, with better staff and services than before. Of the advisers, Leaseguard continues to dominate about a third of the market. The advent of Hubs has not impacted advisers’ activities too much although the picture is not very clear. Advisers tend to deal at individual Trust level with the finance director, so when a Hub is created with, for example 70-80 Trusts, several different advisers can find themselves involved with the same Hub. Does the Hub then allow all the advisers to remain involved or does it put out a new tender to select just one adviser for the whole Hub? The experience to date has been that Hubs can do either, and advisers are now seeking clarification from PASA regarding a common approach to this problem. Some advisers report that Hubs do not appear to be moving forward particularly quickly and are adopting a “wait and see” attitude. Leaseguard’s Stuart Jefcoate has noticed a change in Trusts’ requirements, “Leaseguard has been realigning its strategic planning services to accommodate the needs of Foundation Trusts, and from April, Acute Trusts. We are now advising not only on Lease versus Buy but also Lease versus Loan.” The feedback on the ground is that advisers are currently very busy, so after what for many has been an indifferent year, the next 12 months should see a firmer market. |
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