According
to the new Healthcare Construction Market Report from AMA Research, the overall
picture for construction output in the health sector in 2018 is that output
fell to the lowest level since 2015 – declining by over 15% to an estimated
value of £2.5bn.
The
healthcare pipeline is now mainly concentrated on smaller, lower value
extension and refurbishment projects of existing facilities.
The
public sector still has the majority value share at around 60% in 2018 but has
fluctuated due to budget cuts impacting on the sector, representing close to
70% only a year before.
The
change in public/private sector mix is indicative of recent moves within health
sector construction away from PFI funded larger-scale hospital development
towards the smaller scale local health authority controlled programmes.
However,
demand from private healthcare providers for expansion in facilities has
dwindled in previous years due to a fall in referrals from the NHS and lower
numbers of overseas patients receiving private treatment in the UK. This
has led to a decline in private healthcare construction output, which has
fallen from a peak of £4.9bn in 2008 to around £1bn in 2018.
Additionally,
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. 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.
Going
forward, the outlook for health construction output remains steady, if
moderate, into the medium-term, with moderate annual growth rates forecast to
2023. In the short term, output levels are expected to be underpinned by small
NHS frameworks such as the £4.26bn ProCure22 programme, which is providing a
steady stream of work.
