Healthcare – the balance of risk and opportunity

Martin Robb • 07/04/2020

Never has the healthcare industry been in the spotlight to such an extent and rarely has the interaction between the public and private sectors been so constructive and collaborative.

What factors have evolved in the last few days and what might the future hold for this industry, so often one that the user doesn’t really want to think about until it becomes a necessity? 

To set the scene the UK Healthcare market contributed £191.7 billion to UK GDP in 2016 according to the Office for National Statistics.

Will COVID-19 move the debate about Healthcare and its crucial economic impact beyond a simplistic debate focussed on the NHS and social care funding?

As will be shown below, there is potential for a new era of partnership between the NHS and its private sector counterparts. 

Private Hospitals

The vast bulk of hospital provision in the UK is within the NHS. Private hospitals operate with a blend of NHS overflow work, health insurance referrals and self-pay procedures.

Private hospitals have now been requisitioned by the NHS as overflow capacity. We understand that these businesses are still at liberty to perform procedures for the self pay market or insurers but the NHS work, contractually, takes priority. 

There are numerous examples of:

  • Care home occupancy increasing as the NHS frees up capacity by rapidly ‘un-blocking’ beds. 

  • The NHS and Local Authorities contracting directly with care home owners so that individual beds, or wings, or entire care homes can be used for COVID-19 recuperation. 
  • In short, the care continuum is being used far more effectively across the market and the change has happened at pace. There is every reason why this interaction between acute and social care should continue in a post COVID-19 environment. 
  • Operationally, of course the risk of a catastrophic infection at any given home is unavoidable, although these businesses are used to dealing with infection control generally. At least this can be balanced against a backdrop of some increased occupancy. 



Care home providers report ongoing concerns regarding staffing levels caused by illness, or self isolation, which are largely beyond their control. 

In contrast, some operators report a surge in applications for employment, which is a trend that is often repeated in times of economic downturn.

Whilst the national shortage of nurses will not be eased in the short term, an absence of employment opportunities for non-qualified staff in retail, leisure and hospitality sectors is assisting care home providers fill vacancies.

In the meantime, capacity is also being increased via the “Nightingale Hospital” initiative. The ExCeL London has been transformed in less than a fortnight, with 4,000 new hospital beds due to open imminently.

There are operational challenges for the private hospital groups. They will have to ensure appropriate separation between COVID-19 patients and other patients for obvious reasons.

Not all of private hospital staff will be familiar with working practises from the NHS and some adaptability will be necessary.

Private hospitals may not have the same level of equipment that is found in NHS facilities. However, these issues are not intractable. 

The collaboration between the NHS and the private sector appears to be wholly pragmatic. As one hospital provider advised “we had 10 ventilators, previously unused, that are now suitably deployed”. 


Care Homes

Occupancy and revenue: For long enough the acute care industry (i.e. hospitals and associated facilities) and the social care market (predominantly care homes) have not operated in tandem. Is this finally changing and will that change be lasting?

The benefit to the operator is a potential reduction in agency staff costs and with total staff costs typically over 50% of revenue, there is potential for a material saving in operating costs. 

A peak before a trough? 

If there is some benefit in the short term for occupancy and possibly also staffing cost, is there a corresponding disadvantage when life returns to a new normal?

Care homes are a needs’ driven industry and demographic drivers for the market will not change substantially in a post COVID-19 world.

However, there may still be a need for some adjustment in a post COVID-19 world where block contracts are terminated and unqualified staff go back to work in other sectors.

Care in the future? 

The NHS ‘digital revolution’ has long been promoted as the key to futureproofing health services in the face of rising patient demand.

Unsurprisingly, there is an urgent requirement to move quickly towards greater use of digital technology such as an online doctor, or remote vital signs monitoring for proactive healthcare.

The impact of the digital and healthcare revolution on real estate is profound. Would you like your diagnosis to be made by artificial intelligence? Perhaps that is a question for another day.


rELATED articles

elderly gentleman's hand place over each other on walking stick
Insights • Residential

Should You Invest in the Retirement Living Sector?

As a needs-based product, senior living real estate has historically proven to be more recession-resilient and stable than traditional real estate sectors.
Lee Layton • 14/12/2020
red steel building
Insights • Commentary

UK Real Estate Perspectives

As the COVID-19 pandemic envelops the globe, we are committed to providing our clients with up to the minute intelligence and commentary as to what is happening in the real estate markets.
Digby Flower • 04/11/2020
modern office with lamps and Vitra style chairs
Insights • Workplace

The Challenges of Returning to Work

The return to work is considered across 3-time horizons and across 5 key areas from integrated facilities management, work space, people and future work patterns, to buildings and portfolio.
Nicola Gillen • 21/04/2020
high rise apartment block looking up
Insights • Investment

COVID-19 and Alternatives

Investors in specialist sectors such as student accommodation, life sciences, retirement living, data centres, healthcare, co-working, hotels and residential are seeking to understand the impact of COVID-19 on the underlying operational businesses as quickly as possible.

David Haynes • 21/04/2020
University laboratory US petridish
Insights • Lab

Life Sciences Looking Forward

Life science: from academia, to businesses and clinicians, the sector has never been more at the forefront of society.
empty lecture theatre
Insights • Education

Student Accommodation

The lack of certainty over the 2020/21 academic year and impact on student intake has caused some investors to be more cautious. 
Sarah Jones • 21/04/2020
sand timer with red colour sand
Insights • Residential

Residential - Timing Is Everything

The UK residential market continues to be impacted further with the Government’s advice to close down the new homes and secondhand markets.
Charles Whitworth • 21/04/2020
Insights • Commentary

Rethinking Density

Putting people together creates value. This principle is now being significantly challenged by COVID-19. Do we need to rethink density? If so, do we also need to rethink cities and offices?
Richard Pickering • 21/04/2020
Research • Workplace

Experience per Square Foot™ (XSF)

Gain data and insights to move forward with confidence.
Bryan Berthold • 24/09/2021
Insights • Office

Predicting the Return to the Office

The rise of the Delta variant has increased uncertainty and pushed back return-to-office plans for some occupiers. This global Cushman & Wakefield report provides insight into the factors impacting occupier and employee decisions along with a potential trajectory of when employees will return to the office en masse in each global region.
Kevin Thorpe • 24/09/2021
euromoney brasil
Article • Insights

A Melhor Consultoria Imobiliária do Mundo

A Cushman & Wakefield (NYSE: CWK) foi eleita a melhor consultoria imobiliária comercial do mundo pelo quarto ano consecutivo pela Pesquisa Imobiliária Global 2021 da Euromoney.
Article • Retail

What’s Next In-Store: Retail Tenants of Tomorrow

Our panel of retail experts shared insights on the future of retail and emerging retail tenants. This in-depth discussion covered the changing retail landscape, what retail trends are driving real estate growth, and how to best accommodate retailers who are new to brick-and-mortar.
Barrie Scardina • 23/09/2021
blue duotone graphic of people in office
Insights • Economy

EMEA Markets View

Our EMEA local market research colleagues share the latest real estate market views from their countries.
Andrew Phipps • 15/07/2021
high rise apartment block looking up
Insights • Investment

COVID-19 and Alternatives

Investors in specialist sectors such as student accommodation, life sciences, retirement living, data centres, healthcare, co-working, hotels and residential are seeking to understand the impact of COVID-19 on the underlying operational businesses as quickly as possible.

David Haynes • 21/04/2020
arrow engraved in concrete
Insights • Occupier

Occupier Decision Making

As we stop and reflect on what is, for most people, week 2 or 3 of our imposed lock down, a massive call out to all FM teams globally. They have been working flat out to help businesses stay functioning and open where this is necessary, as well as lending additional support to front-line businesses.
Michael Creamer • 08/04/2020
glasses on desk inside skyscraper office looking out at night time city
Insights • Valuation

The Valuer's Perspective

March quarter figures will show a marked downgrading in all sectors bar Central London offices and the best industrial and logistics units.
Charles Smith • 08/04/2020
Knightsbridge, London during COVID-19 lockdown
Insights • Retail

Retail Quarterday Mayhem

As the ‘stay at home’ message crescendos, and lockdown sweeps the world, many sectors are feeling the economic crunch. Without the daily hustle and bustle on our streets, the physical elements of the retail and leisure market are facing a state of economic hibernation.
Paul Durkin • 08/04/2020
black & white young woman eyes raised, smiling
Insights • Commentary

Motivational and Social Shifts

If your past 2 weeks has been anything like mine, then you’re likely to be getting to a place of COVID-19 fatigue.
Richard Pickering • 08/04/2020
ethernet cables in sockets
Insights • Data Center

Data Centres Versus COVID-19

With society under physical lockdown, we have never been more reliant on data centre facilities, as we increase our virtual (on-line) presence.
flexible workspace people working in converted warehouse
Insights • Coworking

Flexible Workspace's Biggest Challenge

Although some flexible workspace operators had not until now weathered a downturn what we learnt from the GFC in 2008 was that demand for flexible workspace in times of uncertainty tends to remain high.
Emma Swinnerton • 07/04/2020
empty hospital operating theatre
Insights • Healthcare

Healthcare Balance of Risk and Opportunity

Never has the healthcare industry been in the spotlight to such an extent and rarely has the interaction between the public and private sectors been so constructive and collaborative.
Martin Robb • 07/04/2020
pillows on hotel double bed
Insights • Hospitality

Hospitality Challenges

Two months ago, the conversations around the UK hospitality sector were focused on exciting new brands, the undisputed positives of long-term global demographic and tourism trends and how best to package product to satisfy the increasing appetite from institutional capital seeking to capitalise on the secure long term income provided by the sector.
Jonathan Hubbard • 07/04/2020
Woman working on laptop in kitchen with glass of milk
Insights • Commentary

Introducing the New Normal

A week is a long time in politics would be a very apt phrase for the current global situation. The change we’ve seen since we shared our last view of the UK real estate market has been dramatic in two ways. 
Andrew Phipps • 07/04/2020
desktop screen at home with iphone with Skype logo
Insights • Commentary

Leadership Resilience

The resilience of our leadership is brought into sharp relief during times of crisis. The nature of the crisis is moot, it’s how people in positions of responsibility respond and the messages they send to their teams, clients, and in the cases of governments around the world, their electorate and the voracious 24-hour news cycle. 
Andrew Phipps • 07/04/2020