Private multipurpose health malls are big business. Fiona Tyrrelltalks to the Irish developers behind plans for a £200 (€235) million health mall in Manchester
IRISH DEVELOPERS have been given the go-ahead to develop what they claim is the first large-scale multipurpose health complex to be delivered by the private sector in the UK.
HealthCity will form the centrepiece of an ambitious £1 billion (€1.17 billion) urban regeneration project earmarked for a 38-acre site in east Manchester.
The scheme is being developed by Grangefield Estates (headed up by Irishmen Austin Kenny, Brian McDonagh and Phillip McGuinness) in partnership with Manchester City Council.
Tagged "the Harley Street of the north", the private sector project will feature a main hospital, surrounded by a range of secondary care medical operators as well as a sports and rehabilitation centre.
HealthCity forms part of a new city quarter, called Chancellor Place, to be built in the east of Manchester city, on a brownfield site beside Piccadilly railway station, Manchester's main entry and exit point to London, by rail.
Spread over approximately 4 million sq ft, the development will also incorporate 2,000 homes, three hotels, leisure facilities and offices. The developers hope that much of this office and some of the residential space will be taken up by healthcare and medical-related operators.
Promoters of the scheme hope to attract Britain's leading surgeons to HealthCity and say their aim is to become the "internationally recognised location of choice for quality healthcare".
Dublin's Beacon Court, HealthCare City in Dubai and US health malls formed models for HealthCity, says Phillip McGuinness, development director with developer Grangefield Estates.
These so-called health malls usually incorporate a core private hospital surrounded by a range of private sector health providers offering everything from diagnostic to cancer care service. They also generally incorporate a strong hotel element to cater for health tourism, explains McGuinness, who has a background in refranchising hotels.
A health mall of this size is a first for the UK where large-scale health infrastructure has, until now, been public led, according to the developers.
Last month, Manchester City Council granted outline planning permission for the scheme. The council owns 60 per cent of the land earmarked for the project and will recoup the uplift in the value of this land on a phased basis, according to McGuinness.
HealthCity and the wider Chancellor Place scheme is the biggest development undertaken by Grangefield Estates to date. Directors Austin Kenny and Brian McDonagh have undertaken a number of property-led schemes in Ireland and the UK, the most significant of which is in a Liverpool business park. Kenny runs Kenny Cunningham, a financial consultancy firm in Dublin while McDonagh is a civil engineer by trade.
The duo have invested £12 million (€14 million) of their own equity into the project - £10 million which was spent putting the site together.
The idea for HealthCity was first developed in 2003 when the economic climate was in a much healthier state, but now developers, investors and local authorities are scaling back on ambitious plans in a bid to ride out the economic storm.
Despite the lack of anchor tenant or joint venture partner, McGuinness is bullish about Grangefield's ability to fulfil its commitment to Manchester City Council and says that serious negotiation can get under way now that planning is in place.
Healthcare is "recession proof in many ways", says McGuinness - "people always need healthcare".
He says Grangefield is in talks with leading international healthcare providers from both sides of the Atlantic and he hopes to whittle down a long list of 20 providers to a shortlist of five by early next year. Once an anchor tenant is secured, more detailed proposals for the rest of the health village will fall into place, he says.
As in Ireland, the role of private healthcare is a hot topic in Britain, particularly this year, which marks the 60th anniversary of the foundation of the UK's National Health Service (NHS).
Aside from the dramatic changes the project will have on east Manchester, HealthCity, according to McGuinness, will be a "catalyst for change" for the UK's health system.
It will, according to Grangefield, "fill a gap in regional and UK healthcare market provision". Gaps that the promoters intend to target in particular are orthopaedics, cardiology and cancer care.
Vital to the success of a project like HealthCity in the UK is the expectation of an increased demand for private health insurance.
Only 12 per cent of the population in the UK have private healthcare, "we see that growing to 17 per cent" in the next few years, explains McGuinness.
Research undertaken by a medical consultancy firm on behalf of Grangefield found that private medical insurance take-up in the northwest of the UK is 10 per cent, with 9.6 per cent in the greater Manchester area and 13.2 per cent in Cheshire.
A projected growth in private medical insurance over the next 10 years of 3.9 per cent will mean about 252,000 people in greater Manchester will have private medical insurance, according to Grangefield.
He also predicts that the facility will attract health tourists from the Middle East - a market that is worth about €10 million, he says.
The brand of Manchester city has been bolstered by the recent purchase of Manchester City football club by a consortium from Abu Dhabi, he adds.
Like private health facilities in Ireland, HealthCity also expects to sell services to the UK's NHS.
With growing patient expectation and rapid technological advances, the NHS will have to look to the private sector more and more, McGuinness predicts.
He points to the current treatment waiting time of 18 weeks in the NHS, compared with the 12-week target.
Grangefield hopes to begin work on the first phase of HealthCity (a main healthcare anchor and hotel) in early 2010, but the entire scheme will take 12-15 years to deliver.