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expertise: PFI in the Health Sector
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PFI is used in practically all sectors of public service, health and education being two of the major beneficiaries of PFI credits.
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The Department of Health has led the way in improving the flow of projects to the market. It has championed the development and use of standard form contracts and there is no doubt that the NHS Private Finance Unit’s dogged adherence to their use has delivered more projects than would otherwise have been possible.
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The LIFT initiative is a variant of PFI and a mechanism for delivering smaller schemes without having to undertake separate procurements for each one. To date, LIFT has delivered many facilities but its potential is yet to be fully exploited.
Trends and issues Recent reforms in the health sector mean that the NHS and PCTs are constantly having to change and flex to meet changing priorities and needs. For example:
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Increased patient choice gives patients flexibility over when and where they are treated. Hospitals will be paid for the activity they actually undertake (the “funding follows patients” principle), giving an incentive to provide high quality responsive care. Since under PFI the procuring body is committed to paying the private sector partner for the whole of the 25-30 year contract term, the hospital or facility must continue to attract patients so that its income does not fall.
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Increasingly the NHS is looking to treat patients in the community. This means that large hospitals will have a more limited role and must be sufficiently flexible to adapt to changing demands.
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Increasingly there is a move to co-locate primary care facilities on a single site. A PFI and/or LIFT scheme can provide an opportunity to move from a number of older buildings on to a new, more efficient site.
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The Independent Sector Treatment Centre programme is bringing capacity and innovation to the NHS. These centres offer patients fast, safe and streamlined treatment and diagnostic tests in several specialities, such as orthopaedics and eye surgery. Although these centres are run by the private sector they must still offer the NHS value for money, meet the high clinical standards of the NHS and provide genuine extra capacity and not draw staff away from the NHS.
Current projects A number of high-profile PFI Hospital schemes have recently reached financial close, including:
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a £1bn redevelopment of St Bartholomew's and the Royal London Hospitals, to create Britain’s biggest hospital and Europe’s largest Accident & Emergency Unit. This is the largest hospital PFI project authorised by the Department of Health;
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a £690m scheme for Birmingham Foundation NHS Trust to provide a new acute hospital and mental health facilities, the largest hospital PFI scheme so far authorised outside London;
and others are in procurement, including:
- St Helens and Knowsley Hospitals NHS Trust, redeveloping the St Helens and Whiston hospitals under a £338m PFI scheme. The scheme will provide a new 963-bed general hospital and a new diagnostic treatment centre.
PFI is also being used in smaller projects across the health sector, such as the £25m project at Teesside Hospital to build a 32-bed replacement for the Stead Hospital. Foundation Trust status confers greater powers, including tomorrowing
powers. Key issues: The health sector continues to face serious challenges. Much discussion
recently centres around flexibility of buildings. The NHS can appear
or indeed be unable to make investment decisions for fear that they
cannot predict what the future holds. As patient care moves into
the community large scale district hospitals may no longer be required.
The answer is to design and build facilities that anticipate substantial
future changes in use. We have heard of this being achieved elsewhere
in Europe, but not, to- date, in the UK. 
key expertise: Catherine Burke
Partner
catherine.burke@martineau-uk.com |
