Public private partnership and the NHS

I have received the following email.

I am very interested in the public private partnership (PPP) links and the contracting issues surrounding the Mater Dei/Gozo/Saint James Hospitals and Smart City stories.

Since 1995 the private finance initiative (PFI) has been the British government’s preferred method of funding large capital projects across the public health sector.

I worked in the health service for 30 plus years and was closely involved in just such a PFI project: the closure of a large mental health hospital and the relocation into the community of all of its services across six sites.

I was the project manager, and with the project director and the trust board worked closely with the chosen consortium. I was also responsible for writing a number of business cases (6) outlining the project for submission and approval to the Treasury. The project was signed off and approved by the Treasury in June 1999.

Through these private finance initiative schemes, private companies have built National Health Service hospitals in Britain and leased them back to the NHS. They also run support services as part of these contracts. This is highly profitable for the companies involved, but years down the line the earlier concerns that this system offers very poor value for money to the taxpayer and patients are being borne out.

A number of NHS hospitals are now struggling to cope with cost of meeting their PFI debts. For example, South London Healthcare Trust was put into administration after being put on a list of 22 trusts burdened with debt.

However, the British government will not allow these hospitals to default on the debt because this would threaten all the other PFI schemes and result in the banks/consortiums taking legal action. The Treasury and Health Department signed off all the PFI deals in the full knowledge that affordability (“value for money”) had been an issue from the very beginning.

In 2005 Skanska Innisfree won the £400 million, 42-year contract (10 years to build and 30 years to maintain) for the Royal College of London Trust and Barts. The Trust and Barts continue to provide the clinical/healthcare services, while the private sector partner finances, designs, builds or refurbishes and maintains all the buildings, which is called facilities management.

It is my considered view that these deals are usually nothing more than a disgraceful waste of public funds and the taxpayer ultimately pays the price, even if the healthcare provided remains free.