PFI schemes 'at odds' with NHS changes

Private finance deals for hospitals are under strain because they are too inflexible to incorporate changes to government health policy, NHS managers warned today.

Sylvia Wyatt, project manager at the NHS Confederation's future healthcare network, told a London conference on public-private finance that current private finance initiative (PFI) hospital schemes were at odds with the policy of moving healthcare away from hospitals and towards services in the community. This put into question existing PFI schemes' capacity for delivery.

Some 29 PFI contracts - which are scheduled to run for 25 to 30 years - have been signed, with nine so far up and running, said Ms Wyatt.

"The chances are that we will not always need as many hospitals as we've got at the moment," she said.

"How do you handle the downsizing of hospitals?" she added. "[This] is particularly important to consider when we are talking about payment by results [fund flow] - possibly the most important policy change whereby money will follow the patient. We may see hospitals go out of business."

The claim echoes repeated calls by public sector union Unison that PFI deals would hamper service delivery in the future.

Over half of the 130 hospitals involved were already negotiating with PFI partners around making changes to contracts, said the National Audit Office's head of PFI, David Finlay.

PFI deals had proved excellent in delivering hospitals on time and to cost, Mr Finlay said, but future contract terms need "to incorporate greater flexibility to accommodate the changing face of future NHS hospital provision".

He said: "In a world that is changing, being in a long-term contract where high-quality service is provided is good news but, as we have already seen, it is naive to believe that PFI contracts will not need to change."

Mr Finlay was speaking in advance of an imminent government announcement of the next wave of large PFI deals. It is expected that the hospitals will be bound by new rules to ensure greater flexibility.

"If you thought it was very likely that a number of hospitals had to downsize in some way, then the NHS would have to try to arrange shorter term contracts or build in the flexibility," Mr Finlay added.

Ms Wyatt meanwhile welcomed new public-private partnership Lift schemes for public services, which she said offered greater scope for shifting healthcare delivery.

Lift schemes involve a 60/40 split between private and public sector shareholders in companies that oversee local building and service needs over a 20 to 25-year period. The arrangement, first introduced 18 months ago, has been hailed as a solid partnership for primary care trusts and other public sector organisations which removes much of the expense involved in individual PFI bids.

Despite her enthusiasm, however, Ms Wyatt said the first Lift schemes were still "too conservative".

She said: "I am greatly relieved that the first tranche is so small. We have such an opportunity through Lifts to change the model of care and provide more in the community. We have the potential to be much more radical in future designs."