DoH orders £200m cuts to scheme to stay within Treasury guidelines
The Department of Health has trimmed back another major private finance initiative scheme, forcing a trust to abandon plans for new buildings on the site of one of the three hospitals involved. The DoH has instructed University Hospitals of Leicester trust to cut just under £200m from its £761m plans to revamp and reconfigure services at Leicester’s General, Royal Infirmary and Glenfield hospitals.
The trust will now revise its plans for the Royal Infirmary and Glenfield sites and explore a ‘radical new approach’ for a planned care and rehabilitation hospital at Leicester General, using existing buildings, backed by modular units, which could be used to meet changing requirements in future.
The decision was announced in the same week that NHS acting chief executive Sir Ian Carruthers outlined the DoH’s approach to reviewing PFI schemes which have been stalled due to national concerns about affordability.
South Devon Healthcare trust capital developments director Richard Glenn has been seconded to the DoH to oversee the review, which should be complete in four to five months.
University Hospitals of Leicester trust chief executive Dr Peter Reading told HSJ that he supported the DoH approach and had held discussions with Mr Glenn about the healthcare model underlying its PFI proposals. But he said the ‘rigid’ application of ‘the Treasury metric’ that repayments on PFI projects should be no more than 15 per cent of a trust’s turnover meant the trust had to reduce the cost of its plans by around £200m.
‘We have always broken even – we had a £6m surplus last year. We are a three-star trust. But we are being treated the same as a trust that is £20m overspent,’ said Dr Reading.
‘The Treasury says we need to reduce the risk trusts are taking on as a 20-30 year commitment, but there is no subtlety to [reflect an individual trust’s] market situation.’
University Hospitals of Leicester trust has been working on PFI plans for five years, and had its proposals approved by the DoH in March 2005.
They were put on hold in January, amid national concern about PFIs.
Dr Reading said it would be ‘hard to be disappointed’ by the latest decision if the trust was now able to make a £600m investment in Leicester’s hospitals.
He said staff felt frustrated, but the trust was determined to use the opportunity to create buildings with ‘greater flexibility’.
http://www.hsj.co.uk/nav?page=hsj.news.story&resource=4784757
The trust will now revise its plans for the Royal Infirmary and Glenfield sites and explore a ‘radical new approach’ for a planned care and rehabilitation hospital at Leicester General, using existing buildings, backed by modular units, which could be used to meet changing requirements in future.
The decision was announced in the same week that NHS acting chief executive Sir Ian Carruthers outlined the DoH’s approach to reviewing PFI schemes which have been stalled due to national concerns about affordability.
South Devon Healthcare trust capital developments director Richard Glenn has been seconded to the DoH to oversee the review, which should be complete in four to five months.
University Hospitals of Leicester trust chief executive Dr Peter Reading told HSJ that he supported the DoH approach and had held discussions with Mr Glenn about the healthcare model underlying its PFI proposals. But he said the ‘rigid’ application of ‘the Treasury metric’ that repayments on PFI projects should be no more than 15 per cent of a trust’s turnover meant the trust had to reduce the cost of its plans by around £200m.
‘We have always broken even – we had a £6m surplus last year. We are a three-star trust. But we are being treated the same as a trust that is £20m overspent,’ said Dr Reading.
‘The Treasury says we need to reduce the risk trusts are taking on as a 20-30 year commitment, but there is no subtlety to [reflect an individual trust’s] market situation.’
University Hospitals of Leicester trust has been working on PFI plans for five years, and had its proposals approved by the DoH in March 2005.
They were put on hold in January, amid national concern about PFIs.
Dr Reading said it would be ‘hard to be disappointed’ by the latest decision if the trust was now able to make a £600m investment in Leicester’s hospitals.
He said staff felt frustrated, but the trust was determined to use the opportunity to create buildings with ‘greater flexibility’.
http://www.hsj.co.uk/nav?page=hsj.news.story&resource=4784757
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