PFI- Private firms should share benefits of big hospital contracts with NHS
The NHS should be allowed to share the benefits of “efficiencies” made by private companies who have won lucrative contracts to build and manage hospitals under the private finance initiative, according to report from the National Audit Office.
The report into the performance of PFI in the health service praises the private sector for making savings but with the NHS being asked to find £20bn in efficiencies it recommends that the government looks to recoup some of the money by renegotiating contracts – a move that would be fiercely resisted by the private sector.
There are more than 70 operational PFI hospitals in England, costing around £900 million a year and with a capital value of more than £6bn.
PFI contracts are awarded and managed by local health trusts with the private company building new hospitals and in some cases providing ancillary services such as catering, cleaning and portering.
Amyas Morse, head of the National Audit Office, says that PFI hospital contracts are generally well-managed and achieving the value for money originally envisaged but calls on the department of health to ensure that “efficiencies are sought and that an appropriate share of benefit comes back to the public sector”.
There is also some concern over the expense associated with PFI contracts. The NAO says that while catering is on average slightly cheaper in PFI hospitals, hospitals with “PFI buildings spend more on maintenance annually to keep the buildings to a specified high standard”.
The idea of taking on the private sector over the costs of PFI has been rising up the political agenda. Last year management consultants McKinsey said that since NHS contracts were written at a time of high interest rates, by simply adjusting them to today’s lower rates the government could save £200m a year in running costs.
Other experts have questioned whether enough risk is being borne by the private sector or if the end users of the buildings are best served by the contracts.
Tags: DoH, MPs, NAO, nhs cash shortages, PFI, red tape