Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
The return of PFI – will the NHS pay a higher price for new hospitals? November 2014 The Centre for Health and the Public Interest to health and social care policies based on accountability and the public interest. The Centre seeks to frame the policy debate in a way that is evidence-based and open and The author Dr Mark Hellowell Dr Mark Hellowell is a Lecturer in Global Health Policy at the University of Edinburgh. His research Published by CHPI Email: [email protected] www.chpi.org.uk The return of PFI – will the NHS pay a higher price for new hospitals? Contents NHS Trusts and their ability to deliver sustainable healthcare services Why would an NHS Trust agree to a PFI deal if the charges are References 18 3 The return of PFI – will the NHS pay a higher price for new hospitals? factor. 4 The return of PFI – will the NHS pay a higher price for new hospitals? they have signed up to the contracts because there is no other way of meant that PFI investments are not counted as part of public spending or health economies and their ability to address health need. The return of PFI – will the NHS pay a higher price for new hospitals? 1. 1 The emergency unit and maternity services at neighbouring University Hospital 2. * 2 successor PF2: The return of PFI – will the NHS pay a higher price for new hospitals? How do large PFI hospital schemes impact on deliver sustainable healthcare services to local hospitals and schools and receives in return a revenue stream from the 6 6. last decade most respects analogous to a sovereign debt commitment: the state commits 8 8. billion in today’s money.9 responsibility for making the annual PFI payments rests with individual NHS The return of PFI – will the NHS pay a higher price for new hospitals? 9. regime used by NHS England to fund NHS hospitals does not provide any to what would be possible in the absence of these charges. 10. types of investments that carry a similar level of risk. 11. Empirical research has shown that the rate of return on PFI deals typically the minimum acceptable return on their investments.10 12. 11 11 Returns selling their assets.12 These returns show that contract prices have been set high annual PFI payments. 8 The return of PFI – will the NHS pay a higher price for new hospitals? Why would an NHS Trust agree to a PFI deal if the charges are so high and are likely to be fallacy’. 16. * the wider healthcare system or social welfare more generally. In this The return of PFI – will the NHS pay a higher price for new hospitals? 12 18. 19. scheme.12 20. address these issues. 10 The return of PFI – will the NHS pay a higher price for new hospitals? 21. 22. and that assets are maintained to a high standard throughout their lives’. To To achieve this the government changed the types of investors who would the debt capital.16 is reduced to simply maintaining the facility at the standard contractually agreed. 11 The return of PFI – will the NHS pay a higher price for new hospitals? 26. annual PFI payments. 28. * the intended change in original PFI deals. PFI PF2 Cost Weighted Cost Equity Debt Pre-tax Weighted Average Cost of Capital Cost Weighted Cost Equity Debt Pre-tax Weighted Average Cost of Capital 29. to generate a lower overall cost of capital than would be the case under an 12 The return of PFI – will the NHS pay a higher price for new hospitals? that not all of the funds to build and run the hospital will come from the private Cost Weighted Cost Private equity Debt 13 The return of PFI – will the NHS pay a higher price for new hospitals? a lower probability of default. This may mean they are able to charge a lower the cost of private sector capital to be paid by the public sector over the period therefore apparent that the move to PF2 will not address – indeed is likely to 14 The return of PFI – will the NHS pay a higher price for new hospitals? whether the schools and hospitals built under PFI appear in the main measures * any capital investment which is secured under PF2 will not be counted as increased by it. The return of PFI – will the NHS pay a higher price for new hospitals? investments to be agreed in each year. for budgetary reasons at central government level – i.e. there will be a limit to framework. The return of PFI – will the NHS pay a higher price for new hospitals? Conclusion increase the capital budgets available to government departments and individual public health economies and their ability to address health need. The return of PFI – will the NHS pay a higher price for new hospitals? References 1 9 Securing sustainable NHS services: the Trust Special Administrator’s report on South London Healthcare NHS Trust and the NHS in south east London Health Policy 10 Health Policy 2 BMJ 11 and Norwich PFI hospital: how the deal can be viewed in the PFI projects data: March 2013 12 Peterborough and Stamford A new approach to public private partnerships Econometrica DH approval of Outline Business Case 6 Review of the European PPP Market: 2012 A new approach to public private partnerships 16 A new approach to public private partnerships 8 . 18 www.chpi.org.uk