Published Fri, 2010-08-13 13:32; updated 4 years ago.
Hospitals in the West Midlands are having to repay at least 10% of their annual turnover after taking out so-called “NHS mortgages” to build new facilities.
A total of 10 new hospitals have been completed, or are currently being built, in the West Midlands under the private finance initiative (PFI).
Figures obtained by the BBC claim that the NHS in England faces a total bill of £65 billion for 103 PFI hospital schemes, which involve private firms paying for and building new hospitals and mental health units, with the NHS paying the money back over a period of 30 or more years.
Although the data shows that the value of the projects when they were built was only £11.3bn, this soars to £65.1bn over the lifetime of the deals once extra costs such as maintenance, cleaning and catering are taken into account.
But despite concerns that the fees, which rise each year, would make it harder to achieve savings or maintain spending for patient care, hospital trusts in the West Midlands share the government’s view that the PFI schemes are providing value for money.
The new Queen Elizabeth “super hospital” in Birmingham is repaying £48 million a year for its PFI contract, which is around 10% of its £500m annual turnover.
But University Hospital Birmingham NHS Foundation Trust chief executive Julie Moore said this fell to just 4% due to the more efficient cost of running the new building compared with that of the former QE and older Selly Oak Hospital, built in 1987.
She said: “We were operating out of two old buildings so no matter what we did it was never going to be fit for healthcare today.
"We calculated that it would have cost us 78% of what the new building cost to do the backlog maintenence.
“Bringing the two hospitals together on one site has enabled us to drive greater efficiencies.”
University Hospitals Coventry and Warwickshire NHS Trust used the PFI scheme to replace Walsgrave Hospital with the new University Hospital Coventry.
Chief executive Andrew Hardy said their current annual repayment represented 14.7% of their £459 million turnover.
But he added: “It is very misleading to compare PFI projects as each contract differs as to what services it includes, such as catering, cleaning, car parking, portering, medical equipment, and building/site maintenance.
“Our contract includes all the above services which is not the case in many other PFI contracts and therefore makes our contract appear comparatively high.”
Mr Hardy said the contract also inludes 35 years of service charges that do not relate to the original capital build.
“Indeed, one of the advantages of our contract is that patients benefit from some of the most advanced medical equipment in the NHS because our PFI contract provides for its regular replacement. This is rare within the total number of schemes.”
He said they were also in negotiations to look at ways of making cost savings.
The Dudley Group of Hospitals NHS Foundation Trust, which entered into a £160 million PFI contract to build the new Russells Hall, Corbett, and Guest hospitals, will have to repay 13% of its total projected turnover for 2010/11 of £257m.
Trust chief executive Paula Clark said: “This PFI scheme has enabled us to provide the residents of Dudley borough and surrounding areas with the best possible healthcare in purpose-built, high-tech premises.
“The payments made by the Trust to our PFI partners over a 40-year period are not only for the use of the buildings at Russells Hall Hospital, Corbett Hospital and Guest Hospital, but also include a significant element of important services.”
These, she added, range from building management and maintenance, and replacement of medical and computer equipment, to cleaning, transport, and energy costs.
“Despite these services being contracted out, we work closely with our PFI provider to identify savings that can be removed from both organisations and also explore more innovative ways of working together to deliver further cost savings.”
The national situation has prompted calls for the NHS to try to renegotiate the deals to help it cope during the squeeze on public spending.
Nigel Edwards, director of policy at the NHS Confederation, which represents trusts, said of the PFI contracts: “They were planned for a different world. I'm sure that in some cases people feel their hands are tied."
But a Department of Health spokeswoman said the schemes were providing "value for money" and were "affordable".
She added: "One of the benefits of PFI is that the buildings are always contractually required to be kept in good condition - good maintenance will always cost more than not maintaining facilities to a high standard."
Private Finance Initiative hospitals in the West Midlands
Hospital NHS Trust/Foundation Trust
Birmingham Treatment Centre (based at City Hospital) Sandwell and West Birmingham Hospitals NHS Trust
University Hospital Coventry University Hospitals Coventry and Warwickshire NHS Trust
Dudley Hospitals Dudley Group of Hospitals NHS Foundation Trust
Hereford County Hospital Hereford Hospitals NHS Trust
North Staffordshire Acute Psychiatric Unit North Staffordshire Combined Healthcare NHS Trust
Royal Wolverhampton Hospitals Royal Wolverhampton Hospitals NHS Trust
Queen Elizabeth Hospital University Hospitals Birmingham NHS Foundation Trust
University Hospital of North Staffordshire University Hospital of North Staffordshire NHS Trust
Walsall Manor Hospital Walsall Hospitals NHS Trust
Worcestershire Royal Hospital Worcestershire Acute Hospitals NHS Trust