PFI EXPANSION WILL PROVE COSTLY FOR PATIENT CARE

*The annual costs of the private finance initiative (PFI) to the 
NHS in
Scotland are set to increase nearly five fold from £107m to more 
than
£510m over the next five years, a report by the University of 
Edinburgh
warns.

The study, by the University's Centre for International Public 
Health
Policy, adds that the need to meet these financial commitments 
could
lead to unprecedented hospital, community, and primary care 
closures and
will come at the expense of patient care.

Mark Hellowell, lead author of the report, said: "The report 
shows the
impact of large PFI hospital schemes in Scotland on health board
budgets. Funding is being diverted away from clinical care, 
staff and
supplies, to pay 'rent' to the private sector."

Under PFI the private sector designs, builds, and finances new 
health
facilities and runs services like cleaning and catering within 
them. In
return, the NHS pays an annual charge to the private sector - 
often for
30 years or more.

PFI charges cost NHS Scotland £107m in 2005-06, with Lothian and
Lanarkshire health boards accounting for about 80% of these 
costs, at
£46m and £41m respectively.

Both these health boards are experiencing severe financial 
difficulties.
NHS Lothian recorded a £11.4m overspend in 2005-6, while NHS
Lanarkshire's losses came in at £21.66m, despite cost-saving 
measures,
which included service closures and land sales.

And according to the report's authors, these deficits look set 
to deepen.

"Few people are aware of the scale of the Scottish Executive's 
plans to
expand the PFI programme across the NHS. The planned capital 
cost of
£1.7bn will bring the total value of PFI schemes in the NHS to 
£2.2bn
over the next five years," said Mr Hellowell.

"Health boards will have to find more than £500m every year to 
pay the
annual unitary charge. Funds have to be found to bridge this gap 
and
that can have very serious consequences for patient care."

Lothian Health Board PFI expansion plans will require an 
additional £90m
a year to be found from clinical service budgets. In Glasgow and 
Clyde,
planned PFI schemes, which include the Southern General / 
Glasgow Sick
Kids, Glasgow Royal Infirmary, and an ambulatory care and 
diagnostic
centre (ACAD), will see the PFI charge rise from £5.4m to £180m 
a year.

The 'rent' is much higher on PFI buildings, usually accounting for
between 11% and 18.5% of hospital turnover compared with 5-8% in 
non-PFI
buildings.

Of the total PFI charges, amounting to some £512m, that will be 
paid out
by the early part of the next decade, it is estimated that 
around 60%,
or £307m, will go on 'rent', otherwise known as the availability 
charge.
This includes the provision of assets and servicing of debt. An
estimated 40% will go on services such as building maintenance and
catering.

All health boards with major PFI schemes are also planning major
hospital and service closures.

http://www.health.ed.ac.uk/CIPHP/Documents/CIPHP_2006_ImpactOfPFIOnScotlandsNHS_Hellowell.pdf

Dr James Lancaster
Centre for International Public Health Policy
School of Health in Social Science, University of Edinburgh
Medical Quad, Teviot Place
Edinburgh
EH8 9AG

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