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Let’s have another look at that PFI contract…

The Private Finance Initiative is a topic that many individuals and organisations have opinions on. Journalists, even when writing for the popular press, seem to consider it important to draw attention to the apparent failings of PFI. The specialists over at Private Eye devote a whole section to the topic in each issue. Perhaps as a result of this relative prominence and in particular the focus on problems, most conversations among the public appear to start with a general awareness that PFI is a bad thing. Unsurprisingly the trades unions are also strongly negative in their views, starting as they do with the entrenched position that any move towards the greater involvement of the private sector is a bad thing.

If PFI in general tend to make people suspicious, this is doubly true when projects involve the NHS. There may not be any evidence of a connection between private finance and MRSA but somehow public perception seems to put the two things together, along with poor standards of cleaning and a lack of beds.

So it makes something of a change to dig out press reports about a new PFI hospital development and detect a positive tone. The £300 million Pembury Hospital scheme in Kent, which is currently going through the process of finalising contracts and planning before construction starts, seemed to have managed the trick, at least from some viewpoints. Maidstone and Tunbridge Wells NHS Trust awarded the contract late last year to a consortium led by Equion and including the builders John Laing and Laing O’Rourke. The development includes a 42-bed mental health unit as well as 512 hospital beds and is presented as offering a new standard in patient care. A key feature is that it will be the first hospital in the country to have en-suite facilities in all of the single rooms. It also incorporates clever design features, such as placing the door to the en-suite on the same wall as the bed, minimising the danger of slips and falls. The project has benefited from the enthusiastic support of the local MP, Greg Clark, who has stated that he will carry on campaigning until construction gets underway.

It was perhaps unavoidable that not all would continue to go smoothly. A few weeks back we might have noted that the construction timetable appeared to have slipped. Back when Equion was appointed it was reported that construction was due to begin in the autumn of 2007, whereas it now seems likely that nothing will happen until next year, once the judicial review period has expired. There is also still a treasury review of final project costs lurking in the background.

It could be argued that this is par for the course for any major building project financed from the public purse. If things didn’t drift too much further we might well have not noticed unless paying particular attention. However, the unremarkable has now been overtaken by other events that certainly demanded notice even from the innocent bystander. In early October the Maidstone and Tunbridge Wells Trust announced that its Chief Executive, Rose Gibb, was to resign ahead of a highly critical report into cleanliness and deaths from so-called superbugs at the existing hospitals under the Trust’s management. Further attention was focussed on the Trust when the Secretary of State waded in to put Ms Gibb’s agreed severance payment on hold while the position was investigated.

A concern now is that the uncertainties within the Trust may lead to delays in completion of the new hospital. If so a difficult situation may move closer to disaster. As Greg Clark pointed out when Ms Gibb’s departure was announced, the infection risk in the existing hospitals is one of the reasons why the new facility is needed so much. The former chief executive is credited with having guided the Trust through the long process of negotiations leading to the current stage of the PFI project. The Trust has also pointed out that, under Ms Gibb, the organisation took huge steps forward from the zero-rated, deficit plagued position that existed when she took over. Performance, financial control and patient care all seem to have improved on her watch, although you would never guess it from some of the press reports.

The situation in Kent raises important issues about what we expect from senior managers in the NHS. There is evidence that Rose Gibb was doing the right thing in pushing the PFI deal forward, not only as a way of delivering a better class of patient care in the future but, crucially, also as an essential step towards dealing with the infection control issues that are haunting NHS hospitals in Kent and across the country. None the less the chief executive has lost her job because of those issues, not because of the longer term vision but because of a failure to deal with the immediate problems at ward level. But, other than in an overall strategic sense, do we really think it is the best use of a chief executive’s time and abilities to deal with those immediate problems?

One thing that PFI contracts are good at doing is passing risk – where appropriate – to the private sector. Payment under the terms of the contract depends on facilities being available and available to a specified standard. What this means in practice is that, along as the contract has been properly put together by the public sector, if the hospital is supposed to be cleaned to a certain standard then it has to be, or the provider doesn’t get paid. This is already a real plus and the financial logic goes on to generate further benefits. In order to keep cleaning costs down the operator will make sure that the surfaces and finishes are of the right standard and easy to look after, reducing the staff needed to keep it up to scratch. At this point a nagging doubt starts to creep in: is this one of the things that the unions are scared of? That a compact, properly trained workforce is able and willing to keep up hygiene standards, rather than a small army of cleaners that can shut the whole operation down through industrial action or the threat of it? That if a private sector firm is smart enough to position doors so it is easier for patients to use them unaided, then less staff are needed to aid the patients?

Once that doubt grows PFI starts to make a lot more sense. Do health managers really want the cost and uncertainty of building and maintaining their own premises, with all the implications of recruiting and controlling the necessary pool of staff? Surely it is better to use a contractor whose income depends on building on time and to the right quality, together with maintenance staff that suffer financial penalties if the premises can’t be used. Returning to Rose Gibb and other senior managers in similar circumstance, what the NHS needs is precisely chief executives who concentrate on the bigger picture and deliver the transformation that health infrastructure and working practices so desperately and obviously need. That is their job, a job that will be a lot easier to carry out if they have managed to pass on responsibility for cleanliness and routine maintenance to others who know what they are doing and have the incentives to do it properly.

This article was first published in the ACCA Health Service Review. Debate it in our blog.