Barry Francis Consultancy


Promising to end PFI hospital contracts will not make the NHS better


PFI contracts are criticised, especially in the NHS

PFI contracts continue to attract criticism from many quarters and the Labour party indicated recently  that it would:

  1. not enter into any more PFI deals but finance all new infrastructure needs through direct government borrowing
  2. buy back the existing contracts so that PFI assets would immediately be at the public’s risk and in  the public ownership.

PFI contracts have been criticised across  the various sectors – schools, roads, rail transport , water, waste, street lighting and so on but probably the most vitriol is directed at PFI contracts in the NHS. Let me say at the outset that some of the contracts are a bit disappointing, some are not very good but lots are good, just fine or struggling like the rest of NHS services and assets.

They are complex contracts for complex operations which  have been a useful tool in delivering and maintaining about 100 new hospitals to be delivered in good condition to the NHS at the end of the contract term

The 100 or so hospital PFI contracts ( there are others which have focussed on developing the primary healthcare estate) range from relatively small buildings to hospital and research campuses which had capital costs in the region of £500 million. The practical ways of managing these contracts for the maintenance of very different buildings, some involving a variety of NHS, university and other users, will differ hugely but in essence each will involve a consortium of suppliers responsible for maintaining to a required standard over 25 or 30 years a complicated hospital which must be handed over to the NHS in good condition at the end of the contract period. . Sometimes the consortium’s responsibility also  includes other services such as  providing and regularly updating medical equipment and/ or  providing cleaning, portering , catering and the like, sometimes called ‘soft’ or ‘hotel ‘ services. More often these other services are provided by the NHS or by separate contractors.

Resource is needed to manage the contracts well 

And so, in a PFI contract, we have all the complex interfaces of  a hospital clearly set out and allocated to organisations responsible for  managing them. And things go wrong, because they do. Just like they do at any hospital. If the contract is managed properly, much of the cost of sorting out problems lies with th private sector, not the NHS. My own view is that for new build hospital projects PFI (or its successor PF2) is useful tool, has done good. As a general observation, in some cases, it  could have done better had  more contract management resource been more assiduously applied.  I recognise that there may not be many more new English hospitals for a while , so maybe it is not a tool needed much in English healthcare but it is a tool which, with modifications, can do good elsewhere.

There is a need to change the contracts to adapt to changing healthcare requirements and budgets

Some of the existing  contracts are getting to the point that significant replenishing is needed and, as the needs of the NHS and its finances have changed, a lot of the hospitals need to be changed. It is here we run into a problem with PFI. Variations are quite difficult to do. But they can be done. I have been involved in negotiating these variations including  a  major rebuilding and extension of an acute hospital. This involved replacing courtyards with wards and changing the use of parts of the building. It all got done on time. It needs goodwill, patience, skill and good contract management.

Promises to terminate the contracts may discourage parties from making those changes 

I have a concern that the potential termination of these contracts may reduce the incentives to buckle down and sort out what needs to be done.  Why devote time and effort to  renegotiate a contract with 15 or 20 years to run when the whole contract may be terminated by the next government? Especially when the lenders to the project and shareholders would be fully paid out if that happened? From the private sector perspective ( whether service providers, pension fund lenders or whatever) why go through all that hassle? If a future government is going to pay out cash which you can invest somewhere else with less risk and take on the responsibility for maintaining the building, take back the employment and pension liabilities and so on, might it not be better to sit tight?  And that could be very bad for the quality of service provided to citizens in the meantime. And if termination happens, it may well not be  great deal for the taxpayer.

And so, I suggest that those who care about the practicalities of maintaining and improving NHS services concentrate on practical solutions. An atmosphere of trust and alignment of short and long term goals would be wise.

And what of future developments?

The number of new large hospitals to be built in England over the next few years is unlikely to be late. The new Midland Metropolitan Hospital in Birmingham is being delivered under a PF2 model. This is similar in many respects to the more recently completed PFI hospital models but creates more flexibility in terms of services and provides for a government equity stake in the Project Company delivery vehicle. This model is being contemplated for future projects and political uncertainty will not improve the chances of getting new hospitals built quickly.

And Project Phoenix?

In the meantime the need to replenish the primary care estate to repair, replace and meet new service requirements i s urgent. The new model for delivery is in the course of launch- Project Phoenix. This is a development of the LIFT and PF2 models to develop partnership arrangements to match need, expertise and finance. Again political uncertainty may hamper progress. That would be sad. To avoid such sadness a programme with clarity of viable objectives, pipeline and certainty of longevity is needed.




NHS: making change without changing the law: STPs/ Competition/ Law

Before the recent general election the last government indicated that the NHS purchaser provider split might be modified. There has been increasing resistance to the idea of competition in healthcare with the pendulum swinging to cooperation. Vertical and horizontal integration ideas are being pursued and, from what I can see, early analysis of the competition law issues is not  priority.

STPs are being identified  by some as the way forward for the NHS and by others as nefarious vehicles to reduce care.

I see  litigation being threatened which not a surprise in the context of hospital closures.

Co-operation may be seen to deliver more benefits, or fewer disadvantages, than competition. This is particularly  the case  when there is  serious scarcity of resources,

Whatever the best way forward from the healthcare, economic or political perspectives, it is unwise just to ignore the law. If a public body wishes to do something however worthy, it must do so following lawful procedures in order to achieve lawful objectives. It is often possible to do this within existing frameworks but care must be taken.

From the practical perspective, it is all the more important to follow the law if the proposal is controversial. If that cannot be done, then the law needs to be changed. The present  parliament may be distracted by other matters. That may be a reason to pay particular attention to complying with current law. It is not a eason to ignore it. That route leads to delay and waste. And things do not get better.

Fire safety

I see that an immediate fire safety survey of all hospitals has been ordered. I am sure that this is  wise move although how enough skilled professionals will be mobilised over the weekend, I wonder. This will be a testing time for scarce resources.

And what of the results?  If the testing is only of cladding on high rise then this may be manageable. But I wonder the nature and scale of the results if all Pre War (1 or 2)  buildings and more modern facilities are checked. Cladding, other building materials, roof voids, gaps where pipes have been inserted…..

The NHS has an admirable fire safety record but if problems are discovered, I doubt whether evacuation is a practical solution. Added fire safety monitors, heightened alerts and general training of staff can all help manage the risk.  Of course there will be  cost, a further demand on scarce resources. Who should pay? Maybe the NHS, maybe contractors or, where relevant, PFI project companies. If these are issues, they will themselves be a drain on time and budgets.

I suggest that the issues be approached on a layered basis:

  • is there a problem?
  • what is the scale?
  • what is the impact on patients and care?
  • what is the best quick fix?
  • what are the longer term fixes?
  • How did the problem arise -design, build, maintenance, use….?
  • Whose responsibility?
  • Can this be allocated and resolved quickly and fairly?
  • If not can the safest and cheapest solutions be implemented and who pays sorted later?

As well as contractual and other money issues, individuals will have responsibility under health and safety law and more general criminal law. To start with at least, these matters may need not be the subject of intense and expensive scrutiny but experienced professional advice would be a good idea.  From this article in HSJ, there may not have been a good start: https://www.hsj.co.uk/topics/patient-safety/exclusive-fire-services-not-consulted-over-nhs-safety-checks/7019067.article

Lots of sound bites and posturing in NHS ‘debate’ : but what are we going to do?

Despite many distractions, not least Brexit and renewed calls to break up the kingdom, the NHS continues to feature in front page headlines. This demonstrates its importance and the difficulties it is facing. But it doesn’t suggest that solutions are imminent.

Headlines, soundbites and single issue measures do not make up for a rational debate about what health service we want and will pay for. My personal view is that we will continue to lurch from crisis to crisis until and unless we enter rational debate but in the meantime …and it could be a long meantime…what to do?

The ability of the NHS to resource big change is limited. The management of transition to new models of care and use of new delivery vehicles requires additional not diminished resource.

This note focusses on bite sized chunks to develop what is already out there. Fundamental issues are for another day.

Current initiatives include:

  • Integrated care
  • Sustainable Transformation Plans
  • Their possible transmogrification into Accountable Care Organisations
  • Estate rationalisation and investment. In the case of estates, we see potential revival of LIFT, possible use of PF2 for any large new hospitals and the development of what has been called Project Phoenix for other projects
  • Use of ‘technology’ to improve and reduce the cost of healthcare.

Here are some thoughts on what we could be doing and a few challenges along the way.

The STPs emerged after various levels of cooperation between stakeholders and with a mixture of plans and aspirations. Recent announcements suggest that some plans are going to be turned into Accountable Care Organisations. In the recent budget statement, the Chancellor announced some small contribution to the cost of developing STPs.

One size does not fit all, nor should it be made to do so. STPs and other commentaries suggest some of the following.

Primary care. Possible vertical integration with acute hospitals and perhaps creation primary care hubs. These could well be good ideas and made simpler with new standard contracts. It is worth remembering that most  GPs are part of independent businesses and that the changes must recognise their own partnership and taxation issues. The existing property arrangements may need to be untangled.

Integrating health and social care. A lot of good stuff has been written. The Kings Fund has some useful stuff:  https://www.kingsfund.org.uk/topics/integrated-care

Improving the buildings and raising capital There are many models which seek to support estate rationalisation and capital release. From my own observations, it makes sense to be imaginative in working through what could be done. Real estate development and the use of technology to improve service are areas where the independent sector has more breadth and depth of expertise than has the NHS. The use of joint venture models to support new service initiatives and access capital makes a lot of sense.

Stepdown. There have been ideas circulating about step down facilities for decades and whilst a few ideas get off the ground, A lot just lurk in the too difficult pile. I hope that changes in funding inherent in ACO’s may help to make sensible things happen.

Outsourcing. This is certainly not an answer for many issues and any contract will need to be set up carefully and monitored properly (much of the criticism of outsourcing can be traced back to shortcomings in these areas).  But as a potential solution it should be approached with an open mind. There is s useful note at

Change. New buildings, new gadgets, new ideas are only as valuable as the improvements in service and/or cost efficiencies they deliver. Change management is a much under regarded skill. It is likely to work best with involvement and support from the whole range of people involved.

Managing inhibitors Change also requires an understanding of inhibitors and how to work with or around them to achieve objectives. In many cases a plan to change services or facilities will impact existing long term arrangements: Long term services contracts, LIFT, PFI and so on. Inhibitors are not a reason to abandon an improvement but they cannot be ignored. We need early analysis of the issues and constructive engagement to manage them. Complicated but doable.

Law (boring but it hasn’t changed). The intention appears to be to make drastic changes to the structure of healthcare delivery in some areas without changing the law (I can see that a health bill might be difficult in the present parliament). That will require careful management. Where there is unity of purpose, grey areas may not cause too many problems but where there is dissent (for example where a hospital is to be closed) an awareness of the risk of judicial review of decisions must guide process and approach.

Advising in PPP Healthcare Workshops in Ankara

 The UK Embassy in Ankara has arranged, through Strategic Healthcare Planning  (www.shp-uk.com), to provide workshops for key actors in Turkey’s hospital PPP programme. This programme has 17 very significant projects in progress with 2 hospitals now open and many more in the pipeline. It will make a major improvement to healthcare provision in Turkey. The first workshop took place last week in Ankara attended by representatives of government departments, consultants and project companies responsible for delivering the long term serviced hospital contracts.

The contracts have many similarities with the so called ‘UK model’ crucially in providing an availability based payment mechanism with inbuilt incentivisation to meet key requirement to keep the hospital operating to high standards. There are, naturally, differences to reflect the requirements, available resources and sheer ambition of the projects. The workshops were led by Jeremy Cox from SHP and I really enjoyed engaging with participants in working through practical and legal issues arising in respect of commissioning and operating hospitals under this new model.

Sustainability and Transformation Plans

We have now seen the publication of all the STPs. There has been much criticism of these documents produced under difficult circumstances by groups of organisations each with their own priorities and needs.

A few generic thoughts:

  • Where they have been specific, the knee jerk response to hospital closure is not helpful. There is a difficult route to a modern health service- some change is not only inevitable it is good but the absence of consultation will not have helped. We need honest debate now, not posturing.
  • The detail of making things happen needs thinking through: it may be a good idea to bring GP practices together and to vertically integrate some services. But GPs are mostly private partnerships with there own property and financial interests. A plan which anticipates these issues is needed.
  • A real understanding of how the estate could be used, relying on expert evaluation and flexible thinking is needed. What tools can be best used for this? And to what extent are the objectives wholly social or geared to raising cash?

Technology may well help in changing and improving healthcare and wellness. It may change the way money is spent but will it save money? Clarity of thinking and objectives is needed as is a recognition that technology is a tool, not a magic wand.