Only five PFI hospitals to go ahead in next 2 years

More than £2.5bn of privately financed hospital schemes have been axed from the Department of Health’s (DH) privately financed hospital building programme, raising PFI contractors fears that health PFI is in terminal decline.

Thirteen major hospital schemes have been axed from the programme in total since July 2007, according to figures released by DH last week.

At the same time PFI contractors say only five PFI health schemes look set to go in the next two years.  These are the £450m Royal Liverpool hospital scheme; the £250m Alder Hey Hospital scheme; the £130m Papworth Hospital deal; the £350m Sandwell and Birmingham PFI project; and the £135m Merseycare PFI deal. One contractor commented: “Health PFI is dead.”

Few of the 13 schemes scrapped come as a surprise to PFI players. The £100m Southend Hospital scheme was pulled more than 18 months ago. However there are others, such as the £305m Broadmoor Hospital PFI, that PFI contractors had hoped would survive.

SMEs and ProCure21 framework contractors look set to benefit, with many PFI schemes being downsized into much smaller packages of capitally funded works. One example is the £600m Leeds Childrens’ Hospital PFI which has been replaced with a £35m ProCure21 scheme to refurbish existing wards. Laing O’Rourke will deliver the scheme.

The £200m Royal Wolverhampton Hospitals PFI is also being replaced with much smaller works. A spokeswoman said: “We are planning a small scale development worth around £100m over a five to ten year period. It is at design stage and we have not decided the procurement route as yet.”

Some PFI experts remain positive.Matthew Custance, KPMG PFI healthcare specialist, said health PFI was far from dead. He said: “DH still sees PFI as a useful tool and is developing other methods of delivery such as NHS Express Lift and joint venture models. However instead of large waves of schemes we will see a more steady stream of renewal.”

PFI Hospitals that have been cut from the DH Hospitals PFI programme

£711m University Hospitals of Leicester

£61m Southampton University Hospitals

£139 Hillingdon Hospital

£57m Taunton and Somerset Hospital

£305m Broadmoor PFI

£100m Southend Hospital

£50m Northumberland Tyne and Wear NHS Trust Cheery Knowle Hospital

£200m Heatherwood and Wexham Park Hospitals

£40 Barnet and Chase Farm Hospitals

£80m United Bristol Healthcare

£200m Royal Wolverhampton Hospitals

£70m Leicestershire Partnership PFI

£600m Leeds Teaching Hospitals

Schemes most likely to come to market in the next 18 months

£450m Royal Liverpool hospital scheme;

 £250m Alder Hey Hospital scheme;

£130m Papworth Hospital deal;

£350m Sandwell and Birmingham PFI project;

£135m Merseycare PFI deal.