Deal near for 'private' hospitals in the NHS

Flagship of government scheme could contract out patient care

Public Policy Editor

Agreement to the first "flagship" scheme in which the private sector designs, builds, finances and - at least in part - runs an NHS hospital is expected to be reached by the end of the year.

The front-runners include a pounds 100m 700-bed district general hospital for Norwich, a pounds 43m hospital in Durham, and a pounds 40m 474-bed hospital in Carlisle. In the last case firms are being invited to consider running the whole hospital, including the services of doctors and nurses.

Nine projects involving pounds 300m of private-sector investment could be given the go-ahead by the end of the year, according to Newchurch, the business advisory company retained by the NHS Executive to help to develop the Government's private finance initiative.

The facilities provided will include operating theatres, wards, out-patient departments, diagnostic services and day surgery.

The drive to get private finance into the NHS has been attacked by Labour as an attempt to privatise the service, but Tom Sackville, Under-Secretary for Health, has said he sees no reason in principle why private firms should not run hospitals on contract to the NHS.

The private bidders, who include consortia formed by Tarmac, Amec, Laing and the other big construction companies, are proposing to design, build, finance, run and maintain the buildings, providing services such as catering and security. They would lease equipment such as X-ray and other imaging machines to the NHS.

The nine likely projects, with the possible exception of the Carlisle hospital, are unlikely to buy-in core services - those provided by doctors and nurses - although clinical support services such as pathology, X-ray and sterile supplies may form part of some deals.

Clive Moth, chief executive of the Carlisle NHS Trust, said handing over all clinical services to the private sector had not been ruled out. "But my personal view is that it is highly unlikely that the private sector would want to provide core clinical services or that those services are likely to be attractive to the private sector." The trust is, however, interested in clinical support services being privately provided, according to Newchurch.

Alpesh Patel, a consultant with Newchurch, said allowing the private sector to run core clinical services "is very sensitive ground. When you start talking about that, you are talking about privatising the NHS with entire hospitals being run by the private sector". No such idea was contemplated in any of the schemes, apart from Carlisle's decision not to rule it out.

The private finance initiative has brought pounds 170m of private capital into the NHS in 132 projects, but these have chiefly involved boiler houses, leased capital equipment and patient "hotels". "The sector now looks forward to the completion of the first 'flagship' scheme," Kingsley Manning, managing director of Newchurch, said.

The nine front-runners include the pounds 100m Norwich Hospital where the trust believes it should provide all clinical care but wants private sector management of all other services, according to Newchurch; a pounds 30m development at the Royal Brompton; a pounds 26m refurbishment of Bishop Auckland Hospital, Co Durham; a pounds 20m scheme at St James's in Leeds; a pounds 45m refurbishment at Swindon; a pounds 16m project at South Buckinghamshire NHS Trust; and pounds 11m for new theatres and wards at the West Middlesex Hospital.