High cost of private finance in hospitals

The cost of building hospitals with private finance can be almost double that of publicly funded schemes, according to a study in today's British Medical Journal.

The Government insists that the private finance initiative (PFI), where a private sector consortium designs, builds, finances and operates a new hospital, delivers value for money.

But new research led by Professor Allyson Pollock of University College London says that NHS trusts incur much higher costs through the PFI scheme. NHS trusts pay an annual fee to cover the cost of the capital borrowed, maintenance and non-clinical services. But analysis by Prof Pollock of PFI schemes at Worcester, North Durham and Carlisle shows the annual bill for a PFI scheme is "almost double" or one third more than a public scheme.

At Worcester, the annual cost of the PFI is £9.3m compared with £6.8m for public funding; for Carlisle the PFI bill is £9m a year compared with £5.9m, and North Durham has to spend £11.3m as opposed to £6.4m.

Prof Pollock said that the Government's case for using PFI rests on a value for money assessment that is "skewed in favour of private finance".