PFI hospitals pass tests for cleaning + catering

Posted: 24 September 2010 by Graham Ive

Conference comment: When the last Government embarked on its PFI programme, discussion polarised between the evangelists and the doomsayers. Supporters were convinced that private sector discipline would cut the running costs of buildings. Sceptics feared the price of profit would be declining quality.

So, UCL's Bartlett School has studied running costs and quality in PFI hospitals and compared them with other hospitals built around the same time. Our research offers vindication to neither camp – but may reassure the non-aligned. We found that neither the worst fears nor the rosiest expectations of PFI hospitals have been justified.

With PFI, we have found statistically significant better quality at no extra cost in both cleaning and catering, compared with other, similar non-PFI hospitals. But these findings are true only for certain years – and the differences are not huge. Our research sits comfortably with the findings of the National Audit Office, published in June (‘The performance and management of PFI hospital contracts’). That study found little difference between costs and quality of such soft facilities management in PFI and all other hospitals.

Our findings suggest that PFI operators have so far done what economic theory predicted - responded positively to the incentives of their contracts, which include visible penalties if quality drops below a certain level. It would be interesting to see next how PFI hospitals fare on other issues such as control of healthcare associated infection and energy use.

What then are the implications for the future - particularly as the new Government seeks ways to finance infrastructural development that may accompany commissioning by GP consortia? They are, first of all, that some of the alarmist fears about PFI can be set aside, along with the more inflated hopes. That leaves space to refocus on the issue of public sector balance sheets. We’re back to the question of whether there are elements of PFI that can be recycled to tackle the shortages of public capital that currently face the NHS.

The high fixed element of procurement cost and financing fees under PFI make it more suited to the larger investments of the past. But this should not render PFI irrelevant to today’s challenges. A key quality of PFI is that output specification linked to payment levels seems to induce higher operating service standards at no higher cost. Can this element of PFI be transplanted into new methods of procurement more suited to today’s smaller investments and refurbishment projects?

More detail: go to HaCIRIC International Conference Proceedings pp88-102

Graham Ive is Senior Lecturer at The Bartlett School of Construction and Project Management, UCL
Alex Murray is Knowledge Transfer Associate, The Bartlett School of Construction and Project Management, UCL