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The Cost of Using Private Finance to Build, Finance and Operate Hospitals

Author

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  • Jean Shaoul
  • Anne Stafford
  • Pam Stapleton

Abstract

This article analyses the cost of using private finance to build hospitals under the UK government's Private Finance Initiative (PFI). Hospital trusts' annual payments to their private sector partners are higher than expected and are taking 11% of their budget. The additional cost of private over public finance for the first 12 hospitals is about £60M a year, which is 20--25% of the trusts' income. PFI charges create budget inflexibilities and are increasing the pressure on the NHS to cut their largest cost: the jobs, working conditions and pay of their staff.

Suggested Citation

  • Jean Shaoul & Anne Stafford & Pam Stapleton, 2008. "The Cost of Using Private Finance to Build, Finance and Operate Hospitals," Public Money & Management, Taylor & Francis Journals, vol. 28(2), pages 101-108, April.
    • Handle: RePEc:taf:pubmmg:v:28:y:2008:i:2:p:101-108
    DOI: 10.1111/j.1467-9302.2008.00628.x
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    Citations

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    Cited by:

    1. Mark Hellowell & Allyson M. Pollock, 2009. "The Private Financing Of Nhs Hospitals: Politics, Policy And Practice," Economic Affairs, Wiley Blackwell, vol. 29(1), pages 13-19, March.
    2. Rhys Andrews & Marc Esteve & Tamyko Ysa, 2015. "Public-private joint ventures: mixing oil and water?," Public Money & Management, Taylor & Francis Journals, vol. 35(4), pages 265-272, July.
    3. David Parker, 2009. "Editorial: Ppp/Pfi – Solution Or Problem?," Economic Affairs, Wiley Blackwell, vol. 29(1), pages 2-6, March.
    4. Roberto Moro Visconti & Laura Martiniello & Donato Morea & Elisa Gebennini, 2019. "Can Public-Private Partnerships Foster Investment Sustainability in Smart Hospitals?," Sustainability, MDPI, vol. 11(6), pages 1-19, March.
    5. Anna Wojewnik-Filipkowska & Joanna Węgrzyn, 2019. "Understanding of Public–Private Partnership Stakeholders as a Condition of Sustainable Development," Sustainability, MDPI, vol. 11(4), pages 1-16, February.
    6. Daniel Albalate & Germ� Bel & R. Richard Geddes, 2015. "The determinants of contractual choice for private involvement in infrastructure projects," Public Money & Management, Taylor & Francis Journals, vol. 35(1), pages 87-94, January.
    7. Laura Martiniello & Donato Morea & Francesco Paolone & Riccardo Tiscini, 2020. "Energy Performance Contracting and Public-Private Partnership: How to Share Risks and Balance Benefits," Energies, MDPI, vol. 13(14), pages 1-19, July.
    8. Colla, Paolo & Hellowell, Mark & Vecchi, Veronica & Gatti, Stefano, 2015. "Determinants of the cost of capital for privately financed hospital projects in the UK," Health Policy, Elsevier, vol. 119(11), pages 1442-1449.
    9. Peda, Peeter & Vinnari, Eija, 2020. "The discursive legitimation of profit in public-private service delivery," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 69(C).
    10. Maria Caballer-Tarazona & David Vivas-Consuelo, 2016. "A cost and performance comparison of Public Private Partnership and public hospitals in Spain," Health Economics Review, Springer, vol. 6(1), pages 1-7, December.
    11. Anne Mason & Marisa Miraldo & Luigi Siciliani & Peter Sivey & Andrew Street, 2008. "Establishing a Fair Playing Field for Payment by Results," Working Papers 039cherp, Centre for Health Economics, University of York.
    12. Matti Siemiatycki, 2013. "Public–private partnerships in mega-projects: successes and tensions," Chapters, in: Hugo Priemus & Bert van Wee (ed.), International Handbook on Mega-Projects, chapter 7, pages 133-157, Edward Elgar Publishing.
    13. Maria Caballer-Tarazona & David Vivas-Consuelo, 2016. "Erratum to: ‘A cost and performance comparison of Public Private Partnership and public hospitals in Spain’," Health Economics Review, Springer, vol. 6(1), pages 1-1, December.
    14. Rui Sousa Monteiro, 2010. "Risk Management," Chapters, in: Graeme A. Hodge & Carsten Greve & Anthony E. Boardman (ed.), International Handbook on Public–Private Partnerships, chapter 12, Edward Elgar Publishing.
    15. Vecchi, Veronica & Hellowell, Mark & Gatti, Stefano, 2013. "Does the private sector receive an excessive return from investments in health care infrastructure projects? Evidence from the UK," Health Policy, Elsevier, vol. 110(2), pages 243-270.
    16. David Parker & Catarina Figueira, 2010. "PPPs in Developed and Developing Economies: What Lessons can be Learned?," Chapters, in: Graeme A. Hodge & Carsten Greve & Anthony E. Boardman (ed.), International Handbook on Public–Private Partnerships, chapter 23, Edward Elgar Publishing.
    17. Acerete, Basilio & Stafford, Anne & Stapleton, Pamela, 2011. "Spanish healthcare public private partnerships: The ‘Alzira model’," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(6), pages 533-549.

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