P3 hospital debts threaten quality of health care

Patients in Britain could see their health care services cut as a result of botched public private partnership (P3) hospitals.   

The Public Accounts Committee of the British House of Commons has flagged special concern about the “unaffordable” P3 deals.   Public Accounts Chair Margaret Hall said, "We are particularly concerned that the financial viability of a number of trusts is being undermined by the fact that they are locked into unaffordable PFI (the British phrase for P3s) contracts.”

She added that ministers were unable to provide MPs with reassurance that financial problems will not damage the quality of care or access.  “The Department of Health could not explain to us how it will deal with an NHS trust that goes bankrupt. Nor could it provide reassurance that financial problems would not damage the quality of care or equality of access to all citizens, wherever they live.”

At least 22 health care trusts operating 60 hospitals are facing severe problems as a result of their P3 deals. P3 contracts guarantee that the P3 consortium are paid first by the National Health Service (NHS) and the Department of Health has already agreed to pay £1.5 billion ($2.4 billion) to bail out seven health care trusts with specially bad P3 deals.

The Public Accounts Committee notes:

“A number of trusts in financial difficulty have PFI contracts with fixed annual charges that are so high the trusts cannot break even. Paying these charges is one of the first calls on the NHS budget and the Department is liable for supporting all PFI payments because it underwrites the Deed of Safeguard given to contractors. It already expects to have to find £1.5 billion to bail out seven trusts facing problems with PFI repayments over the remaining life of their contracts - equivalent to £60 million a year. The guarantee provided by the Deed of Safeguard also gives PFI providers the upper hand in any attempt by trusts to renegotiate the contracts, which experience suggests can result in reduced service levels rather than greater efficiency. The priority given to meeting PFI annual charges inevitably distorts priorities which is especially worrying at a time when resources are constrained.

In contrast with the P3 hospitals, NHS trusts reported an overall  surplus of £2.1 billion ($3.36 billion).

Also in Britain yesterday, the administrator appointed by the government to oversee one particularly troubled P3 hospital in South London has said the Department of Health should write off £207 million ($331 million) in debt that the hospital has incurred.   The administrator also said the government should pony up £20 to £25 million ($32 to $40 million) extra per year to help pay for the hospital’s P3 debts.

Britain pioneered the P3 model. Despite the many disasters with P3s in Britain, Ontario and other Canadian governments continue to invest in them, with little public discussion. 

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