NHS organisations should press for better value for money from existing private finance initiatives and find new ways of funding projects, according to a report by the National Audit Office.

The report, which draws together lessons from research into PFI, says managers should draw up an “efficiency plan” for each project “setting out a strategy for getting better value over the life of the contracts”.

The report says the government and public sector must learn lessons from past mistakes in order to make the best use of scarce resources.

In the past, NHS trusts and local councils embarked on private finance projects because there was “no realistic funding alternative”, says the report.

But the NAO concluded: “In the current climate, the use of private finance may not be as suitable for as many projects as it has been in the past.”

One problem is a lack of data on whether projects for schemes such as new hospitals are good value for money compared with other options, the report says.

It highlights the need for tougher independent scrutiny of major projects. Organisations like the NHS should make more use of incentive based and fixed price contracts, it recommends.

The report also flags up the need to ensure those in charge of contracts have the right skills and expertise.

“The managers should be incentivised and held to account for maximising value for money,” it says.

NHS Confederation acting chief executive Nigel Edwards said a “measured debate” was needed “so we do not discourage future private investors from supplying capital for large projects”.

“But it is right to examine whether there are practical ways for the NHS to squeeze more value from existing deals, given the substantial savings that all trusts have to make,” he added.

  • Enter the inaugural HSJ efficiency awards – designed to celebrate those initiatives which have improved quality and delivered cost savings – at www.hsjefficiency.com

Topics