The cost of replacing two acute hospital sites with one private finance initiative scheme may have been 'significantly underestimated' according to a report commissioned by the health authority behind the proposals.

West Hertfordshire HA is due to decide on the plans in two weeks' time.

Its preferred option is a new greenfield hospital, likely to be funded through the PFI.

But last week's report by London Health Economics Consortium says early estimates putting the cost of a PFI scheme at£150m are 'likely to be more accurate' than the£83m-£86m suggested in a HA public consultation document.

Author Nigel Edwards says 'care should be taken' to ensure that the 'significant capital investment needed' is 'robust and affordable'.

But the report broadly backs the HA's preference for replacing two acute urban sites with an out of town site backed by community hospitals.

This option has met with fierce public opposition, but has been accepted by medical directors at the two acute trusts.

An HA spokesperson said it had been consulting on 'wider strategic direction' for health services in the area, rather than a PFI project.