Published: 17/02/2005, Volume II5, No. 5943 Page 12
A successful refinancing of the first private finance initiative hospital contract will save the trust involved around£60m, a National Audit Office report has shown.
But the NAO value-formoney report criticised Dartford and Gravesham trust for missing an opportunity to save money by 'fining' contractors at Darent Valley Hospital for sub-standard service.
The NAO report revealed that private investors received£37m following the refinancing, from an initial investment of£13m when the hospital was built in 1997.
This has led to criticism of 'windfall profits' made in the private sector.
The project was refinanced in March 2003, giving the trust an immediate lump sum of£1.5m and a reduction of£2m annually on its repayments, an estimated£60m over the contract's duration.
The contract was extended from 28 to 35 years and the trust agreed to take on the extra risk of the contract being terminated early. The PFI contract now accounts for around£17m of the trust's annual budget of£94m.
Since Darent Valley's opening in 2000 it has progressed from zero stars in 2001 to three in 2003 and 2004. Its management was franchised in 2001, with chief executive Sue Jennings being appointed from Basildon and Thurrock University Hospitals trust.
Under the terms of the contract with the PFI company created to build and service Darent Valley, the trust could deduct payments if the firm's services were considered to be below standard. The NAO report found that service lapses happened 'in important areas such as waste collection and cleaning'.
Sylvia Wyatt, project manager of the NHS Confederation's future healthcare network, said: 'The refinancing was prudent business by the trust management. It was inevitable that there would be some lessons to learn from the Darent Valley experience, given that it was the UK's first PFI hospital.'
www. nao. gov. uk