New 'fast-track' ambulatory care centres that separate elective diagnosis and treatment from emergency work are part of the government's plans for spending private finance, alongside the building of new hospitals, writes Seamus Ward

When health secretary Alan Milburn gave the go-ahead for 29 new hospitals worth£3. 1bn in February, the announcement was more than just a further wave of private finance initiative schemes. Most will undoubtedly be financed with private cash, but rather than just a new hospital, the health secretary hopes this new generation of PFIs will provide the means to reengineer all local health services to meet NHS plan requirements.

He believes the move to seamless care could be aided by including an intermediate care centre or primary care facilities in a hospital PFI scheme. Waiting times will be cut and the number of cancelled operations reduced by 26 new 'fast-track' ambulatory care centres that will separate elective diagnosis and treatment from emergency work.

These new diagnostic and treatment centres, based on a pioneering unit at the Central Middlesex Hospital, are perhaps the biggest indication of the government's desire to use PFI to change the NHS.

'There is a clear message that it will not just be a case of getting another new hospital.

There is an expectation that this will be a catalyst for change, ' says John Kelly, a director of healthcare strategy consultants RKW.

'If you want your scheme approved it is not about coming up with more of the same but demonstrating how it will change service delivery in order to deliver the NHS plan targets. '

Nabil Hindi, an independent health planner, is worried about the rush to build ambulatory units. 'The prime minister has seen the Central Middlesex and he likes it. We all like it. But as a model it would be dangerous to go round the country saying: 'Let's have 20 of them'. In every situation the delivery of services will be different. If the ambulatory care unit is about the separation of the elective environment from the emergency environment, one could achieve that in any hospital without building a new ambulatory unit. '

There is also a question over whether the construction companies have the capacity to build 29 hospitals plus the ambulatory care units in a short period of time. 'PFI projects take a while to get to the point where the builders are on site, let alone finished, so we are talking about all of that programme being done simultaneously in the last half of the decade. There is a question mark over whether that is achievable, ' Mr Hindi says.

Mr Kelly agrees that privatesector capacity is potentially a large constraint. But he adds:

'I think the private sector is keen to go for it and it has been staffing up accordingly.

My understanding is that the market has been carefully managed by the private finance unit to ensure the release of projects will not overheat or break the back of the market. '

Indeed, 12 new hospitals will begin the procurement process this year, 13 next year and four in 2003. Staging the projects will ensure there will be no shortage of advisers to trusts or the private sector, says Michael Boyd, partner in the major projects group at solicitors Pinsent Curtis Biddle.

'A large number of schemes will be coming to the market but they will be staggered over a period of time. The guidance and standardisation of PFI will also help. '

Mr Kelly believes the remaining consortia will work hard to meet demand. 'There are fewer major players now, but some of these consortia have quite an extensive international business as well, so they will have resources from the US and Australia to be ploughed into the UK market. '

One consortium making the most of its international resources is Catalyst Healthcare Management Ltd, made up of Bovis Lend Lease, Sodexho and the Bank of Scotland.

Mike Davis, its chief executive, says the February announcement was a spur to the company's strategists.

'We are looking to upskill using international input from the US and Australia. We are developing our management teams to deal with some of the complex issues around design management and the integration of IT and medical equipment. These have often been bolt-ons outside the PFI procurement process. '

Even though Bovis and Sodexho are large companies, there is a limit to their capacities. 'Our effort will be directed towards the larger projects because we believe that if we can focus our expertise on the major acute sector and that is successful, then we can more economically offer to provide a response to the smaller projects, ' Mr Davis says.

Modular building could speed up building time and cut costs, according to Tom Ainscough, managing director of manufacturers Rovacabin. 'Fast-track centres will apparently not be ready for several years. However, modular buildings can be up and running within a matter of weeks, ' he adds.

There are fears that there may not be enough private cash to invest in the projects, though Guy Pigache, director in charge of Charterhouse Project Equity Fund, says delays may help the government achieve its ambitions. 'If the past is anything to go by, the biggest help in delivering the plan is that whatever the government announces will take longer than it says. It will be difficult to get all these deals agreed in the next three or four years so the availability of finance will not become a question. '

However, one problem needs to be addressed, he adds. The government's insistence that it should claw back some of the money made by the private sector in PFI deals - due to be formalised in guidance any day from the office of government commerce - is scaring potential investors.

'We have to persuade pension funds and insurance companies to give us money to invest in these schemes, ' he says. 'But when they hear the government wants to claw back the profits they will put their money somewhere else.

We need a sensible balance to restore confidence. '

The NHS plan promised an extended role for the private sector in PFI schemes.

Already, the Department of Health has indicated it will pilot a variety of models for extending private-sector involvement in pathology services, and some could include private companies taking over a whole service, including staff.

Though Mr Davis says Catalyst is not interested in providing clinical or clinical support services, others will be tempted, particularly if they get the chance to manage the new diagnostic and treatment centres. This would not necessarily mean employing or managing the clinical staff; rather the private sector could take on the risk of managing the high volume of elective work the ambulatory clinic would undertake, ensuring patients turned up for appointments, for example. Mr Kelly says: 'In another model, the private sector would not employ staff but it would have management control over where they were deployed.

There is a lot to be resolved over how this would work and how much expertise there is in traditional PFI consortia to do that is debatable. '

Mr Hindi says there would be a lot of opposition. 'Areas such as laboratories and pharmacy are on the margins but there is still a feeling that they should not be put into the private sector because there have been problems with outsourcing. '