Sandwell and West Birmingham Hospitals Trust is among the first NHS bodies to use the revamped private finance initiative which will be launched tomorrow.

HSJ’s sister title Construction News discovered the new private finance initiative - to be known as PF2 - could be used to provide £370m for a new hospital in Smethwick.

Under the revised PFI, deals will have to be signed within 18 months and could involve the public sector taking stakes of up to 49 per cent in projects.

Chancellor George Osborne will announce the changes in his autumn statement on Wednesday.

The new model will see the public sector win a share of profits from PF2 schemes and there will be more transparency about private partner profits. It is also set to see an increase in public equity share in projects.

Sandwell and West Birmingham Hospitals is working with the Department of Health to assess the suitability of PF2 to deliver most of the funding for the new hospital. However, the trust declined to comment.

The hospital’s construction will enable consolidation of services from multiple sites and reorganisation of activity between hospital and community settings and the replacement of Victorian buildings at Birmingham’s City Hospital.

Meanwhile, Papworth Hospital Foundation Trust has been working with the Treasury to develop a funding model for a £130m, 300-bed rebuild which incorporates many PF2 principles.

The trust is hoping to raise between 40 and 45 per cent of the capital cost through low interest loans from the foundation trust bank. It will agree a “partial indexation” deal for repayments over the 30 years of the deal, a provision Mr Bridge describes as similar to a “fixed rate mortgage”.

Papworth is also negotiating a clause to ensure it pays market rates for soft facilities such as cleaning and maintenance.

Chief executive Stephen Bridge expects work to start at the Cambridge Biomedical Campus next autumn, after the plans have been in the pipeline for nine years.

He said the biggest obstacle to completing the deal quickly was the requirement to get sign off from commissioners and Midlands and East strategic health authority cluster, at a time of reconfiguration. Delays in obtaining planning permission for the green belt site have also held up the process.