- Negotiations ongoing over way forward for new £350m PFI hospital
- Trust CEO raises concerns about “balance” in discussions
- Solution sought by end of April
The chief executive of an acute trust is growing increasingly concerned about the length of time it is taking to resume building on a “key” new PF2 hospital, following the demise of Carillion.
Toby Lewis, chief executive of Sandwell and West Birmingham Trust, told HSJ it was “taking longer than expected” to arrange restarting work on the £350m Midland Metropolitan Hospital.
Work on the new hospital – which was initially planned to open in October – was halted in January when Carillion was liquidated.
Since then the trust has been involved in complex negotiations with its PFI provider The Hospital Company (Sandwell) and PwC, which is acting on behalf of the Official Receiver, over how the project should be resumed.
Mr Lewis previously told HSJ he expected a resolution by the end of March, but this target has since been pushed back to the end of April.
In his report to the trust’s board, which meets on Thursday, Mr Lewis said it was “enormously important” that safety and clinical risk are “weighted more highly” than “accounting conventions”.
“I am increasingly personally concerned that the right balance is not being struck in the negotiations in which we are a part,” he said.
He added he remained optimistic that “decency and quality will prevail in the end”, however.
Speaking exclusively to HSJ, Mr Lewis said his comments were not meant as a criticism, but a reminder that the hospital was a “key investment in clinical safety and quality”.
“My point is not to suggest their [accounting conventions are] not important, but our strong view – and I’m sure everyone agrees with this – is that the clinical risk needs to be paramount in considering the way forward,” Mr Lewis said.
He said the new hospital was designed to address “serious quality issues” linked to having acute services across the trust’s two existing sites - City Hospital in Birmingham and Sandwell General Hospital in West Bromwich.
Asked if there was a blockage in the negotiation process, Mr Lewis said: “I wouldn’t conceptualise it as a blockage. There are many parties involved - a series of banks, a private finance company, a trust, and three three different government departments.
“No one is being unhelpful, no one is blocking, we have not yet collectively managed to agree the way forward.”
Mr Lewis said the fastest solution would be the trust continuing its relationship with its private finance initiative provider to secure enough money to pay a new builder to take on the project.
Other options could include terminating the contract and exploring a public finance solution.
All the parties are currently analysing which options will provide best value for money.
The Midland Metropolitan project was a contributing factor in Carillion’s demise, with the company’s accounts revealing a shortfall of £28m for the scheme.
Mr Lewis said the additional cost of completing the hospital because of the changes to the deal would be “greater” than £28m, but reiterated his determination to ensure the “local NHS” would not pay for this.
The extra costs relate to the risk premium a new builder would put on its bid to take on the work, inflation, and the existing engineering problems that caused delays prior to Carillion’s liquidation.
Asked about the immediate impact on the trust’s finances, Mr Lewis said the trust would hit its 2017-18 control total (a £7m surplus), and added the trust is having “constructive dialogue” with NHS Improvement about its 2018-20 finance plan.
As of this week, 20 ex-Carillion staff who worked on the new hospital remain employed by the Official Receiver.
Last month 27 staff who worked on the site were made redundant by PwC.
Royal Liverpool and Broadgreen University Hospitals Trust is reportedly in “advanced talks” with Laing O’Rourke about continuing the building work on their new PFI hospital, which was also affected by Carillion’s demise.
Information obtained by HSJ