- Princess Alexandra Hospital Trust hopes to be among first to use new model of public-private financing
- Trust will pursue “blended financial model” to build new hospital in Harlow
An acute trust is hoping to be among the first organisations to use a new form of private financing to help fund a replacement hospital.
Princess Alexandra Hospital Trust is considering whether it can generate part of the funding for a new facility in east Harlow through a new “regional health infrastructure company”.
Last year, the chancellor said the private finance initiative (PFI/PF2) would no longer be used for such projects.
RHICs have been proposed by Community Health Partnerships, a government subsidiary, as a way of raising private capital for NHS infrastructure projects in a new form of public-private partnership. HSJ has previously reported that CHP plans to establish six RHICs in England.
However, the Treasury has not yet approved the model. Among the Treasury’s considerations will be the accounting treatment of such projects and whether they will count towards the national debt.
PAHT has proposed a “blended” finance model to replace its main hospital in Harlow, to be financed through a mixture of land sales, capital funding from the government, and private income.
But the report said that RHICs would be “at least a year away given [the] extensive procurement process” to get the infrastructure companies in place.
The full cost of the building project is unclear and the trust does not know how much public capital might be available. The report suggests the RHICs model could raise “up to £150m” of financing. However, it’s not yet clear if the trust would need that amount.
The trust favours a rebuild on a new green field site in east Harlow, around three miles from its current site, but said NHS Improvement has not yet approved its strategic outline case which includes these financial proposals. If the trust’s SOC is agreed, a final business case is not likely to be complete until 2021.
It expects an announcement from the Department of Health and Social Care later this year about how much funding, if any, the trust might receive towards the rebuild.
Lance McCarthy, trust chief executive, said: “With respect to funding options for the hospital we have identified a blended funding model as the preferred way forward, although the exact detail of this is yet to be worked through, we are exploring a mixture of government funding, self-financing and the potential for an element of the scheme to be privately financed.
“All of these funding options require further testing to assess both their suitability and availability for a scheme of this size and complexity.”
The trust does not want to refurbish its current site as it would cost £105m alone to resolve the backlog maintenance. A survey conducted in 2018 said 45 per cent of its estate was rated as unacceptable or below for quality.