Capital planning and the private finance initiative: Cost minimization or health care planning?

Abstract

This paper looks at the process of Private Finance Initiative (PFI) planning in the UK National Health Service, and addresses the extent to which it ensures the adequacy of service provision. The Private Finance Initiative is intended not only to substitute private for public financing of healthcare facilities, but also to produce efficiencies in the operation of these healthcare services through the introduction of innovatory private sector practices. The paper contrasts the traditional capital-planning process within the health service, which was based on estimates of service need, with the PFI planning framework, which is finance led. PFI planning also has to be seen in the context of other organizational and financial reforms within the health service which have increased the pressures on health trusts to operate like commercial businesses and to rationalize service provision to meet financial targets. Drawing on a series of interviews and documentary sources, the paper shows how these pressures, coupled with the tendency of PFI to increase capital costs, have led to drastic actual and planned cuts in services not only in the facilities directly affected by a particular PFI but also in other areas of local healthcare provision which have not been justified by detailed analysis of projected healthcare needs.