The Local Improvement Finance Trust, designed to get health centres ship-shape by 2004, was launched two years ago. So why, asks Victoria Madine, hasn't it got off the ground yet?
The NHS has acquired a reputation for keeping people waiting – and developers and contractors are no exception. Two years ago, the Department of Health published the NHS Plan, which explained how the government was going to make a perceptible improvement in public healthcare by 2004. Part of this improvement was to rest on a £1bn programme to create an additional 500 one-stop primary care centres and either build or refurbish 3000 GPs' surgeries to replace rundown centres in the most deprived areas. About £175m of public finds was set aside to make it happen, but so far, not one brick has been laid.

The reason for the delay is that the government wanted to create an entirely new organisation to procure the facilities: a public–private partnership called the NHS Local Improvement Finance Trust, or LIFT for short. If the public sector has been slow to put the initiative in gear, the private sector has been equally slow to understand what LIFT is and how it can contribute to it. With only two years to go before the first varicose veins are due to be treated, the initiative has switched on its sirens and blue flashing light, and is no longer stopping at traffic intersections.

How the system works
LIFT is organised into two tiers: one national, the other local. At the national level is a joint venture company divided between Partnerships for Health, a registered company owned by the DoH, and Partnerships UK, a body set up to oversee public-private partnerships. PUK is itself a joint venture between the Scottish Executive and the Treasury, which own 49% of PUK between them, and private sector firms, including Jarvis and Serco, which own the remainder.

At the local level the DoH has a target of 42 registered companies, "LIFTcos", responsible for procurement. These will have boards of directors drawn from Partnerships for Health, NHS managers, GPs – if they take an equity stake – and whichever private sector companies want to get involved. They will be set up by local health authorities with the assistance of Primary Care Trusts, and will target underprivileged areas such as inner cities. The government hopes that LIFTcos will appeal to contractors with the capacity to run the facilities as well as build them, and pharmaceutical retailers, who would be able to put a pharmacy in the facility.

The way the system is supposed to work is that the national organisation supports and regulates the local LIFTcos, acting as production engineer, quality controller and banker. It draws up documents to cover contractual terms, provides a consultancy service, sets minimum specification standards, decides how much money the private sector is to come up with, allocates public money, and so on. Despite this looming presence, the local tier is intended to be free to choose whichever procurement route it wants, including lowest price competitive tendering.

Where are we now?
The scheme's planners hoped that this set-up would make for a happy marriage between regulation and implementation, and the theory was to be tested by six pathfinder LIFTcos. Of these, only one, the East London and City scheme, has so far reached the stage of advertising for private sector partners. The remaining five are in danger of being passed by the second wave of 12 schemes that were announced in January – and the other 25 LIFTcos are yet to be formed.

Joe Clyne, head of procurement policy at the private finance and investment branch of the DoH, says the private sector investors will choose the LIFTco's supply chain, though Partnerships for Health will value-check this arrangement every few years, as agreed with the LIFTco. He adds that the policy has been chosen to encourage strong, transparent competition, while keeping transaction costs as low as possible.

Mark Smith, managing director of Amey Health, one of the companies looking to participate in LIFT, says that at first glance the tendering process looks like a move away from the Egan principles of procurement that were enshrined in the health service's Procure 21 frameworks. However, he goes on to say that the public sector will be looking to "procure a partner" to run as well as build its facility. Smith says the long-term duration of this partnership will mean that Egan principles can be applied. He adds that as Amey Health is primarily a support services specialist for health buildings, it may well subcontract the construction work.

Both architectural watchdog CABE and Prince Charles, in his capacity as NHS Estates' design champion, will have an influence on the design specifications for the 3000 refurbished and new-build surgeries. Although CABE and the DoH are tight-lipped about the details of their future relationship, Stephen King, head of public affairs at CABE, says the commission is keen to see some form of design benchmarking.

"We would also like to see a building such as the surgery at Hammersmith Bridge by Guy Greenfield Architects, which was shortlisted for the Stirling Prize in 2000, used as some form of benchmark. And we'd like to set down design guidelines to complement those already produced by Primary Care Trusts." However, King does not envisage a template design, as "each development will have different needs".

But just as the procurement timescale for the LIFTcos is vague, it is unclear just when CABE's proposals might come into effect. And procuring a healthcare building is a notoriously lengthy and bureaucratic process. Guy Greenfield of Guy Greenfield Architects says: "The approval procedure for a new surgery is very slow, and I can't see the process speeding up in the near future, even if authorities have a reduced role."

There may be trouble ahead …
Most potential private sector partners are stoical about the time it is taking for the pathfinder LIFTcos to start looking for partners. Amey's Smith says: "A lot of work has gone into making LIFT right; hopefully the time taken to formulate the standard documents means the foundations are sound." Henry Lafferty, head of Jarvis Primary Care, agrees that although the delays are frustrating, it is "better than formulating policy while companies are actually going through procurement". This, he says, has been a cause of delay with previous government initiatives.

Others are not so patient. Harry Hyman, managing director of specialist property investor Primary Health Properties, says: "Delays are a real issue – especially if you take into account planning constraints, and the time to procure the actual buildings after a LIFTco is formed."

More worryingly for the government, Hyman is unconvinced that the basic concept of the LIFTco – a partnership between the commercial and the clinical – will work in practice. He points out that the health sector will be both shareholder and care provider, which could result in a conflict of interest and make the LIFTco boards unworkable.

Hyman's concerns are a particular worry for the government because he speaks for the private funders it is relying on to deliver its policy. If the DoH is to bring him on board, it will need to be clearer about which services will be contracted out and how decision-making will be managed. Most importantly, it will have to reassure him that doctors are ready to allow developers to control many of their services.

Contractors seem less concerned about conflicts of interest within the LIFTcos. Jarvis' Lafferty says that the doctors will always have the upper hand in the relationship (one of Hyman's principal concerns). "There are potentially a lot of shareholders, but I am not worried about it at this stage," he says. "If GPs do become stakeholders, it will be through some sort of trust. GPs know what they want, and will be – how can I put it delicately? – vocal about the service they get if they are not happy with it."

The prognosis for LIFT is still unclear. Although contractors are resigned to biding their time as they wait for notices to appear in the European Union's Official Journal, even relatively sanguine commentators such as Lafferty and Smith are anxious that the procurement process speeds up once that happens. "To meet the government's targets, we'll need to see around 300 doctors a year furnished with new premises through to 2004, and that will require a lot of effort," says Lafferty. The challenge is: can a potentially disparate group of LIFTco stakeholders unite to ensure the buildings actually go up?

For more information on LIFT, go to

Work on the ground

Newcastle Health Action Zone is made up of three Primary Care Trusts and 266 GPs’ surgeries. In May, it will try to enlist a private partner to form a LIFTco by advertising in the European Union’s Official Journal. The first tranche of work will take in up to 10 surgeries; all of them belonging to the Primary Care Trusts. Chris Wright, project co-ordinator of Newcastle’s LIFTco programme, says Newcastle is in the process of calculating the value of the work, but provisionally puts it at more than £20m. He says that the successful developer will be contracted to run the company for 25 years, and that the project will be value-checked after seven years.