Health department sets precedent by giving London hospital £45m extra to meet cost of new PFI facilities.

The government has moved to bail out National Health Service trusts that are struggling to find the money to meet their PFI debts after the introduction of a revised method of payment for operations.

It is understood that the health department is to give a £45m “PFI supplement” to University College London Hospitals NHS Foundation Trust over the next five years to cover a shortfall in income.

If the department had not taken this step it is understood that UCLH would have run up huge debts on its 35-year PFI scheme, the first phase of which was completed last month with the opening of the £422m University College Hospital.

Trust chair Peter Dixon said that it was paying £38m a year in management fees to a consortium made up of Amec, Balfour Beatty and Interserve.

This amount is set to rise with the completion of the second phase of construction in 2008.

Dixon added: “All PFI trusts will need this approach otherwise contracts will not be met. The reason for this is the new ‘payments by results’ process introduced by the government last year.”

This system was introduced in April last year for the first wave of 29 foundation trusts. It is triggered for other NHS hospitals in April this year.

Under the scheme, the cost of operations is standardised to ensure that there are no wide variations across the country. The effect, however, has been to penalise some trust that will now receive less money than before for carrying out certain operations.

Dixon said that a number of trusts that had agreed PFI deals for new facilities were particularly vulnerable to rising costs and would not be able to bring in enough revenue to meet their PFI obligations.

He said: “There is one price across the NHS for, say, a hip replacement. Some trusts will hit this bang on, others will be above or below. However, even if you require the average rate, if you then are required to pay for new PFI facilities then you are in trouble.

“A group of trusts made that point to the department: that because they have new kit they have a higher cost base. The health department has been persuaded that it needed to act and I would imagine that the sums it has set aside to cover this are substantial.”

In a separate development the Major Contractors Group met this week to discuss the future of PFI health schemes after health secretary Patricia Hewitt hinted that fewer large schemes might be built under PFI. It is understood that a leading industry figure is working with the government to remedy problems over PFI.

The NHS has completed more than 50 schemes under the PFI, including new hospitals, extensions and refurbishments. Another 80 are in the pipeline. Smaller projects are being bundled together through the NHS Lift scheme and Building Schools for the Future programmes.

Hewitt said she did not wish to jeopardise the 26 PFI hospitals out to tender or nearing financial close but indicated that there could be changes in the future.