1.  INTRODUCTION

  This joint paper has been prepared for the Health Select Committee by Health Management (Carlisle) plc and North Cumbria Acute Hospitals NHS Trust.

2.  BACKGROUND

  Prior to the opening of the new hospital the Trust provided clinical services from three hospitals on two sites, two miles apart which had many significant operational issues:

—  High clinical risks from providing services across the City.

—  Patient's facilities in some areas were poor, eg nightingale wards which did not provide good levels of privacy.

—  Lack of basic facilities in some wards eg no piped medical gases, nurse call systems, inadequate number of WCs.

—  Significant backlog maintenance issues.

—  Lack of theatre capacity.

—  Poor functional relationships for key clinical departments eg A&E, Theatres and Imaging.

  A new hospital development had been planned for the previous 25 years but did not receive traditional funding. In 1994 the PFI procurement commenced, financial close was achieved in November 1997 with the Trust's private sector partner, Health Management (Carlisle) plc.

  The project involved the rationalisation of three existing hospitals onto the Cumberland Infirmary site with the subsequent clinical and operational benefits.

  The redevelopment of the Cumberland Infirmary Carlisle was achieved and opened to patients ahead of programme in less than two and a half years. The overall design and construction period was considerably less than that achieved historically for traditionally funded projects. The project was delivered within budget.

3.  BENEFITS

—  Single Site.

—  Improved facilities and environment.

—  Improved vertical and horizontal functional relationships.

—  Unified Imaging department with CT and MRI.

—  Combined Day Surgery/Endoscopy Unit.

—  Dedicted Ophthalmic Day Surgery Unit.

—  Integrated Rehabilitation Unit, including hydrotherapy pool.

—  Dedicated main theatre block (with additional theatre).

—  Dedicated Family Services Unit, including six LDRP maternity rooms.

—  Combined Critical Care Unit (ITU and HDU with additional bed).

—  Helipad.

—  Pneumatic tube system.

—  Individual bedside (pay) TV screens and telephone.

—  33,000 square metre new construction.

—  10,000 square metre retained buildings.

—  Total beds—474 design brief/442 operational.

4.  TIMETABLE FOR THE CARLISLE PFI PROCESS

5.  PRIVATE SECTOR PARTNER

  Health Management (Carlisle) plc is a 50/50 dedicated joint venture concession company formed for the Cumberland Infirmary Carlisle by AMEC and Interserve (Facilities Management) Ltd [formerly Building & Property Group Ltd].

  Both shareholders have extensive experience in various sectors of the PFI market, including healthcare. Projects include University College London Hospitals which is currently under construction, and Burnley General Hospital which is at the bidding stage.

  Main Subcontractors

  Design & Build:

—  AMEC Capital Projects Construction [formerly AMEC Construction].

—  AMEC Capital Projects Mechanical & Electrical [formerly Matthew Hall].

  Facilities Management:

—  Interserve (Facilities Management) Ltd [formerly Building & Property Ltd].

6.  FINANCE

—  Concession Period—45 years with a break at year 30.

—  Construction capital cost at financial close—£57.00 million.

—  Total finance—£83.71 million.

—  Finance provided by shareholders—£7.91 million.

—  Finance provided by 30 year AAA guaranteed bond—£75.80 million.

—  Annual charges to the Trust at 1 October 2001 in base date prices (March 1996):

    —  Usage: 207,000.

    —  Availability: 6,049,000.

    —  Service: 4,288,000.

    —  £10,544,000.

—  Annual charge increases in line with RPI.

—  Availability fee is subject to deduction if areas are declared unavailable.

—  Service fee is subject to deduction for poor performance.

—  Soft services are subject to periodic benchmarking and market testing.

7.  SERVICE PROVIDED BY HEALTH MANAGEMENT (CARLISLE) PLC

  7.1  Health Management (Carlisle) plc are responsible for the design, construction and funding of the new Cumberland Infirmary. Responsibility for all non-clinical services for the concession period of 30 years following practical completion also lies with Health Management Carlisle.

  7.2  Interim facilities management service provision began in April 1998 with the transfer of non-clinical staff under TUPE provisions. During the interim period up to practical completion of the building works all the non-clinical services were progressively transferred to Health Management Carlisle and their facilities management subcontractor Interserve (Facilities Management) Ltd.

  7.3  From the full service commencement date Interserve (Facilities Management) Ltd have been responsible for the provision of the following services to the entire Cumberland Infirmary premises and grounds:

—  Car park and traffic management.

—  Catering—provision of patient and staff/visitor catering (canteen and coffee shop).

—  Domestic Cleaning.

—  Estates management—provision of planned maintenance, adhoc repair and capital works.

—  Grounds Maintenance of the whole site including car parks and landscaping.

—  Help Desk/Reception.

—  Linen/laundry—provision of rental service.

—  Portering service to agreed areas.

—  Provision and management of the full facility including energy monitoring, mechanical services, electrical services and environmental controls.

—  Security including CCTV monitoring.

—  Telephone switchboard and help desk.

—  Waste disposal.

  7.4  Health Management Carlisle are also responsible for the following:

—  Life Cycle replacement programme for the hospital to maintain a specified standard over the project life.

—  Management of health and safety relating to the service provision and integration with Trust procedures.

—  Procurement and management of non-clinical insurance's for the Cumberland Infirmary site.

—  Development and support of new facilities in meeting changing Trust requirements.

8.  RISKS/RESPONSIBILITIES ASSUMED BY HEALTH MANAGEMENT CARLISLE

—  Fixed price and programme for construction.

—  Fixed price for all non clinical services (subject to indexation and periodic market testing).

—  Full availability of the whole facility for the concession life.

—  Full cost of all planned/reactive maintenance and life cycle replacement of building elements, plant and service equipment.

—  Payment partially linked to patient volume.

—  Income from restaurant and coffee shop.

—  Income from car park.

—  Income from retail unit.

9.  LESSONS LEARNT

  The project in Carlisle was in the initial wave of approved PFI schemes, the second to be signed and the first to be completed. There was little advice available and as a result the Trust was exploring new ground. Consequently in such situations there are a wide range of lessons learnt which have already benefited later schemes. The PFU and the NHS Executive are now co-ordinating all schemes across the country and standard project documents are available which have improved the process.

  The key issues learnt can be summarised as:

  1.  Detailed specifications for the building, clinical services and support services should be agreed early.

  2.  The Project team should have appropriate human resource and finance.

  3.  Ensure multi-disciplinary groups undertake clinical specifications and design approvals including modelling and simulation.

  4.  The equipment strategy should be prepared well in advance.

  5.  The planned commissioning period of eight week was too optimistic.

  6.  Staff expectations have to be managed as all new buildings have teething problems as systems are commissioned.

  7.  There are some weaknesses in the Contract particularly in relation to the Payment Mechanism, service performance penalties and operational costs that affect all parties.

  8.  Be aware of the cultural changes. In Carlisle's case:

—  Three distinct hospitals into one.

—  New working relationships public and private.

—  New environment.

—  New working patterns.

  9.  Any partnership takes time to develop and the relationship between the Trust and HMC is still maturing.