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James Cook University Hospital

Category: Hospitals

"When you look at what we’ve got, when people come and visit us and see what we’ve got, the kind of environment that we have from which to actually serve a community that has very poor health by national indices - we wouldn’t have that without PFI.”

Simon Pleydell, Chief Executive, South Tees Hospitals NHS Trust

June, 2007

James Cook University Hospital is a major tertiary centre providing leading edge acute hospital services. It is a 1100-bed state of the art facility comprising 130,000m2 of new and refurbished estate. It ranks as one of the largest and most complex hospitals in England.

After a four year multi-million pound development to house all of the Trust’s specialties on the one Middlesbrough site – which involved consolidating the services previously provided at North Riding Infirmary and Middlesbrough General Hospital onto the James Cook site – the redeveloped James Cook University Hospital was completed in 2003. It was one of the first ten PFI sites in the country.

The PPP Forum interviewed Simon Pleydell, Chief Executive of South Tees Hospitals NHS Trust.

Why was there a need for a new hospital?

Two of the hospitals that were closed were in very poor structural condition, and weren’t really fit for purpose, in terms of giving patients a satisfactory environment for the 21st century.. There was a huge backlog of maintenance on those sites. And what we were trying to do, and what we’ve achieved, is pulling together a sub-regional service with everything on one site - apart from major transplantation and very complex children’s surgery, which we don’t do. And, if you look at our national trauma audit scores, we have the second best trauma survival rate in the country now at James Cook.

When George Bush came to see Tony Blair at Trimdon in 2003, we were the designated hospital to look after the President if anything should happen to him. And the people from the White House said that we were one of the few sites that they had been to in the world that had everything on hand, on one site!

Had the Trust always identified the need to transform its health facilities?

Yes, if you look at the basic health of the population, we wanted to put together a very special hospital in Middlesbrough, because the health needs of the population are very great. And we felt that there was something extra about putting all these specialities in close proximity together, that you not only have the specialties working, but you have them working in partnership with each other. And if you walk round the operating theatres now, you rarely see one consultant surgeon working on their own, you see them with other specialties and there is a lot of cross-specialty collaboration. And we knew that would be achieved, particularly for trauma, but also other specialties, if we could manage to put this on one site. And we also knew in the early ‘90s that there was no way we would have achieved this through Treasury capital. So, our only opportunity for achieving this was through PFI.”

So this wouldn’t have been achievable before PFI?

No, I don’t think we’d have ever made it happen.”

And in terms of developing what you wanted, were you involved in the design?

I was heavily involved in the design, and we had two competing consortia, two designs to choose, and obviously two different teams to work with.”

And do you feel you got really good designs? Could either of those designs have worked?

I think we did get a good design. We’d also done a lot of thinking about critical relationships before anybody came in, and we’d actually used some independent architects to work with us to look at the sort of basic skeletal framework that we were looking for. So, we did get a good design, but I know there’s been a lot of debate about how you get the best design, with designers selected by the consortium.

We worked really, really hard at this, and we put an awful lot of work into it, but nevertheless, when you have two competing consortia, with two different design teams, you may get the financial package from one consortia that makes sense, and the design may not be the design that you want, and you may get the design that you want with a financial package that isn’t as competitive. However, I think we’ve got a product now, and we’re very happy with it. I think the process could be improved though.

The outcome here is that we’ve got a hospital that everyone can be proud of, that the local population is very happy with, and it has achieved what we wanted it to achieve.”

Were all the different areas of staff represented and involved in the whole process?

Yes. We had over 40 working specialty based working groups. When it was at the competitive stage between the two consortia, both designs were marked by all the clinicians in the organisation.

Our style in this organisation is that everything was worked up, all the levels of drawings were worked up with the clinicians; we’ve always done that. So, everybody was aware of what was going on.

I think that people think that we’ve got a good product, and I think that when we bring other people and other colleagues to visit this Trust, people are really impressed by what we have now. But that’s a combination of the style of clinical services that we deliver, the processes that we deliver, and also obviously the environment from which we deliver them.”

What about the main construction phase? The new hospital was being built around the site of an existing one, which had to be kept going, and then there were the relocations…

I think it was about one of the most complex construction projects. Yes, it was a hugely complicated issue. I mean, of an order of magnitude greater than building on a greenfield site and then moving to that greenfield site.”

What about the delivery?

There were some delays, and the truth of the matter is, we’ve had discussions about the financial issues around those delays, and we’ve had to reach a settlement on that. But I guess in terms of the complexity of the scheme, some of those things were inevitable.”

How is the project running now?

We’re still running through some of the outstanding issues. Sometimes when you’ve got an output specification, there will always sometimes be a mismatch and dispute about what our output specification actually requires, in terms of inputs. And we have been going through a fairly lengthy process of trying to get those issues sorted out, and sorting out who’s responsible for what.”

And how would you describe your relationship with the private sector provider - would you describe it as a partnership?

I think it’s working towards a partnership. I think that clearly we recognise that the private sector provider is here to make a return for their investors, and that’s a very hard bottom line for them. And there have been all sorts of issues about how we continue to develop the estate, because healthcare never stands still, and there’s been a whole bunch of things for us to work through. And I think that over time, our relationship has been maturing. But I don’t think you would say to anybody that the relationship would always be totally plain sailing.”

Do you have to work at the relationship?

If you want to get it right you have to work very hard at it.. One of the issues is responsiveness. And I think it’s true to say that we’re beginning to get these things sorted out, but I would like the provider to be more responsive in terms of timetabling and getting things done than perhaps we’re able to achieve at the moment. And that’s because I’m driven by the business imperative that I have of treating patients, meeting waiting time targets and all those sorts of things.”

Is Payment by Results changing the way you’re looking at how you use the hospital?

Well the simple economic facts about PBR are that you have to try and make sure that for everything you do against PBR, you’re either under the cost - and hopefully there’s a margin in terms of savings – or at the very least your costs reflect the PBR income - otherwise you go bust. So, our business on this site is sweating the asset and the good thing is that we’ve had no major interruptions; we’ve had no legal issues in terms of unavailability or anything like that. The hospital is working at full throttle. But the issue obviously is that we need to continue that, because all PFI hospitals have a higher cost infrastructure, because of the programme of maintenance, because we pay upfront for all of those things, keeping everything at condition B, according to the NHS Estates classification. And clearly, if you look at any PFI hospital, we are de facto, more expensive than other hospitals that don’t have, as part of their inherent business, that objective to keep the estate at a high quality.”

Do you think that’s an important aspect?

I think the high quality environment is really important. We know that we’re spot on with our reference costs, which is how we compare ourselves with other hospitals, we’re spot on at 100, which means that we’re absolutely on average, which I think is a good position for us to be in given that we’ve got a PFI hospital.”

Do you see the length of the contract term as a benefit or a hindrance; does it give you enough flexibility?

In terms of making changes and developing the estate, I think we’ve come to an understanding with the private sector provider that we know how we’re going to work those things through. But to be honest, the length of the concession doesn’t worry me - what I want to make sure of is that the working relationships between ourselves and the provider work well, so that we can respond to the changing environments that we’re in. But however you played around with that, there would always be a cost entailed anyway.”

Has the new hospital helped with recruitment?

People really like the environment they work in. There is an old ward block which is part of the old hospital, which is not part of the PFI scheme at all, which people feel a bit like second class citizens in, and we had a big discussion at the Trust Board yesterday about how we’re going to try and resolve that. But it’s a great environment, and environment is also important to staff, that’s for sure. We have a central mall, an atrium, and if you walk round at lunchtime, you’ll see members of staff sitting on the sofas in the various hub points down the mall, and it provides a good environment for people.”

And what was the actual state of the building before the project?

This building here was a late 1970s design with various constructions that had been added on to it. So it wasn’t in bad nick, but it certainly wasn’t the kind of environment which we have now.”

There’s been a lot of press coverage about the financial deficits in the NHS recently, what is your current status?

At the moment, we are breaking even but we still have an historic deficit.”

Do you see PFI as part of the reason for that?

I don’t attribute PFI as the reason for our financial problems. I actually gave evidence to the Health Select Committee on this, and my view is that there was an opportunity cost of closing, in essence, three hospitals and moving them onto one site. And part of that opportunity cost, apart from the bricks and mortar, is that it is a major change for a lot of staff. I mean, you had staff who were working in an operating theatre department in the North Riding Infirmary, which had two operating theatres in it. They now go into a department where you can get lost with 20 operating theatres in it. So, huge changes for a lot of people, and the way that the regime works was that we had to continue with our targets, there was no allowance made whatsoever for us, whilst we were going through that change, and I think it is arguable that when we were going through that change, we lost a little bit of financial control.

But now we’re back on track, and we’re currently actively discussing the historic deficit with our colleagues in the local healthcare community, and I’m optimistic that we’ll get out of the woods. Our 2005/6 reference costs are at 100, which is good.”

What do you think the benefits of PFI are?

Well simply, if you ask ‘is PFI a net good value?’ – well Middlesbrough would not have one of the leading hospitals in Europe here without PFI. And there are always, for these kind of things, opportunity costs. But I think when you look at what we’ve got, when people come and visit us and see what we’ve got, the kind of environment that we have from which to actually serve a community that has very poor health by national indices - we wouldn’t have that without PFI.”

What advice would you give to people who might be undertaking the process now, looking back from your own experience?

Try and get as clean a construction project as you can, so that you don’t get into delays, and you don’t get into construction disputes. So, try and do that, and learn as much as you can from other sites. I mean, we do network quite a bit, and I think that’s important, but I think every special purpose vehicle NHS relationship is quite unique, and it’s dependent on the attitude of the people. And I think that you just have to work at that. So, I know that some of the processes have changed in terms of the preparation, business planning and tendering processes and I think most of those, although I have a limited understanding of them, seem to be sensible moves.

I think all of these relationships have their issues, so I don’t want them to be blown out of proportion, because I think it’s important to know the good bits that we have. And the good bits that we have - that we now have a major hospital that we didn’t have in the past. The only other thing that perhaps I should say is that it does take a healthcare organisation a while to understand that it’s not our maintenance men - it’s all done through a third party. And that’s quite a change that staff on the ground have to get to grips with.”

And what are you most proud of?

Have you seen the photograph outside, the before and after? I just think this was one of the most complicated PFI that has been done, to my knowledge, in the country, so I’m very proud that it got done at all. I am proud that we got there, and that was about joint working with the consortium. And I am proud of the product that we’ve got, and genuinely, I’m proud of the services that we provide. So, that’s all part of a package. And all the relationship stuff – well you’ve just got to work at it on a day to day basis, as we know we do with all relationships.

And it makes things happen, PFI, which is an important aspect.”