Yesterday, 11 December 2019, the third of the facilities in the latest NHS Greater Glasgow and Clyde healthcare PPP reached financial close.
Unusually, the new facility (new Clydebank Health and Care Centre) is being added to an existing DBFM contract under a pre-agreed change procedure.
The first component of this healthcare project reached financial in December 2018 and procured two new facilities (the new Greenock Health Centre and Mental Health In-patient facilities at Stobhill Hospital). The private partner is hub West Scotland and the contract follows Scotland’s hub/DBFM “PPP-lite” template contract.
We supported the NHS in-house team and were responsible for a range a financial transaction support activities including assessing financial submissions from the private sector partner, confirming that returns, margins and fees are consistent with benchmarks and validating financial model optimisation throughout the procurement and at financial close.
We are helping NHS Highland procure two new DBFM/PPP hospitals from hub North Scotland. The new hospital in Broadford on the Isle of Skye will replace the ageing Dr MacKinnon Memorial Hospital, and the new hospital in Badenoch and Strathspey will centralise services currently delivered through several dispersed inpatient units that are not fit for purpose.
Within a wider redesign of health and social care services, the new hospitals will deliver a range of benefits including:
- greater numbers of people being cared for at home;
- reduced length of stay in hospital;
- co-location of specialisms and related services;
- equality of access to services;
- dementia-friendly inpatient facilities;
- more dignity and privacy for patients – 100% single rooms with en suite.
The two new hospitals will be developed under a single DBFM/PPP contract using the Scottish hub ‘compact PPP’ modality.
We will support the NHS in-house team and are responsible to assessing financial submissions from the private sector partner, confirming that returns, margins and fees are value for money and consistent with pre-agreed levels. We will liaise with technical specialists to calibrate the payment mechanism and Key Performance Indicators (KPIs), and will contribute to commercial negotiations.
Caledonian Economics helps Local Authorities, Health Agencies and National Government develop and deliver excellent PPP projects. We work at all stages of the PPP process: PPP strategy development, business cases, financial modelling, transaction support, Operational PPP performance improvement, rescue of distressed projects, and Public Sector training and capacity building.
Many of the projects we have supported have been open and operating successfully for ten years or more. The senior public sector officials who have been responsible for these projects are uniquely experienced to comment on the most effective approaches to long term management of PPP projects.
We spoke to ten of these public sector professionals, asked about their experiences, and discussed what advice they would give to new projects, now and in the future.
In our new report on Operational PPP projects, we ask seven key questions about the effectiveness of PPP Management, and identify important lessons. You can read what we found out in our new report by downloading it here: Caledonian Economics Report on Operational Projects.
Senior public sector officials from central government departments in Beijing and several Chinese provinces including Jinan, Guangzhou and Hebei have taken part in our PPP Masterclasses this month. This follows events we have run previously for government officials in Latvia and Uruguay and of course many training and development events in Scotland.
Our bespoke events draw from a menu of knowledge areas that covers all financial and commercial aspects of Public Private Partnerships. They provide an ideal opportunity to learn and share expertise that equip participants will skills to develop robust projects which deliver real social and economic benefits.
Our Event Leaders include some of the most experienced PPP practitioners in the world. This professional team has worked at every stage in the PPP development process including sectoral strategy development, feasibility and planning, transaction support, operational performance improvement, and rescue of distressed PPP projects.
Please contact us if you would like to know more about how we can help you shape better projects.
We would like to congratulate NHS Grampian on achieving Financial Close (on 5 December 2016) with hub North Scotland Ltd on the project to build new health centres in Inverurie and Foresterhill (Aberdeen) using the hub/DBFM/PPP structure.
The total construction cost of around £22 million will be funded by institutional debt from Aviva, and subordinated debt from Currie & Brown Equitix, Galliford Try Investments, NHS Grampian, the Scottish Government and the Hub Charitable Foundation.
We advised NHS Grampian throughout the procurement up to and including financial close. Our responsibilities included assessing the financial submissions from the private sector partner, confirming levels of private sector returns, margins and fees, payment mechanism calibration, and support of commercial negotiations.
The Foresterhill Health Centre is being built within the site of Aberdeen General Hospital, adjacent to the Anchor Cancer Care Centre. It proximity will allow excellent liaison between Primary care and specialist services.
Inverurie Health Centre is home to the largest single General Practitioner practice in Scotland with around 21,000 registered patients, projected to rise to 30,000 by 2021. The new health centre will be a major improvement on the existing facility. At around 3,500 square metres, it will have space to incorporate community health services such as dental and community maternity provision. There will also be an energy centre as part of the development.
Working with LPS, we delivered a half day seminar and web broadcast to around seventy representatives from Latvian municipalities and local government bodies. The Webinar described the Scottish experience of PPP, its evolution to meet the particular social aspirations of the nation, and its relevance to other states of similar size and latitude.