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Comprehensive Guide to PFI Handbacks in the Healthcare Sector

Private Finance Initiative (PFI) contracts typically expire after 25-30 years, and the process of handing back these facilities to public sector control can be complex and challenging.

The handback involves transferring not only physical assets but also the data and information about the assets that the private finance company (PFI Co) needs to hand over to the contracting authority. This includes operation & maintenance (O&M) guides, user manuals, health and safety files, asset registers, maintenance records, condition assessments, design and construction drawings, training records, compliance records, and more.

Cohesive aims to provide you with a comprehensive overview of PFI handbacks in the healthcare sector, covering all aspects from planning to execution and beyond.

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What Is A PFI (Private Finance Initiative) Handback?

A PFI Handback is a process in which the control and ownership of a PFI asset are transferred from the private sector to the public sector at the end of a PFI contract. This typically occurs after 25-30 years, when the facility has been used by the NHS Trust or healthcare provider under a long-term agreement with the private finance company.

  • Borrowing the Hospital: A private company builds and takes care of a hospital for many years (usually 20-30 years). They also provide some services to keep the hospital running well.
  • Using the Hospital: During this time, the government (or a public organisation) uses the hospital to treat patients. They pay private companies for this service.
  • Taking Care of the Hospital: The private company must make sure the hospital stays in great condition. They fix things when they break, clean the place, and make sure everything works well.
  • Giving it Back: When the time is up, the private company must give the hospital back to the government. But before they do, they have to make sure it’s still in really good shape, almost like new. This is called the “handback.”
  • Inspection: Just like the dealership would check the car to make sure it’s still nice, the government checks the hospital to ensure it’s well-maintained and everything is in good condition.

A PFI handback in the health industry is the process where a private company returns a hospital to the government after taking care of it for many years, ensuring it’s in excellent condition, just like when they first started using it.

Current Landscape

PFI contracts deliver important public services like schools, hospitals, social care, waste management, roads, housing, prisons, and military capabilities. Therefore, it’s crucial to manage these contracts well throughout their lifecycle to ensure the public receives the services they need and are paying for.

The PFI Centre of Excellence, established within the Infrastructure and Projects Authority (IPA) in 2020, aims to build the skills, knowledge, and tools needed in the public sector to effectively manage PFI contracts during their operational and expiry phases. It also ensures effective engagement with the private sector.

At present, there are over 600 PFI contracts in the United Kingdom (UK) which are set to expire before 2040. Around 159 of these projects are hospitals and acute care facilities. With just approximately 16 years left for these PFI contracts to expire, there is a growing concern about the condition in which these hospitals will be handed back to the government.

Will they still be in good condition? Will they require significant repairs and maintenance? How are data asset management and digital transformation handled?

Without proper management and maintenance, challenges can present themselves during the PFI expiry and handback process.

What Are the Challenges Involved In the PFI Expiry and Handback Process?

As with any contract, and handback process, as well as navigating through it, presents its own set of challenges. With PFI contracts, these challenges can be even greater due to their long-term nature and complex structure.

Some of the main challenges faced during a PFI expiry and handback include:

  • Gaps or very limited information about the assets.
  • Information is held in hard-to-access formats and spread across different systems.
  • Operational knowledge of the assets is confined within the PFI company.
  • Incomplete or low-quality asset information risks future operation and maintenance. It also hinders the contracting authority’s full understanding of the asset’s history and condition.
  • Missed actions and deadlines.
  • Expiry may not be prioritised within broader business plans, causing delays in decision-making.
  • Not enforcing major maintenance obligations results in double payment: first through the unitary charge and then again after the PFI contract expires.
  • Insufficient personnel, skills, and experience to manage expiry. (Vickerstaff: 2022)
  • An adversarial relationship between PFI parties and ineffective contract management on both sides.
  • Contracts lack detail or practicality regarding expiry conditions and processes.
  • Limited understanding and experience of authorities in future service markets.
  • Questionable trustworthiness of available asset information.
    Information is stored in “analogue”/paper form.

Good preparation, with the right technical expertise and a planned, proactive approach, is essential for a smooth handover with the private sector. This minimises risk and allows time for any necessary corrective actions.

The PFI Handback Process

When a PFI contract expires, the handback process begins.
This involves the private sector contractor returning the asset to the public sector authority. The handback process is often complex and involves three phases: the preparation phase, the execution phase, and the post-handback phase.

1. The Preparation Phase

Most handback contracts start 7 years before they expire. To help with this, the PFI CoE has set up a programme of (EHCs) to assist PFI Contracting Authorities (CAs) in evaluating their readiness for expiry.

What Is an EHC?

An EHC involves reviewing key project documents, completing a detailed questionnaire, and conducting a structured interview with the contracting authority. Using this information, the IPA evaluates and benchmarks the project’s readiness for expiry across five themes:

This process allows the IPA to identify components of expiry risk, project risk, and contract-based risk.

After the readiness assessment, an EHC output report is issued to the contracting authority. It highlights areas of concern and makes recommendations on how best to mitigate risks before the handback process begins.

When Does The EHC Process Start?
EHCs will be offered to PFI handback projects when they reach 7,5, and 3 years from expiry. This timing is based on the IPA’s PFI Expiry Guidance, which recommends that the EHC process starts at least 7 years before expiry.

The contracting authorities should expect the IPA to contact them eight to ten weeks before the EHC review session.

What happens after an EHC?
After receiving the EHC report, the contracting authorities will need to meet to discuss the report’s findings and recommendations.

2. The Execution Phase

The next step is the execution phase.

During this phase, the contracting authorities will need to work closely with their advisors, stakeholders, and the IPA to implement the recommendations from the EHC report.

Key Considerations During Execution Phase

  • Develop a detailed action plan based on the EHC report’s recommendations.
  • Ensure continuous communication and engagement with relevant stakeholders to address any concerns and facilitate smooth project progression.
  • Monitor progress closely against the established timelines and adjust as necessary to stay on track.
  • Follow the guidance and support plans released by various government agencies and independent organisations, including the UK National Audit Office (NAO), UK Infrastructure and Projects Authority (IPA), Scottish Futures Trust (SFT), UK Local Partnerships, and the Global Infrastructure Hub (GIH.)

3. The Post-Handback Phase

After the completion of the handback phase, the focus shifts to the post-handback phase. This phase involves ensuring that the asset continues to deliver the intended benefits and maintaining its operational efficiency.

Key Considerations During Post-Handback Phase

  • Conduct a thorough post-handover review to assess the condition and functionality of the assets.
  • Continue engaging with stakeholders to gather feedback and promptly address any ongoing issues.
  • Implement a maintenance and management plan to ensure the asset remains in good condition and service interruptions are minimised.
  • Evaluate the overall success of the PFI project by comparing projected benefits against actual outcomes.

Contact Cohesive for an in-depth workshop on evaluating your current PFI Handback Stage. Discover how we can help you ensure a seamless transition into the post-handback phase.

Let’s make this journey smooth and efficient together!

The Role Of Cohesive In PFI Handbacks

Cohesive empowers owners and operators of complex infrastructure assets to use innovative technologies and data across their lifecycles.

We recognise the key challenges confronting our industry: economic performance, carbon reduction, ageing assets, operational reliability, and optimising availability. Our commitment is to collaboratively develop solutions tailored to your needs.

How We Can Help You During PFI Handbacks?

One key aspect of PFI contract expiry is the transfer of asset data and documentation maintained over the contract term.

Incomplete or low-quality asset information can risk future operations and maintenance. It also hinders the contracting authority’s understanding of the asset’s history and condition.

It’s easy for contracting authorities to underestimate the complexity and the time and resources needed for a ‘best practice’ handback.

Proper preparation, with the right technical expertise and a proactive plan, is crucial for a smooth handover with the private sector. This approach minimises risk and allows time for corrective actions.

And this is where we at Cohesive step in.

We support PFI contracting authorities, including NHS Trusts and Health Boards, with this component of the PFI handback process.

We will work with you to establish the quality and completeness of the available asset information and help you answer questions such as:

  • What asset information is currently available?
  • What format is it in?
  • Is it verified and trusted?
  • What asset information is missing?
  • What asset management systems are currently used, and are they suitable?

We also help you establish the mechanisms and timeline for the data transfer and arm you with the knowledge needed to engage with your private sector partner to manage this part with ease.

So, Where Do You Start?

We have developed a PFI Handback Asset Data Rapid Readiness Assessment. We highly recommend this as the first step for any contracting authority embarking on the PFI handback journey.

What Is A PFI Handback Asset Data Rapid Readiness Assessment?

Drawing from our team’s extensive knowledge and experience in helping public sector organisations with asset information management, our PFI Handback Asset Data Rapid Readiness Assessment covers asset data, organisational strategy, and the technology systems used to manage them.

It offers a clear path to help you answer key questions such as:

  • How will the asset be managed after PFI Handback?
  • What are the data requirements in the project agreement?
  • How is the existing data structured? Is there a data scheme/model? Does it include medical equipment as well as core assets and equipment?
  • Is there evidence that the data is being kept up-to-date?
  • What technologies does the PFI Co use for asset management?

This assessment will clarify your current situation versus where your organisation needs to be for a successful handback. It will provide clear recommendations and actions to address identified issues and gaps in capabilities.

Alongside the EHC (Expiry Health Check) analysis, the PFI Handback Asset Data Rapid Readiness Assessment will provide a solid foundation for managing the asset handback process and achieving a successful outcome.

How Does It Work?

Our rapid assessment tool provides you with a framework that you can repeat with each separate handback.

It generates a radar diagram that illustrates the current and required assessment scores needed to achieve a successful handover.

We provide observations and recommendations on how the identified issues and gaps can be addressed.

Contact Cohesive for an in-depth workshop on evaluating your current PFI Handback Stage. Discover how we can help you ensure a seamless transition into the post-handback phase.

Let’s make this journey smooth and efficient together!

Cohesive Rapid Readiness Assessment

Building a future-fit digital healthcare sector, today!

Schedule your assessment now

Digitisation In The Healthcare Sector

The wider drive towards a modern and digitised healthcare strategy centres on the concept of a ‘digital estate’.

A Digital Estate includes all the healthcare-built infrastructure, data, and information that ensure the healthcare asset functions optimally. Like a physical estate, a digital estate must work for healthcare professionals and building users. It needs to be trustworthy, secure, and adaptable to changing requirements.

A digital estate supports the transition to a modern and digitised healthcare sector and helps answer the question, “How can we get better outcomes from our existing infrastructure?”

What Are The Characteristics Of A Digital Estate?

The Importance of Data In The Transition Towards A Digital Healthcare Estate

At the heart of the digital estate is an ecosystem with the ability to search, unify, visualise (at a campus level) and analyse, asset data and information. Having this ability at an enterprise level will support optimisation of healthcare owner and operators’ asset management strategies and management plans, allowing them to use those assets more productively, with higher levels of reliability.

Simply put, a Digital Estate enables a golden thread of connected data across a healthcare portfolio or campus. It is both a technology, a Connected Common Data Environment (C-CDE) and a process supporting a consistent, integrated and repeatable methodology for curating and managing information about physical healthcare assets in a digital environment.

This on-demand access to joined-up data on critical healthcare systems, equipment and business intelligence will inform better decision making and ensure healthcare infrastructure can function efficiently and safely. The Digital Estate helps answer the question, “How can we get better outcomes from our existing infrastructure?”

Healthcare Digital Twins

A Digital Estate and its connected data also support the move to a Digital Twin.

A Digital Twin is a digital representation of a physical asset, process or system. The purpose of creating this replica is to better understand, predict and optimise the performance of the physical asset.

At Cohesive, we offer you our Digital Twin solution. It connects to asset information systems and integrates with 3D model Geometry, Geospatial Data, Drawings and Documents, Survey Data and Photogrammetry.

You can learn more about the ‘digital estate’ concept and the role of high-quality, structured data within it from the following resources:

You’ll learn about the value and benefits of digitisation, how to derive more from it, and how Cohesive can help you achieve your digital transformation goals.

The Future Of Technology In Healthcare

The hospital of the future may look quite different than the hospital of today. With the continuous advances in technology, the healthcare sector is rapidly evolving towards a more digitised and data-driven approach.

What Problems Are Experienced in The Current Healthcare System?
The current healthcare system faces several challenges, such as:

  • Outdated infrastructure
  • Increase in staff shortages
  • Evolving patient expectations and experiences
  • The rise in chronic diseases
  • Regulatory and compliance issues
  • Inefficient processes and workflows

The Role of Digital Asset Management in Preparing Hospitals for the Future

Our Offering To You

1
Readiness
Assessment

2
Discovery

3
Data
Strategy

4
Implementation
Plan

5
Support
Implementation

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How Can Technology Help?

Technology can help address these challenges.

Based on a research paper by Deloitte, here are some technologies that may help build the future of healthcare estates.

Centralised Clinical Command Centers and Digital Continuous Monitoring

In the future, hospitals may have command centres equipped with real-time support tools to help decision-makers make quicker clinical and operational choices.

These centres provide visibility into patient treatments and status, aiding in managing patient capacity and other processes.

For instance, command centre analysts can use data on admissions, inter-facility transfers, and predictive analytics to predict discharge days.

Digital and Artificial Intelligence Technologies

Digital technology can enhance the patient experience by offering real-time access to medical information.

Picture an AI-powered bedside virtual care assistant for an impatient patient who can answer questions or direct them to the right hospital staff. This virtual assistant can respond to routine inquiries about diagnoses, recovery timelines, and daily medication schedules.

AI can also transform the way data is collected and presented. Using machine learning, AI can analyse data from multiple sources in real-time and help make more accurate clinical decisions.

Automation and Robotics for Care and Ancillary Services

Automating hospital ancillary and back-office services with robotics can save costs and time and improve reliability. Nurses and other medical staff can use a screen to call robots for tasks.

For example, robots can deliver medications, transport blood samples, collect diagnostic results, and schedule linen and food deliveries—either as a scheduled task or on-demand.

Overall, the future of healthcare is heavily reliant on technology and digital solutions.

With the potential to improve efficiency, accuracy, and patient outcomes, it is important for healthcare organisations to embrace and adopt these technological advancements.

A PFI Handback is the perfect place to start integrating digitalised processes and services.

During the handover process, healthcare providers can work closely with the PFI contractor to assess and implement new technologies that will benefit both patients and staff. This collaboration can also help identify any potential areas for improvement in the existing systems and processes.

Smart Buildings & Infrastructure

With the deterioration of healthcare infrastructure, smart buildings are becoming increasingly common in healthcare systems.

These innovations range from customised patient rooms with personal touches like pre-populated family pictures and preferred bed firmness to healing gardens and noiseless medical device alarms.

Additionally, advancements in soundscapes and health acoustic engineering improve ambient noise, all of which aim to enhance patient comfort and well-being.

Regulation and Compliance

As technology advances in healthcare, there is a growing need for regulations and compliance measures to ensure patient safety and privacy.

This includes guidelines for the use of AI and robotics in medical procedures and data protection laws to safeguard sensitive patient information.

The increased use of electronic health records (EHRs) also requires strict security protocols to prevent data breaches and unauthorised access.

Overall, implementing these regulations can help mitigate potential risks associated with the use of technology in healthcare and ensure that patient well-being remains a top priority.

PFI Handback FAQs

What Does PFI Stand For?

Private Finance Initiative (PFI). It is a project financing method that has been used in the UK since the early 1990s to fund and manage public sector projects.

What Is The Difference Between PFI and PPP?

A PFI (Private Finance Initiative) project is a type of PPP (Public-Private Partnership) where the private sector provides the financing, construction, and operation of a project on behalf of the public sector. The major difference between the two is the manner of the financial agreement and who bears the risk. In a PFI project, the private sector bears more of the financial risk; in a PPP project, it is shared between the public and private sectors.

What Does Digitisation Mean In Healthcare?

In healthcare, digitisation refers to the process of converting all non-digital assets, such as medical records, images, and documents, into digital formats that can be stored and accessed electronically.

What Is The Future Of Healthcare?

The future of healthcare is increasingly leaning towards the integration of advanced technologies and digital solutions. Innovations such as artificial intelligence (AI), machine learning, and blockchain technology are poised to revolutionise patient care, data management, and operational efficiency.

Why Do PFI Contracts Expire?

PFI contracts expire because they have a fixed term agreed upon between the public and private sectors. Once the contract ends, the asset is transferred back to the public sector or renewed with updated terms. This allows for flexibility and ensures that both parties are held accountable for their roles in the project.

Additional Resources

A Guide to PFI Expiry
Health Checks

Download

Expiry
Toolkit

Download

Phase 1 PFI Expiry Health
Checks Learning Report

Download

Motts Hospital of
the Future

Download

Philips Smart Hospital
of The Future

Download

Deloitte The Hospital
of the Future

Download

Preparing for PFI
Contract Expiry

Download

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