Select Committee on Health Minutes of Evidence

Memorandum by Central Manchester and Manchester Children's University Hospitals NHS Trust (PS 53)



  Central Manchester and Manchester Children's University Hospitals NHS Trust was established in April 2001 and is one of the largest teaching hospitals in the country. The Trust provides adults and children's services to both the local population of Manchester and for specialist areas, for example, neonatal, genetics, cardiac, renal, oncology, paediatric intensive care and burns services to Greater Manchester and beyond in the UK and for some services internationally.

  The turnover of the Trust is nearly £300 million per annum.


  A number of major reviews of service configuration across Greater Manchester culminated in January 1997, with decisions by the Secretary of State for Health about renal services and specialist children's services. These decisions, which set the context for the scheme at Central Manchester were that:

    —  specialist services at Booth Hall Children's Hospital and Royal Manchester Children's Hospital (both of the then Manchester Children's Hospitals NHS Trust [MCHT]) should relocate to the Central Manchester site.

    —  renal services for the conurbation should be concentrated at the Central Manchester and Salford Royal sites.

  MCHT and Central Manchester Healthcare Trust subsequently collaborated on a Strategic Outline Case for the redevelopment of the Central Manchester site. This was approved by the Secretary of State for Health in April 1998.

  The Outline Business Case was approved in May 2000 and Private Finance procurement commenced with an advertisement in the Official Journal of the European Community (OJEC) in July 2001.


  The project structure is typical of most major NHS projects. However, there is also a Strategic Board which has probably enabled a greater level of strategic co-ordination. As there were two Trusts involved in the development of the scheme, each with different priorities, the Strategic Board emerged to provide a forum or "safe environment" within which difficult issues could be discussed and resolved. The Strategic Board provides the overall direction for the project and the key parameters (content, cost and timescale) within which the scheme is to be delivered. The membership represents the key stakeholders to the project; Regional office, Health Authority (Manchester), Primary Care Trust (Central Manchester), the University and the Trust. The membership has recently been widened and now also includes a representative from Manchester City Council and Greater Manchester Community Health Council.

  The inclusion of CHC representation on the Strategic Board was in response to concerns expressed by the CHCs about lack of openness. It should be pointed out, however, that the three CHCs (North Manchester, Central Manchester and Salford) most affected by the Scheme are invited to attend all Trust Board meetings; a standing item for which is a report on the PFI scheme. CHCs have also been given regular briefings on the PFI scheme and more recently (though before the CHC became a member of the Strategic Board) had been offered regular meetings with the project team.

  As the openness of the PFI process has been questioned the Trust is talking to other major PFI schemes to assess whether we can do anything else or learn from experience elsewhere.


  The scheme re-provides five hospitals and includes the construction of England's first purpose built specialist children's hospital for 100 years. The hospitals being re-provided are:

    —  Royal Manchester Children's Hospital (RMCH) in Salford.

    —  Booth Hall Children's Hospital (BHH) in North Manchester.

    —  Royal Manchester Eye Hospital at Central Manchester.

    —  St Mary's Hospital for Women and Children at Central Manchester.

    —  Approximately half of Manchester Royal Infirmary at Central Manchester.

  As a Private Finance scheme it also includes the provision of non-clinical services ie catering, cleaning, portering and estate maintenance by the private sector provider. The Trust has been, and will continue to work closely with the Trade Unions to financial close and beyond. We are awaiting with interest the outcome of the three pilots on the "Retention of Employment" model.


  The three key benefits of the scheme are:

    —  Elimination of split site specialist children's services currently at three different locations (BHH, RMCH and St Mary's) thereby ensuring critical mass for services and enabling accreditation for children's services to be maintained.

    —  Replacement of buildings at Central Manchester, which are in poor physical condition, have outdated facilities and are standalone, with new integrated facilities for the whole site.

    —  Development of new models of service delivery which will be more responsive to the needs of patients and enable a more appropriate patient environment determined by the patient's dependency. This is outlined in more detail under 6. below.

  There are many many subsidiary benefits for patients, staff, research, teaching and education.

  It is worth noting that the Central Manchester redevelopment is one scheme within much wider social, urban, commercial and academic regeneration close to the heart of the City of Manchester.


  Over the last twelve months the Trust has taken account of both projected growth in activity to 2010 and has remodelled the way in which the hospitals will function in the future. Clinicians from both primary and secondary care and managers within the Trust were closely involved in this process and the aspirations they articulated are now reflected in the design. This will enable:

    —  the children's hospital to retain its own identity;

    —  a Trust wide culture and ethos;

    —  separation of elective and emergency patients within the hospitals;

    —  dedicated facilities for elective day patients and those with short lengths of stay (Elective Treatment Centres or ETCs).

  When the new hospital is complete there will be in excess of 100 more beds in the Trust and it is projected that there will be approximately 15,000 more inpatients. day cases (Finished Consultant Episodes) than in 2001/2. It is also projected that between 80 and 90 per cent of all elective patients will be treated in the ETCs.


  Procurement commenced with an advertisement in OJEC in July 2000. A longlist of six bidders was identified in September 2000 and following submission of initial bids a shortlist of three bidders was identified in January 2001. The Trust has been working with the bidders since then to ensure that three robust and competitive bids are submitted at the end of November.

  Evaluation will take place over the following five months with the preferred bidder being identified in April 2002.

  The target for financial close is December 2002.


Strategic Outline Case Approved April 1998
Outline Business Case ApprovedMay 2000
Advertisement in Official Journal European Community July 2000
Longlist of Six CandidatesSeptember 2000
Shortlist of Three CandidatesJanuary 2001
Preferred Bidder IdentifiedApril 2002
Contract SigningDecember 2002
Children's Hospital and Adults' Facilities Commissioned Spring 2006
Eye Hospital and Women's Hospital Commissioned Mid 2008


  Priced bids from the three Candidates are due to be submitted on 28 November 2001.

  The following is in the public domain:

    —  The capital cost of the scheme in the Outline Business Case (OBC) was £250m

    —  Since the OBC was completed in September 1999/approved in May 2000, the scheme has been enhanced to take on board a number of a national initiatives including the requirements of the National Beds Inquiry, the Cardiac National Strategic Framework and the NHS Plan.

    —  The final figures for capital cost will need to take account of construction cost inflation.

  A small mental health redevelopment that will enable the Manchester Mental Health Partnership to deliver the requirements of the Mental Health National Service Framework is likely to be part of the privately finance project.

  We would be happy to share other cost data with the Health Select Committee on a confidential basis.


  The additional revenue consequence of the scheme is in excess of £30m. This will provide, for example, an additional 15,000 FCEs per annum, a Burns Centre for Children serving the north of England and Information Technology to meet the requirements of Information for Health/Building the Information Core.

  For Greater Manchester Strategic HA, the additional revenue required when the new hospital opens is approximately equal to nine per cent per annum of the SHA's assumed growth over the next seven years.

  The affordability of the scheme has been questioned. In particular, a paper by the Director of Finance at Manchester Health Authority has been widely quoted with references to "financial deficit" and "The children's re-provision must proceed but the rationale around adults services may be less strong".

  However, less widely quoted is that the paper also states "The size of the investment is affordable by the Manchester health economy over the likely timescale". In addition, the Chief Executive of Manchester Health Authority was interviewed on both television and radio about this paper in October. He stated "One of the reasons for the increase in day-to-day running costs that we anticipate is because more patients will be treated at Central Manchester than we anticipated, after all this is a time of expansion for the National Health Service"...... "I'm saying there will be no financial problem in the context of the NHS budget for the whole of Greater Manchester."

1   Trusts were notified by Peter Coates, Head of Private Finance Unit, Department of Health on 27 April 2001 that "Following discussions with HM Treasury, it has been agreed that as from today's date, neither the Public Sector Comparator (PSC) nor the affordability envelope should be made available to the private sector at any point during the competitive bidding process. The reason for this change of policy is that the Treasury are concerned that competition is being constrained and contractors may be pricing their bids in relation to the Trust's affordability envelope, rather than the true costs of the project." Back

2   See above footnote. Back

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