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Fair return for risk? An examination of structure, competition and profitability in the market for private finance in the National Health Service

หน่วยงาน Edinburgh Research Archive, United Kingdom

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ชื่อเรื่อง : Fair return for risk? An examination of structure, competition and profitability in the market for private finance in the National Health Service
นักวิจัย : Hellowell, Mark Stephen
คำค้น : Private Finance , PFI , NHS , Internal Rate of Return , IRR , Structure-Conduct-Performance , capital budgeting
หน่วยงาน : Edinburgh Research Archive, United Kingdom
ผู้ร่วมงาน : Pollock, Allyson , Price, David , Collin, Jeff , Hardie, Iain
ปีพิมพ์ : 2555
อ้างอิง : http://hdl.handle.net/1842/7895
ที่มา : -
ความเชี่ยวชาญ : -
ความสัมพันธ์ : Hellowell, M (2007), Written evidence to the Finance Committee of the Scottish Parliament with regards to its inquiry into the funding of capital investment, University of Edinburgh. , Hellowell, M. and V. Vecchi (2009), ‘The cost-efficiency of private finance in public healthcare: evidence from the UK and Italy’, Mecosan Review. (CERGAS, Milan). , Hellowell, M and A. Pollock (2009). ‘The private financing of NHS hospitals - politics, policy and practice’. Economic Affairs. Vol. 29, No. 1, pp. 13-21. , Hellowell, M and A. Pollock (2009). ‘Do PPPs in Social Infrastructure Enhance the Public Interest? Evidence from England's National Health Service’. Australian Journal of Public Administration, 69 (S1): S23–S34. , Hellowell, M and A. Pollock (2009). ‘Non-profit distribution: the Scottish approach to private finance in public services’, Social Policy and Society, 8 (3), 405–14. , Hellowell, M (2010), ‘The UK’s private finance initiative: history, evaluation, prospects’. In Hodge et al (eds.) The International Handbook on Public Private Partnerships. (Edward- Elgar, London). , Hellowell, M (2011), ‘Box 1: Private finance comparison with public finance – worked example’. In Treasury Select Committee (2011), Private Finance Initiative. (The Stationery Office, London). , Hellowell, M (2011) ‘NHS cuts and PFI’, BMJ; 343; d6681. , Hellowell, M and Vecchi, V (2012), ‘An evaluation of the projected returns to investors on 10 PFI projects commissioned by the National Health Service’, Financial Accountability and Management, Vol.28, No.1, pp. 77-100. , Smith, K. and Hellowell, M (2012), ‘Beyond Rhetorical Difference: A Cohesive Account of Post- Devolution Developments in UK Health Policy’, Social Policy & Administration, Vol.46, No.2
ขอบเขตของเนื้อหา : -
บทคัดย่อ/คำอธิบาย :

Since 1993, the Private Finance Initiative (PFI) has been the dominant form of large-scale infrastructure procurement used by National Health Service (NHS) organisations in the United Kingdom. As of April 2011, 123 PFI projects for new hospital facilities had been agreed between NHS organisations and private sector consortia, representing privately financed investment of £15.9 billion (in 2010 prices), and a projected long-term cost to the NHS of £70.5 billion. Eight additional hospital PFI schemes were being procured or prepared for tender as of April 2011, with an estimated capital investment value of £2 billion. Despite the financial significance of PFI projects to the NHS, the literature has not assessed whether, or the extent to which, the returns expected by investors are excessive. This gap in the evidence base is highly problematic. The presence of excess returns to investors will have an impact on the cost efficiency and affordability of PFI projects, and consequently the financial sustainability of the NHS organisations that pay for them. This thesis evaluates the returns that investors in NHS-commissioned PFI projects expect to earn with reference to the scale of risk being borne by these investors, and explores the sources of the identified excess via an examination of the structure and competitiveness of the PFI financing markets. The study therefore comprises two substantial empirical components. The first draws on the financial models of 11 NHS PFI projects to describe and evaluate the return to investors. Cost of capital benchmarks, constructed on the basis of the Capital Asset Pricing Model, are used as comparators to assess the Internal Rate of Return (IRR) for the 11 projects, and as discount rates to calculate Benefit-Cost Ratios. Both measures agree on the presence of significant excess returns for investors on each project – with large “spreads” between the IRRs and the corresponding cost of capital benchmarks, and high Benefit-Cost Ratio scores. The second empirical component provides an analysis of the structure and competitiveness of the market for private finance. Two indicators of this market’s structure – concentration and entry/exit rates – in addition to the dynamics of the procurement process are the focus of measurement and evaluation. It is demonstrated that: (a) the market for private finance in this sector is an oligopoly, (b) market share is highly concentrated when assessed against UK regulatory standards, and (c) churn and market penetration rates are extremely low. Constraints on the competitiveness of the market are identified as: (i) the low number of bidders; and (ii) the extensive period of non-competitive bidding in the final phase of the procurement process, in which the output specifications of projects are materially altered. The thesis concludes that recent reforms to the procurement process have been ineffective, and the problems underpinning a lack of competitive pressure in procurement may be insuperable, given the inherent complexity of this form of investment and the need to secure external financing. For the NHS, this source of cost inefficiency implies substantial opportunity costs (i.e. foregone opportunities for additional capital investment) and excess costs (i.e. a higher than necessary burden on the revenue budget). A stronger regulatory regime, incorporating regulation of the profitability of PFI projects for investors, is required to minimise the threat posed by this policy to the financial sustainability of the NHS.

บรรณานุกรม :
Hellowell, Mark Stephen . (2555). Fair return for risk? An examination of structure, competition and profitability in the market for private finance in the National Health Service.
    กรุงเทพมหานคร : Edinburgh Research Archive, United Kingdom .
Hellowell, Mark Stephen . 2555. "Fair return for risk? An examination of structure, competition and profitability in the market for private finance in the National Health Service".
    กรุงเทพมหานคร : Edinburgh Research Archive, United Kingdom .
Hellowell, Mark Stephen . "Fair return for risk? An examination of structure, competition and profitability in the market for private finance in the National Health Service."
    กรุงเทพมหานคร : Edinburgh Research Archive, United Kingdom , 2555. Print.
Hellowell, Mark Stephen . Fair return for risk? An examination of structure, competition and profitability in the market for private finance in the National Health Service. กรุงเทพมหานคร : Edinburgh Research Archive, United Kingdom ; 2555.