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Education And Debate

Private finance and “value for money” in NHS hospitals: a policy in search of a rationale?

BMJ 2002; 324 doi: (Published 18 May 2002) Cite this as: BMJ 2002;324:1205

Alzira model: a PFI based on a capitative system

The Valencia Community Government, applying the actual Spanish
Legislation has developed a collaboration agreement with UTE-Ribera, a
Private Finance Initiative (PFI), called “Alzira Model”. The aim of this
agreement was the building of a new 250-bed Community Hospital in Alzira
(East coast of Spain), a 250000 inhabitants local health area. This area
lacked hospital services and their inhabitants used to travel more than 30
miles to receive acute hospital care. In this agreement, legally called
“concesion administrativa” (administrative concession) allows PFI to build
a new hospital: Hospital de la Ribera, on public grounds. Although, PFI
has paid the whole cost of the building of the hospital, after a 10 year
period, it returns to the Valencia Health Department (VHD). During this
period of time the PFI is the health provider of the area and manages its
public funding.

In return, the VHS pays an annual capitation-fee per inhabitant of
420 euros. In a way of ensuring a good quality service from this PFI a
“money follows the patient” regulation was established. Therefore all
patients of this area that seek hospital services somewhere else, PFI has
to pay the costs of those services to VHD. On the other hand, the VHD pays
to the PFI for all patients attended, who do not belong to its catchment
area. There is a cross-billing between the VHD and the PFI.
The Alzira Model has its advantages:

1. The VHD knows how much is going to spend in this area per year for
the next ten years. The cost risk has been transferred to the PFI. Also if
any new health policies are implemented by the VHD they will also
automatically be accepted by the PFI.

2. Citizens have got new local health services that may be could not
be possible with public funding alone: MRI, cardiac surgery, radiotherapy
. Besides, Hospital-Ribera needs to keep its patients fidelity to prevent
them seeking medical services outside, therefore offers them a variety of
services such as: single inpatient rooms, elective surgery waiting time
less than 90 days, open access to hospital out-patients clinic, etc..

3. UTE-Ribera is implementing new management styles that give more
flexibility and efficiency to the model.
Hospital-Ribera opened in 1999. It was acclaimed number one in the Spanish
Hospital benchmark for its category in year 2000. During 2001, 19205
inpatients, 19098 surgical acts, 115428 A&E visits, 462733 outpatients
visits, etc... 90% of patients seen were very satisfied with the care
receiv ed.
So far, this collaboration between PFI and the public VHD has been
satisfactory for all the parts involved.

In summary, the PFI makes an investment in a needed facilities and in
return receives a fixed capitation fee for a 10 year period time. It needs
to take the right decisions for not being penalised by its own patients
going somewhere else. The Valencia Health department allows a PFI to
manage a public hospital during a period of time but at the same time it
ensures that patients of this area get universal, equal and high quality
care as the rest of the citizens.It also knows how much it will cost

Competing interests:

Carlos trescoli works in Hospital de la Ribera

Serafin Castellanos, Health Conseller, Valencia Health Department

Luis Barcia, Financial Director, Hospital de la Ribera

Competing interests: No competing interests

23 May 2002
Carlos Trescoli
Head medical Department
Serafin Castellanos, Luis Barcia
Hospital de la Ribera, Alzira, 46600-Valencia, Spain