The government's ambitious vision for transforming healthcare delivery through neighbourhood health centres represents one of the most significant shifts in NHS strategy for decades.
Moving healthcare provision from hospital settings into local communities represents a fundamental pillar of the government's 10-year health plan, yet the financial reality of delivering this transformation presents considerable challenges.
The Department of Health and Social Care (DHSC) has already designated 42 locations for these facilities, in which healthcare professionals, social care workers and allied specialists will work together, adopting an integrated approach to patient care that aims to diminish reliance on hospital services.
For patients, they will be able to access a comprehensive breadth of services including diagnostics, mental health, rehabilitation, pharmacy and nursing under one roof.
But given that public finances are under considerable strain, the government must identify how it will finance what could amount to hundreds of community health hubs nationwide.
Strategic alignment of infrastructure and health policy
A potential answer is presented by the government's infrastructure blueprint, UK Infrastructure: a 10-Year Strategy, which was published around the same time as the 10-year health plan.
It acknowledges that private finance could potentially play a role in supporting the development of community healthcare infrastructure, alongside decarbonisation initiatives.
There will be no wholesale return to the Private Finance Initiative (PFI), the mechanism that delivered more than 700 public infrastructure projects, predominantly during the previous Labour government from 1997 to 2010. However, the current administration has committed to incorporating PFI's lessons into a fresh public-private partnership (PPP) framework, with comprehensive details expected this autumn.
While the exact structure of this new model remains undefined, the DHSC, working alongside the National Infrastructure and Service Transformation Authority (NISTA), has issued a preliminary market engagement notice for "Project Wings". This initiative encompasses the “design, build, finance, operation and maintenance of specific primary and community health infrastructure projects via a PPP framework”.
A crucial consideration involves determining which organisations will serve as contracting authorities for future healthcare PPPs. Integrated care boards, NHS trusts and local authorities may all participate in delivery, depending on the specific programme structure.
Learning from PFI controversy
Under Project Wings, NISTA will conduct further market consultation aimed at building upon "insights gained from previous government involvement" with PPP frameworks.
Before its termination in 2018, PFI was the predominant PPP model. Private sector partners would cover initial project costs, subsequently recovering this investment plus ongoing financing and operational expenses through long-term payments known as unitary charges from the commissioning body.
This period witnessed the most extensive sustained phase of major public infrastructure investment in recent history, funding vast amounts of new public infrastructure across transport, education, healthcare, leisure, corrections, street lighting and environmental services. However, concerns emerged regarding poor taxpayer value and excessive profits for investors who refinanced debt at reduced rates after completing the higher-risk construction phases.
The National Audit Office's report, Lessons learned: private finance for infrastructure, published in March, recommended enhancements in areas including flexibility, transparency, public sector equity participation and improved risk transfer mechanisms for future PPP models.
The NAO's analysis highlighted that many PFI contracts proved too rigid to accommodate changing service requirements over their typical 25 to 30-year terms, with complex financial structures often obscuring true costs and value.
The report suggested that giving public sector bodies a stake in PPP projects could help align interests more effectively while providing taxpayers with a share of any upside returns. It also emphasised the need for more sophisticated approaches to risk allocation, ensuring risks are placed with the party best able to manage them at reasonable cost.
Creating an effective PPP framework
New approaches to public-private collaboration are moving beyond traditional PFI structures towards more flexible, partnership-based models.
These often incorporate shared governance structures, performance-based payment mechanisms, and more sophisticated risk-sharing arrangements.
Last year, the Future Governance Forum proposed the Infrastructure Investment Partnership (IIP) model, which also placed greater emphasis on community benefits, cultivating long-term collaboration and giving local areas more control over their infrastructure.
Crucially, the IIP model also explores how private developers can access unused land around core infrastructure projects to unlock additional commercial potential – a feature likely to appeal to the private sector.
The healthcare sector presents particular opportunities for PPPs given the long-term nature of infrastructure needs and potential for revenue generation through improved service delivery.
A well-designed PPP model can facilitate benefits such as private sector innovation, rigorous project management and structured pipeline discipline. Whether these advantages materialise in practice remains a subject of debate.
The government will therefore be determined to ensure these lessons are genuinely applied, and that the new pipeline delivers these benefits while avoiding PFI's perceived shortcomings.
PPP programmes succeed when there exists a reliable project pipeline enabling private sector partners to achieve economies of scale with reasonable certainty. Likewise, the market requires well-funded public sector delivery mechanisms with the capability for effective engagement.
The path forward
Bringing together primary and community care services forms a central component of the 10-year health plan, while the UK's infrastructure strategy outlines how facilities accommodating these services will be constructed, renovated and expanded to meet community requirements.
Project Wings represents the beginning of market engagement to realise this vision. The contracting authorities that may soon participate should ensure they possess the commercial and project management expertise.
The transformation of healthcare infrastructure through neighbourhood health centres represents a fundamental reimagining of service delivery and financing.
Success will require innovative financing mechanisms alongside new approaches to service integration and performance measurement. Because while a comeback for PFI appears unlikely, it's clear that public-private partnerships will be necessary to deliver the government's objectives.