Nursing Home costs

dandelion

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Private finance initiative. In the Uk anyway, instead of the government building a hospital, it gets a private company to build one. Then it pays rent to the company. A house of commons committee investigated this recently and reckoned it was averaging out costing 1.7x as much as building them itself. Obvious, really, because what happens is a private company borrows money to build a hospital and then charges the government whatever it costs, instead of the government borrowing money directly at much less interest. Apart from that the government is also committing itself to a fixed contract for decades, and there have already been cases where the government decides it no longer needs a building or needs to change, and obviously cant without throwing money at it.

The brilliant reason why the government might want to go through this insanity is that the capital costs do not appear in this years budget. Government borrowing appears to be much smaller than it really is. For some reason successive governments dont seem to care it will cost the taxpayer more, just so long as they dont have to pay for it now. Its the national equivalent of putting it on your credit card instead of getting a proper loan.

Those dogmatically attached to the idea that private sector is good and government bad, claim it must be cheaper to get the private sector involved as much as possible in everything.

Government claims that health costs in medicine go up faster than inflation, which is one reason the NHS always needs more money. Another reason is it increasingly has to pay very high rents on its buildings.

There is naturally enough a secondary market in PFI buildings as investments. They have been sold on by the original builders for remarkably high amounts of money because of their guaranteed future incomes.
 
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