Research Economic Seminar: The Impact of the UK hospitals procurement type on facility management costs

Private Finance Initiatives (PFI) is a specific type of Public-Private Partnerships (PPP) that has been widely used in the UK since the early 80s. This study ex-post compares facility management costs of hospitals supplied through PFI with those under traditional procurement. Using the ERIC panel dataset covering 2017 to 2021, we estimate the impact of hospital procurement type on its Hard Facility Management (HFM) and Soft Facility Management (SFM) costs. The evidence suggests that maintenance costs per square meter are lower for traditional hospitals than those delivered with PFI. Moreover, it shows that in-house laundry and linen services contributes to the slower SFM costs increase rather than its outsourcing regardless of the hospital procurement type. We discover that HFM costs raises at a moderate pace per each consumed by the hospital energy unit for traditional hospitals. Finally, we find that the age of hospital is an important factor influencing the estimated relationships.