The state-of-the-art facility will be built with private cash but, unlike the controversial Royal Infirmary deal, the building will eventually pass into public hands.
Health Minister Alex Neil was today set to announce that the business case for the facility had been formally approved by the Scottish Government, in what will be seen as a significant landmark in the long-running saga.
The development marks the completion of one of the final formalities before the contract to build and run the new hospital, which will be situated next to the ERI at Little France, is ready to be put out to tender.
Mr Neil, who is today scheduled to visit the aging current Sick Kids site at Sciennes, said: “I am pleased to say that the outline business case for the new Royal Hospital for Sick Children and Department of Clinical Neurosciences has been approved, meaning work to get the new hospital up and running for 2017 can move apace.
“There have been delays with the new Sick Kids hospital in the past, due to land and commercial issues with an inherited PFI contract on the proposed site.
“I am pleased to say that there is now a framework in place to resolve the legal and commercial issues that arose in the original contract.”
The hospital will be built using a non-profit distribution model – a similar arrangement to the private finance initiative (PFI) which was used for the ERI.
But health chiefs reiterated that the mistakes of that disastrous agreement – which will see the ERI remain in private ownership even after NHS Lothian has paid out £1.26 billion over the course of the 25-year deal – will not be made again.
Under the terms of the new contract, the building, which will also house NHS Lothian’s Department for Clinical Neurosciences and new facilities for the Child and Adolescent Mental Health Service, will be passed directly to NHS Lothian after the 25 to 30-year contract expires.
NHS Lothian will also be given more control over the management of the project, following a series of issues with Consort, the private company which built and runs the Royal Infirmary.
NHS Lothian’s chairman, Dr Charles Winstanley, said the government’s approval represented a “significant step forward” for the new hospital.
He said: “The benefits of having children’s, maternity and adult services on the same site are well documented. This project to re-provide services from the Royal Hospital for Sick Children and Department of Clinical Neurosciences will create a centre of excellence at Little France, bringing paediatric care, specialist neonatal care, neurosciences and A&E together.
“The proximity to the university and the BioQuarter will also improve opportunities for partnership working and bring research to the bedside.
“We are working closely with the Scottish Futures Trust to plan the procurement process and, as required, we expect to advertise the project in the Official Journal of the European Union before the end of the year.”
Although the government approval of the project had been anticipated, it will still come as a huge relief to those who have campaigned for a new children’s hospital in Edinburgh.
It will also finally put to bed fears that the a new Sick Kids hospital would not be built in the Capital, following the delays and complications which have beset the project.
It had been under threat after negotiations over a crucial land-swap deal between NHS Lothian and Consort appeared to have reached a stalemate after a bank refused to agree to a proposal which would have seen a car park – where the new building will be situated – handed over to the health board.
But a solution was finally found, with the new agreement formally signed last month.
The Sick Kids hospital was deemed unsuitable almost a decade ago and, under initial plans, a replacement had been expected to open this year.
Opposition Labour MSPs today welcomed news of progress, but questioned the length of time it had taken to arrive at this stage, as well as the ability of the current building to last until 2017.
The new hospital, which is estimated will cost £150 million to build, is part of a wider £750m programme of investment in health projects across Scotland using the non-profit distribution model.
Mr Neil, who replaced Nicola Sturgeon as Health Minister earlier this month, was also expected to use today’s visit to Sciennes to confirm his commitment to an investment programme worth more than £1bn in NHS Scotland capital projects over the next two years.
He added: “I’ve been clear in the past that investing in our infrastructure is vital to growing our economy and the NHS presents huge opportunities to do this.
“High-quality health services as close to home as possible is what the people of Scotland want, and that is something this government is determined to give them.”
FIT FOR PURPOSE
NHS Lothian has pledged that the new facility, incorporating the new Sick Kids hospital, Department of Clinical Neurosciences and facilities for the Child and Adolescent Mental Health Service, will be “truly fit for the 21st century.”
Paediatric care, specialist neonatal care and neurosciences – as well as adult and children’s emergency departments – will be brought together on one site for the first time in Lothian.
It is hoped that the move will ensure specialist teams benefit from working closely together, sharing experience and expertise with potentially lifesaving benefits for patients.
Paediatric and adult neurosurgery will be offered in the same theatre suite, which will maximise the use of specialist equipment and staff in the hospital, with patients then being transferred to age-appropriate wards situated nearby.
Mental health services for children and young people will also be on the same site as acute services, which will reduce disruption if patients require psychiatric as well as physical help.
It is hoped that notoriously expensive and specialist services – such as operating theatres and radiology treatment – will be able to be provided in a more cost-effective way as they will be concentrated closer together making use of staff and equipment more efficient.
Emergency access to services will be improved at the Royal Infirmary site after plans for a new helipad on the roof – with a lift directly to emergency wards below – were revealed.
The new hospital’s close proximity to the Edinburgh University campus and BioQuarter is expected to offer a boost to medical research.
As the plan to build the new hospital in Little France stalled, options including staying at Sciennes or relocating to another location were looked at, but health chiefs reaffirmed that moving to next door to the Royal Infirmary was the only appropriate solution.
FOR BETTER AND WORSE
1850s: One in every 13 children in the Capital dies before the age of five.
1859: Campaign for a new hospital for sick children in Edinburgh is launched after Dr John Smith, a Royal Infirmary surgeon, has a letter printed in The Scotsman.
1860: The first Sick Kids hospital, with 12 inpatient beds, opens.
1863: Services move to a new custom-built hospital in Meadowside House. Queen Victoria bestows her patronage.
1890: After a major typhoid outbreak, it moves again to Plewlands House – the former Morningside college - but it proves inadequate.
1895: The hospital relocates to its current site in Sciennes where it expands over the decades.
1995: A new three-floor extension opens.
2003: The now aging hospital is deemed “not fit for purpose”.
2005: Decision to pursue the construction of a new children’s hospital is taken by the health board.
2012: Scottish Government confirms a new hospital will finally be built.
PRIVATE PROFITS CAPPED
THE Scottish Government said today that the non-profit distribution model which will be used to build the new Sick Kids will ensure profits made by private companies are capped.
Under the model, a private company which is successful in its bid will finance, construct and maintain the hospital. NHS Lothian will then pay an annual charge to the company over 25-30 years.
It is designed to transfer risk away from the public sector, while utilising private expertise and discipline.
Any surpluses from the project can be directed back into the public purse, rather than lining the pockets of private investors.
Although the government has directly funded a new hospital in Glasgow, it claimed using private cash was the only way it could ensure the Capital’s Sick Kids goes ahead.