July 2, 2013 by Protect Our NHS
ON SOME PRIVATE NHS PROVIDERS – DOSSIER ONE
Mental Health Services are being recommissioned in Bristol. The majority of the services under the Modernising Mental Health programme have now been formally advertised with an advert going live on 5 June 2013.
Two weeks earlier, on 23 May, the Bristol Modernising Mental Health Programme hosted an event for potential providers of future mental health services in Bristol called a Pre-Bidder event. Alongside small locally-based voluntary organisations, charities and statutory health bodies, interested attenders included representatives from a number of large private providers.
We thought we would share some facts regarding a few of those at the Bristol meeting, as follows:
Beacon Health Strategies was set up in the US as its founders realised that medical insurance systems such as Medicare and Medicaid were deficient in mental health care and the management of patients with long-term conditions. In 2011, Beacon launched a UK arm in a bid to work with purchasers and providers of mental health services from the NHS, the private and third sectors, so it is a relatively new entrant to UK mental healthcare provision. The company has already worked with a number of shadow CCGs and mental health trusts on a consultancy basis, analysing data on specific patient groups. It is part of the Beresford Beacon Group (BBG) which describes itself as a specialist healthcare group that “constantly strives to bring increased levels of Quality and Value to the Health and Social Care arena, through the provision of Client Centred Solutions”. Its UK management team includes Beacon US’s Chief Executive Officer and its US Executive Vice President for Corporate Development and Strategy. In a Guardian interview , Emma Stanton, Chief Executive of Beacon, said she was “bored with the controversy about competition in healthcare in the UK” . She believes the Health and Social Care Act didn’t go “far enough”. Far enough in what direction remains to be seen.
Care UK runs more than 50 primary care services and six hospitals that carry out NHS work. In March 2010, private equity group Bridgepoint became the major shareholder in Care UK. Care UK de-listed from the London Stock Exchange on April 2010, and changed its name to Care UK Ltd. Private equity firms (PEF), sometimes called ‘vulture funds’ often use tax haven protection for their financial transactions. These are legal but morally questionable practices . PEFs buy companies using tax havens, restructure them and then sell them, often making huge profits for the private equity managers and investors but leaving the company in difficulty. This was what happened with Southern Cross .
In 2012, Care UK bought out Harmoni (the major 111 service provider) for £48m. In 2013 Care UK lured a top civil servant from the Department of Health – Jim Easton, who actually oversaw the NHS 111 procurement process – to become its managing director. In February 2013 Care UK acquired healthcare provider UK Specialist Hospitals (UKSH) – which run the Emerson Green Treatment Centre in South Gloucestershire.
On takeover by Bridgepoint , Care UK issued £130 million of loan notes through a tax haven on the Channel Islands stock exchange . It is paying £8 million a year in interest on these loans. The Inland Revenue deemed £4 million of this interest could be tax-deductible, helping Care UK to halve its taxable profits.
The Board of Care UK have backgrounds in Exel PLC (logistics providers – sic), McLeod Russel Holdings PLC (largest producer of tea globally), Wellcome Foundation (pharmaceutical), Cheshire Building Society, Centrica PLC (whose Chief Executive took home £5 million per annum pay in 2012), and GSL (now G4S). The chair of Bridgepoint’s European Advisory Broad is Alan Milburn , former Labour Health Secretary, while Lord Patten , chair of the BBC Trust, is also on the Board.
This is one of the largest health sector corporations in the world. It is based in the United States. In 2004 it ranked first in the US in net sales of healthcare insurance.
The basic aim of UnitedHealth is to generate wealth for its executive board, senior managers and shareholders.
UnitedHealth has also made its profits from defrauding government funds and patients. In July 2002, the New York State Insurance Department fined United HealthCare $1.5 million for ‘cheating patients out of money’.
Companies like UnitedHealth make profits by :
‘cherry picking’ or ‘cream skimming’ – selecting the profitable treatments and patients by placing access restrictions on the services they offer. Wherever possible, those who are elderly, frail or at high risk of chronic illness are excluded from insurance or comprehensive health cover.
‘charging for risk’ – expecting individuals with high health risks to pay higher insurance premiums, to have a more limited range of benefits, or to pay for a higher proportion of the costs of health care through charges or ‘co-payments’.
‘over-servicing’ – maximising income by providing unnecessary treatments.
‘reducing quality and staffing’ – maximising income and profits by lowering the quality and cost of health care as much as possible. For example, they may close local services, reduce the numbers of staff employed and use cheaper and less qualified staff.
‘denial of care’ – protecting their profit margins in the United States by denying care if payments cannot be met. The risk for the financing of health care in a commercialised health care market tends to fall on individuals and their families, while health insurance companies make massive profits.
Barchester Care employs more than 17,000 people at over 200 locations across the UK. It is controlled by the Grove Group. This is a Jersey-based investment vehicle chaired by fellow Irishman, Denis Brosnan. It includes a group of Irish racing tycoons led by JP McManus, John Magnier (both instrumental players in the takeover of Manchester United eight years ago) and Dermot Desmond among its investors. The Barchester Healthcare empire of more than 200 care homes makes it the second largest in the UK behind Bupa and Four Seasons Healthcare. Grove is also a major shareholder in Cygnet, one of the largest private providers of psychiatric care services to the NHS (see below).
Barchester reported a £16m profit in 2011, but is still wrestling with a £1bn debt due to mature in October 2013 – made worse by another £487m the company owes after a series of deals with RBS backfired.
In May 2013, it was reported that HCP, a giant of the American healthcare industry, had teamed up with Blackstone, the former owner of Southern Cross, the care-home group which collapsed affecting thousands of vulnerable residents, to take control of Barchester’s debts. HCP, which has a market value of more than $24bn, has bought 30% of the junior debt of Barchester. Blackstone, whose sale of Southern Cross several years before its collapse led to a political outcry in 2011, has separately bought just over 20% of the Barchester property company’s junior debt from Lloyds Banking Group, the other state-backed UK lender. The finalised deal involved HCP acquiring roughly £175m of the borrowings of Barchester’s property empire.
In 2012 the Care Quality Commission (CQC) issued a formal warning to Barchester, the registered provider of Glenroyd care home in Blackpool, stating that it must make urgent improvements or face further action. The warning followed an unannounced visit to the “Memory Lane” unit at Glenroyd to follow up on a previous review of compliance. The “Memory Lane” unit provides residential and nursing care for up to 31 people with dementia conditions.
The super-rich tycoons behind Grove are also big investors in several other care providers in the UK. Another Jersey investment vehicle called Lydian Capital, involving the same millionaires mentioned above, controlled Castlebeck, the company behind the Winterbourne View scandal .
CYGNET HEALTH CARE LTD
Cygnet is a large private provider of mental health services, and is part of the same group ownership as Barchester, Castlebeck etc.
John Hughes, chief executive, had a successful career in private healthcare in California before he moved to the UK in 1980 to buy the loss-making Priory Hospital in Roehampton, south-west London. He developed the Priory Group to include eight hospitals before he resigned to found Cygnet in 1988 . They have also been warned by the CQC for failing to protect the safety and welfare of people in its care.
(With acknowledgement to False Economy for much of the information below)
Serco began life in 1929 when Radio Corporation of America formed a UK subsidiary, RCA Services, to support the country’s growing cinema industry. Now it employs more than 100,000 people, has a turnover of £4.6bn, and is the UK’s largest private supplier of public services. Its contracts range from cycle hire in London to maintaining nuclear warheads. Serco describes itself as “a values-led company with a culture and ethos that is at the heart of everything we do”. It is so proud of its ethos that it publishes an attractively designed magazine of the same name, dedicated to “exploring the debates that shape public services”. The Serco ethos is “imbued with a spirit of public service” .
So it seems almost churlish to mention money, but in 2010 the FTSE100 company, which is almost entirely dependent on public funds, paid its CEO Christopher Hyman £3.1m – six times more than the highest-paid UK public servant . Senior executives have continued to receive austerity-busting pay rises in recent years, but other staff earn less than the living wage .
In 2012, whistleblowers revealed that Serco’s out-of-hours GP service in Cornwall was understaffed, lacking in training and risked patient safety. In an act hardly imbued with a spirit of public service, the company had provided false data to the NHS on 252 occasions .
Serco has been nominated by False Economy as one of the fishiest outsourcing firms in the country being nominated for:
• Running an out-of-hours GP service that was understaffed, provided inadequate training and left patients facing long waits – and falsifying its records 252 times. (Source: Guardian 20/9/12, Guardian 25/5/12)
• Losing and mislabelling patient blood and tissue samples following its takeover of NHS pathology services. (Source: Corporate Watch 30/9/12, Guardian 30/9/12)
• Paying chief executive Christopher Hyman £3.1m in 2010, more than 250 times the salary of his lowest-paid UK staff (in contrast to the 20:1 public sector pay ratio backed by David Cameron). (Source: One Society 9/11, Daily Mail 13/3/11, Financial Times 30/3/11)
• Spurning campaigners’ pleas for FTSE100 companies to pay all employees at least a living wage. (Source: FairPensions, Living Wage Foundation, Serco jobs search)
• Going further than the government by recommending benefit cuts for 9,000 people on its workfare schemes. (Almost 7,000 of those requests were rejected.) (Source: Guardian 30/6/12, Corporate Watch 1/7/12)
• Multiple allegations of assault, abuse and neglect at its UK and Australian immigration detention centres. (Source: BBC News 24/2/10, Guardian 25/5/12, Guardian 7/12/11, Medical Justice Network 7/08, Liberty 17/7/12, Bureau of Investigative Journalism 11/4/12, The West Australian 25/8/11)
• Receiving an ethical rating of just 4.5 out of 20 from Ethical Consumer – second from bottom in its outsourcing league. (Source: False Economy 16/11/11, Ethical Consumer 11/11)
In April 2013, after MPs had given Serco a roasting for ‘lying and cheating’, a Guardian article asked the question, “Who will hold NHS contractors like Serco to account?”
That is the question we all need to ask about all these organisations.
For further reading see NHS SOS by health academics Professor Raymond Tallis and Dr Jacky Davis.
See NHS SOS by Professor Raymond Tallis and Dr Jacky Davis, One World Publications, published 2013. Review at http://www.sochealth.co.uk/2013/06/22/book-review-nhs-sos-ed-dr-jacky-davis-and-prof-raymond-tallis-oneworld-publications-2013/