Whether Boris Johnson goes or not, one thing is almost guaranteed to continue, and that is the increasing level of privatisation in the NHS and Social Care sector. The incorporation of that approach in the new NHS and Social Care Bill is, via the introduction of sub-regional ‘Integrated Care Services’, likely to neuter the ability of locally elected councils to mould the care market to the users needs. Indeed the experience to date of such providers has not been a good one. Now we see one big contractor, and one that delivers highly sensitive and personal services on Teesside, fall into the hands of a short term ‘speculative fund’. This is something that is pushed to extract profit maximisation followed by disposal.
I am speaking of Richard Branson here. As the ultimate boss at ‘Virgin Care’, his company entered the market for NHS services in 2010 after the election of the Cameron/Clegg coalition. Since then he has successfully bid for a wide range of contracts to provide services in the NHS, including: primary care services, GP practices, urgent care centres, minor injury units and walk-in centres, intermediate care services, community services, wheelchair services, prison healthcare, sexual health, community hospitals, neuro-rehabilitation, frail/elderly care, health visiting, district nursing, services for children with complex mental, physical and sensory learning difficulties, end of life care and social care services. Cumulatively, these acquisitions and contracts total £2 billion in all.
This figure is calculated based on 10 years of contracts at their full advertised value assuming that all performance related payments are made. The vast majority of the funding for contracts is paid to colleagues in salaries.
Many of these services are provided within large contracts that span both health and social care; Virgin has been one of the only private companies to bid for such large complex contracts. In late 2017, Virgin Care Private was launched, the company’s first venture in purely private healthcare. This business venture opened its first health and wellbeing centre in Birmingham in January 2018. The centre provided GP services, specialist consultations, diagnostics and tests and well-being services all on a pay-as-you-go service. However, this venture has now closed. Indeed, as we will see later, Virgin’s foray into the health and care market seems to have been marked by ongoing losses – although whether these are genuine or are ‘book losses’ designed to bolster the ultimate owners, is difficult for non-experts to gauge. Virgin’s last year as owners saw a loss of some £9.9 million, and with tax paid in the UK almost negligible
Twenty20 Capital Ltd
This record led to the Cayman Islands based Virgin brand being sold to a particularly cold fish in the world of private equity finance – Twenty20 Capital Ltd. This is an outfit which makes no pretences about its raison d’etre. The company aims to make as much profit for shareholders in as short a time as possible. Such companies often buy businesses that are either non-profitable or failing and use strategies, such as asset selling, redundancies, and mergers, to create ‘shareholder’ value. In this case, the shareholder is not some “Sid” in the street – but a small clique of the global ultra-wealthy who use Twenty20 as their banking and investment vehicle.
Virgin Care contract on Teesside
Just over five years ago, Virgin Care was awarded the contract for integrated sexual health service across the boroughs of Hartlepool, Middlesbrough, Redcar and Cleveland and Stockton in May 2016 by the councils of these areas. The contract was for five years with an option to extend to nine years. The areas specified in the contract, to be delivered by local units in each of the boroughs, were for things like urgent confidential help and counselling, rape and abuse, emergency contraception, treatment for sexually transmitted infections, Implant /IUS / IUD fitting and removal, HIV / AIDS services, psycho-sexual counselling and support and abortion advice. Clearly all these are sensitive areas of work, and need to be partnered by collaborative working with agencies like local GPs, schools, women’s centres and the Police
And a new contract
The initial five year contract was worth £36.2 million. In December 2020, and widely seen as failing in reported health outcomes, it was reported that Virgin had declined to apply for the extension of the contract and so the contract was due to end in August 2021. However, in late August last year, whilst Twenty20 were still concluding their deal to buy, Virgin announced that it had been awarded a new contract by Teesside’s Sexual Health Commissioning Collaborative, which includes Hartlepool, Middlesbrough, Redcar & Cleveland and Stockton-on-Tees local authorities and the Tees Valley CCG. The contract was to deliver a new Integrated Sexual Health Service across Teesside for the next three years, based on increasing digital take up of the service and agreed outcomes. Interestingly, this was not for another full term, but for three years only, possibly reflecting the commissioning partners suspicion of any ability to meet these targets.
So this puts this service out on a limb possibly insofar as Twenty20 may be concerned. As said, they seek to quickly maximise return on a contract in as short a time as possible, which could be by merging with another company, exiting contracts, making strategic changes (sale of subsidiaries, redundancies) or breaking up the company and selling its assets. Twenty20 Capital’s website proudly notes that this approach “reinforces Twenty20 Capital’s focus on realising value for shareholders.”
My advice to the Burghers of Teesside and the Tees CCG?
Keep a close eye indeed on this service and any moves to cost cut in preparation for a possible contract default and a runner.
The company has since responded with the following statement:
“Although our owner and our name has changed, our commitment to working with the councils in Teesside and our partners to deliver exemplary health and care services across Teesside, and to continuing to improve outcomes for local people, has not. Our new owners have a wide experience of the health, care and education services sector and we are confident their investment will benefit everyone who uses the services we provide for the NHS.”