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June 22, 2012 / politicsbitesize

The beginning of the end for the NHS

George Elliot Hospital, Coventry.

Across the UK doctors and nurses went on strike on Thursday in response to proposed changes to pensions and working conditions. Ministers condemned the action as irresponsible and unnecessary, but then these are the same people who ushered through the Health and Social Care bill that is slowly going to erode the NHS. The action taken by health professionals is needed but it could have been applied sooner. Successive Labour and Conservative governments since the 1980s have diminished the effectiveness of the service provided by our doctors and nurses by outsourcing certain NHS services to private equity companies.

Over the coming months Corporate Watch will be examining facts about the private equity companies that are involved in providing services for the NHS. In the first of their series of fact sheets, designed to present information on each individual company, Corporate Watch’s focus has turned to Care UK.

The company currently runs 85 residential homes, provides care for over 17,000 people, operates numerous GP practices, NHS walk-in centres, GP out of hours services and is responsible for prison healthcare services. Care UK wants to add more hospitals and services to its portfolio and so is lobbying for more contracts and bidding to take over the management of the NHS George Elliot Hospital in Nuneaton.

In 2010, Care UK was bought out by the private equity firm Bridgepoint Capital. As already noted by Politics:bitesize, private equity firms (also known as ‘vulture funds’) buy up companies and restructure them in order to make a profit for investors. These firms do not consider the potential impact on the companies they have bought out and often leave them riddled with debt.

According to Corporate Watch, Bridgepoint Capital has burdened Care UK with an enormous debt which it is struggling to pay. In order to buy Care UK in 2010, Bridgepoint issued a £250 million bond, which is secured against the assets held by Care UK. The result of this takeover is that a whopping £25 million is being paid in interest by Care UK every year. Furthermore, the investors and fund managers are receiving a split of £8 million a year from the ‘cumulative preference shares’ in the company, which guarantees them a return even if the company is not making a profit.

The amount of money being siphoned off from Care UK per year is staggering. If the company was publicly owned this money could be reinvested in services but instead it is being paid back to the private equity firm who now owns it. What is also worrying is the fact that Care UK neither owns nor manages its assets. The buildings in which the services are provided are leased from a subsidiary of Bridgepoint called Silver Sea Holdings, which means the many care homes, GP practices and NHS walk-in centres that Care UK manages could be sold off to property companies that could raise the rents and thus increase the financial pressure on Care UK.

In addition to these financial difficulties Care UK is experiencing problems in providing adequate services. The company has claimed that it can provide a better service to the users of NHS provisions than previous public sector companies, yet several newspaper reports have highlighted a number of cases of neglect and mistakes by Care UK. On the 13th July 2011, a headline in the Manchester Evening News read: ‘Abandoned: woman, 85, left alone and bedridden for three days as carers fail to turn up in red tape blunder’. This catalogue of errors coupled with its financial instability means that Care UK cannot reasonably claim to be able to provide a better standard of care than public sector companies.

A rather more alarming fact is that not only is Care UK the largest private provider of NHS services, but it stands to gain even more from the Health and Social Care Reform Bill. Do we really want a company that is laden with debt and unable to provide adequate basic care to run our NHS?

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