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Health, Issue 1534
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Health secretary Matt Hancock agreed a deal with private health providers in March
WHY is NHS England so coy about the amounts it is paying private hospitals under the deal agreed by health secretary Matt Hancock in March?

Many of the hospitals had been losing money (Eye 1526), but precisely how well they are now doing from Covid (by carrying out mostly diagnostic tests and, latterly, non-urgent operations) remains a secret. The only public figures are payments made at the end of March, just a week after the new contract began, and described in a memo from the NHS as “the first weekly payments”. They make striking reading.

The largest recipient was Spire Healthcare Ltd, which runs most of the old Bupa hospitals, with two payments for £13.3m. The company is the only UK-quoted private hospital provider and thus the only one to publish more detailed information itself. A recent results announcement disclosed that by the end of June, just over three months into the deal, Spire had received “net revenue” of £133.7m, which would equate to around £500m a year.

That’s around half its costs across all 39 hospitals, enabling Spire to report operating profits in the first half of 2020 (unlike so many firms this year). No wonder Spire Group’s share price shot up on the deal’s announcement and is currently more than double its lockdown low.

US-owned HCA International, which runs private facilities in London including the Harley Street Clinic and the Wellington Hospital, was paid £18.6m in the first week. This looks helpful given the previously loss-making operation’s annual £550m costs. It would certainly have helped pay the $145m in dividends that parent company HCA Healthcare Inc forked out to shareholders the same week.

Other private hospital operators eschew the stock markets for the private equity world. Circle Health Holdings Ltd, with hospitals in Bath and Reading, was paid £16m. Given its hospitals’ combined annual costs of around £50m, and the group’s expenses across all treatment centres of about £160m, the sum will have pleased private equity owner Tosca Penta.

Aussie-owned Ramsay Healthcare UK Operations Ltd received £11.8m; total annual costs for its 35 hospitals run at around £500m. It has reported that while the Covid contract “may reduce profitability” this year, it does ensure that “positive cash flow is maintained throughout the period of the contract”.

In total, after further payments to Care UK, Bupa Cromwell, Nuffield Health and Aspen Healthcare, sums handed to private hospital operators in the first week of the Covid contract came to £98m. The agreement, under which most of the private hospitals were little called upon but paid anyway, runs to the end of December for most firms, which have also been able to perform more of their core private work since the summer.

The numbers suggest the annual subsidy to companies is running into a few billion pounds a year – enough to have provided the NHS capacity now having to be bought in so expensively. NHS England refused to comment on the figures. Still, as all bills are checked by erstwhile Carillion auditor KPMG, what could go wrong?

Meanwhile, with non-Covid procedures backing up, in August NHS England put out a £10bn contract tender notice for the same private operators to bid for more NHS work. Thanks to its rolling taxpayer bail-out, long Covid has a healthy prognosis for Britain’s private hospital companies.

More top stories in the latest issue:

HUNGER GAMES
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CLASS CONNECTIONS
Providers approved for the National Tutoring Programme have close links with the organisations operating the scheme.

CARRIE FAVOUR
The prime minister steps in to ask picture desks to remove photos of Carrie Symonds at a university ball from their front pages.

EYE TOLD YOU SO
A consensus is now building – even among ministers – that councils and local health authorities do a better job contact tracing than the Serco scheme.

DISHY’S DESSERTS
Even the chancellor’s old employer (not Goldman Sachs but Kuti’s Brasserie in Southampton) is joining in offering free hot meals for children during the holidays.

SANTA SACKED
Predicted Christmas cutbacks will be a huge blow to the advertising sector, with only online retailers and the government able to spend.

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