Private Eye: Has Norman Lamb Finally Recognised Private Equity Firms Should Not Run Healthcare

This is story from the 11th December-21st December 2012 issue of Private Eye, reporting that Norman Lamb appears to have cottoned on to the fact that private equity firms running hospitals and other healthcare facilities is recipe for disaster. It states

‘Private Equity

Not-so Super Model

Health minister Norman Lamb has finally recognised what the Eye has been saying for ages: that the tax-driven ownership structure behind companies providing some of the most sensitive public services, such as care for the vulnerable, puts them at huge risk.

Companies such as Castlebeck, behind the abusive Winterbourne View home (Eye 1290), the Rochdale children’s home that was supposed to be looking after girls sexually abused by gangs, all operated on the same financial model: highly-geared with expensive loans from funds (often offshore) that remove any profits the taxman might get his hands on but also leave the “businesses” themselves highly vulnerable to economic downturn.

The model increasingly extends now to other outsourced services – such as forensic science, for example, where offshore fund-owned LGC Forensics recently contributed to the wrongful five-month detention of a man on rape charges after cost-driven lapses at one of its labs. As Eye 1325 noted, the report by the Forensic Science Regulator on LGC was highly critical.

Then of course there are the scores of hospital PFI contracts now held at least partly by private equity funds (Eyes passim ad nauseam).

In a consultation on care home regulation, Lam has at last promised to “challenge business models that could compromise quality”. But lessons of the last decade have yet to be learned, it seems, as his consultation document promises there will be a “light touch”. Such was the approach to financial services regulation that led to Northern Rock and 2008 crash. Good one, Norm.’

In other words, Lamb and the Tories are aware that private equity firms running healthcare doesn’t work, or at least, not as well as they’d hoped. They don’t want to admit, and don’t want to do anything about it, except issue vague statements about quality when the scandals become too great to ignore.

So it’s pretty much business as usual then.

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