Posts Tagged ‘Paul Ruddock’

Private Eye 2011 on Circle Health

January 20, 2015

Last week the Circle Health group finally pulled out of its contract to run NHS hospitals. The standards of care were appalling, and the company had not been able to make the massive profit it expected. Four years ago in their 24th June – 7th July 2011 issue, Private Eye printed this story about Circle Health, and what their acquisition of government contracts augured for the rest of the NHS under the Tories’ privatisation plans.

NHS Competition
Circle Health Merry-Go-Round

As the debate rages over greater private sector involvement in a reformed NHS, the aggressive behaviour of one private health firm, Circle Health, is a sign of things to come.

Using the ‘”Any Willing Provider” rules that are designed to increase competition in the NHS (and which will continue even after the Conservatives’ current health reforms are watered down), Circle is trying to force two NHS trusts to give it more surgical work and on better terms regarding price and timing.

Circle Health is 49 percent-owned by employees and often described as a “social enterprise”. But 51 percent of it is owned by private investors, including around 40 percent by hedge funds Odey Asset Management and Landsdowne Holdings. Since 2003 Crispin Odey and Lansdowne’s Paul Ruddock and David Craigen have between them donated more than £560,000 to the Conservative party.

In January this year, Circle Health applied to the NHS Cooperation and Competition Panel to demand that NHS Wiltshire and NHS Bath and North East Somerset give it more work and on better terms. The panel, a New Labour quango, is meant to determine when the NHS should give operations to private firms, in keeping with the edict that “any willing provider” should be considered for NHS work in competition with NHS hospitals.

Under the government’s current “climbdown” on NHS reform, the panel will be moved into the NHS regulator Monitor and become the main enforcer pushing NHS privatisation. This is supposedly less aggressive than health secretary Andrew Lansley’s original plan because the panel will now consider “cooperation” as well as “competition”, whereas before Monitor only had a duty to promote “competition”.

Circle Health is pressing its demands on Wiltshire and Bath, who jointly commission NHS services, because it built its flagship hospital in Bath and needs the NHS work to pay for its fancy. Norman Foster-designed building with “chauffeur drive service”, “five-star hospitality” and a bistro serving “locally-sourced, mainly organis food” prepared by a “Michelin-starred chef”.

Local NHS suits must be hoping the panel, headed by former private healthcare investor Lord Carter, looks fairly at the case. Worryingly, he and health secretary Andrew Lansley appear to be fans of Circle Health: in January they were guest speakers at its annual conference at the firm’s Bath hospital.

According to papers lodged with the panel, Circle Health is angry that out of a £160m local budget, its own potential revenues “have been capped at 6m”. It claims the health authorities won’t offer it more contracts because they want to keep work in-house to “protect NHS providers from further potential capacity reduction”. Circle also claims that the health authorities are favouring the NHS by only offering private sector providers four types of surgery. Circle wants more, including the chance to carry out liver surgery.

The panel is due to give its verdict at the end of the month.

In the same piece, the Eye also had this to say about Ruth Carnall, the NHS head, who was also on the payroll of the private health care industry. Unsurprisingly, she also favoured cuts and privatisation, for which she was suitable awarded.

Congratulations to Ruth Carnall, who grabbed a CBE for services to the NHS.

Carnall flitted between running the “Change Programme” at the Department of Health … and jobs with private health firm Care UK and consultants KPMG. She is currently head of NHS London, where her hospital cuts plan for the capital was so aggressive even slash-happy health secretary Andrew Lansley had to call for a pause.

At both the national and local level then, the privatisation of the NHS has been carried out by politicians and NHS heads with links to private health care companies and the firms involved in the privatisation – a clear conflict of interest. As for Circle Health, the events of the past week shows how right NHS BANES and Wiltshire were not to want to give NHS contracts to this outfit of incompetent profiteers.

From 2013: Private Eye on Complex Corporate Structure and Dodgy Accounting of Private Health Contractor

April 15, 2014

This is from the Eye’s edition for 22nd March – 4th April 2013.

NHS PLC

Broken Circle

Worrying symptoms of Enron-it is have broken out at groovy health company Circle Health which, in partnership with its staff, runs NHS facilities and a group of private hospitals.

Circle’s parent company, Circle Holdings plc, is owned largely by hedge funds, including Crispin Odey’s Odey Asset Management and Sir Paul Ruddock’s Lansdowne Partners, plu8s the offshore trusts of founder and ex-Goldman Sachs banker Ali Parsa. As 51 percent controller of the Circle Health group that now runs Hinchingbrooke NHS hospital trust in Cambridgeshire, as well as the Nottingham NHS treatment centre, it might be hoped that the company’s financial position is above board and fully understood.

Alas, corporate transparency is in even shorter supply than profits at the struggling firm, especially when it comes to financing what it describes as its “flagship” private hospital in Bath (which earns two-thirds of its income from the NHS). The hospital is owned not be Circle Health but by a Jersey company called Health Properties (Bath) Ltd, which leases the building back to Circle in the UK. Given its offshore status, the finances of this company are secret; but clues in Circle Holdings’ accounts suggest it has debts of around £40m (on some of which it has already defaulted), funding a hospital worth about £35m.

As the Bath hospital is very much part of Circle’s business, these amounts would ordinarily be “consolidated” in Circle Holdings’ balance sheet – increasing its overall debt figure. But this is where the “off balance sheet” trick comes in. Health Properties (Bath) Ltd is owned not just by the Circle group, which has 1,200 B shares in the company, but by two other companies as well; one called Health Estates Ltd, with 1,800 B shares, plus the European arm of Lehman Brothers (in, ahem, administration) with 100 A shares. This structure, says Circle, means it owns just 38.7 percent of the property company and can keep it off its books.

Closer scrutiny, however, shows that Health Estates Ltd (also a Jersey company) is managed by yet another company, Health Estates Managers Ltd (ditto), that is wholly owned by Circle. And when it comes to voiting on matters concerning Health Properties (Bath) Ltd, it has agreed to do whatever Circle tells it to. Since the A and B shareholders appoint equal numbers of the property company’s directors, this means control is nominally shared by Lehmans (in administration) and Circle. But in practice the Lehman administrators, Pricewaterhouse Coopoers, are unlikely to demur from Circle’s wishes, not least given their clear conflict of interest as Circle Holdings’ auditor with duties such as signing off the strange arrangement every year.

An accountancy rule known as SIC-12 says that if a company in substance controls what is known as a “special purpose entity”, such as Health Properties (Bath) Ltd, its results and its assets and liabilities should be consolidated in the holding company’s figures. Other indications that this ought to happen include where the special entity’s assets – such as a big hospital – is used for the wider group’s benefit, as it is here.

Circle Holdings’ latest figures show debts of around £55m. Adding in the Bath debt would take that towards the £100m, which would not look good as the loss-making company – from which Parsa recently departed – repeatedly goes cap in hand to the City to stay afloat while running vital health services. Nor would it be too reassuring for the taxpayer given its reliance on the firm.

MPs on the public accounts committee have already expressed concern over the Hinchingrooke deal, pointing out that “the NHS can never transfer the operational risk of running a hospital, leaving the taxpayer exposed should the franchise fail”. Handing hospitals to companies with offshore, off balance sheet property schemes might not have been the healthiest option.

This is of particular interest to people in the Bristol/ Bath area, as Circle Health’s hospital in Bath was opened last year with some fanfare. It was featured on the local news, if I remember correctly, and adverts for it have appeared in Bristol and, doubtless, some other areas. Yet the company is clearly saddled with massive debt, which it has attempted to hide through a complex off-shore corporate structure intended to keep it off the balance sheet. And it’s partly owned by Lehman Brothers, who were partly responsible for the financial crash in 2010. Given this history and background, it’s questionable that such a company should ever have been given control of NHS hospitals, regardless of the wider issues of the supposed superiority of private enterprise.