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‘MPs seem unconcerned that some of our major healthcare providers are now owned
in whole or in part by the sovereign wealth funds of the Chinese Communist party
or the UAE.’ Photograph: Jeff Moore/PA
View image in fullscreen
‘MPs seem unconcerned that some of our major healthcare providers are now owned
in whole or in part by the sovereign wealth funds of the Chinese Communist party
or the UAE.’ Photograph: Jeff Moore/PA
OpinionNHS

This article is more than 1 month old


INVESTORS ARE MAKING A FORTUNE FROM UK HEALTHCARE. WHY IS NOBODY HOLDING PRIVATE
EQUITY TO ACCOUNT?

This article is more than 1 month old
David Rowland



From care homes to cancer treatment, millions in taxpayer funds are being paid
out of the system every year

 * Private equity groups collecting millions to run UK government-funded sexual
   assault referral centres

Wed 13 Mar 2024 11.05 CETLast modified on Wed 13 Mar 2024 15.12 CET
Share



If you are in a vulnerable situation in the UK because of your age, personal
circumstances, violent crime or ill health, there is a strong chance that
somebody somewhere – most likely an offshore private equity investor – will be
making a profit out of your health and care.

In the case of older people needing care towards the end of their life,
companies backed by private equity funds have been generating significant
returns for decades. Our research at the Centre for Health and the Public
Interest shows that around £1.5bn is taken out of the care home sector each year
in the form of different types of returns to shareholders and investors.



Even during the pandemic, when the care home sector witnessed more than 40,000
Covid-related deaths and was propped up by £2bn of taxpayer support, a number of
private care home companies continued their focus on profit-making, with 122 of
them paying out dividend payments totalling £120m during the first year of the
pandemic (an increase of 11% on the previous year) – all this while many of the
staff in those homes worked longer hours and received no extra pay.

At the other end of the age spectrum, thousands of children in care homes, as
well as those who have been fostered, have also been treated as a source of
income and profit by companies who have made large margins from buying up and
delivering these services. More than 80% of residential care homes for children
are provided on a for-profit basis, with local authority leaders warning that
profiteering is occurring at the expense of young people in care.

People with serious mental health needs are also a major revenue stream for the
companies variously owned by private equity funds and US healthcare
corporations, which operate hundreds of inpatient mental health facilities in
the UK.

But that’s not all. As our joint investigation with the Guardian has revealed,
more than half of the people seen in the NHS-funded Sexual Assault Referral
Centres (SARCs) are treated by two companies owned by private equity investors,
with slightly under a third of the total NHS SARCs budget now going to these
companies. These are services for people who have been raped or sexually
assaulted, including children. The centres help thousands of victims each year
by providing psychological and medical services, and gathering forensic evidence
for criminal prosecutions.

Again, the returns generated by such companies are very handsome. In the case of
the one company for which financial data is available, we found that it had paid
out dividends worth £8.7m over two years, from income of £45m that it had
generated from delivering both SARCS as well as healthcare to those in custody
and secure accommodation. In 2021, the amount of dividends paid out exceeded the
amount of pre-tax profit generated by the company in that year.

The lack of democratic input into the decision to contract out such services is
striking – for example, it is difficult to think of a time when a government
minister proposed that care for victims of sexual assault should be privatised.
Nor have the three main political parties who have formed governments in the
last two decades made manifesto commitments to allow investors to generate
uncapped profits from children’s care homes, mental health facilities or care
homes for older people.

Much of this outsourcing has taken place on the quiet, often described
euphemistically as “public sector reform”, while those receiving the services
are often the least able to raise concerns. Moreover, there has been no public
debate about the types of companies that should be allowed to run such vital
services.

While some members of parliament are up in arms about the possibility that the
Spectator and the Telegraph might soon be owned by a foreign government, none of
them seem to be concerned that some of our major healthcare providers are now
owned in whole or in part by the sovereign wealth funds of the Chinese Communist
party (in the case of the private cancer care provider GenesisCare, which has a
growing presence in the UK) or the United Arab Emirates (in the case of Circle,
the largest operator of private hospitals in England). This is in addition to
the numerous companies running health and social care services in the UK whose
owners are registered in offshore tax havens.

The mantra that has been used to justify private sector involvement in
delivering health and social care from the Blair government onwards is “what
matters is what works”: it doesn’t matter who provides care, it is the quality
of care that counts.

But a recent study published in the Lancet found that transferring the ownership
of publicly owned hospitals into the for-profit sector almost never had a
positive effect on the quality of care, and that any reduction in costs came at
the expense of care quality. A paper in the BMJ found that private equity
ownership increased costs to those paying for care with “mixed to harmful
impacts” on quality. A US review of deaths in nursing homes for older people
found a 10% increase in mortality after the home was taken over by a private
equity-backed company.

Now we know there are no health and care services that are off limits for
private equity investors in Britain, nor any limits on the amount of profit they
can extract, it is time for the National Audit Office and other parliamentary
committees to do their job and find out exactly where the millions of pounds
that are being pumped into these services actually end up, and what impact the
high rates of return being made by these companies are having on people
experiencing some of the most difficult situations imaginable.

 * David Rowland is the director of the Centre for Health and the Public
   Interest

 * Do you have an opinion on the issues raised in this article? If you would
   like to submit a response of up to 300 words by email to be considered for
   publication in our letters section, please click here.

Explore more on these topics
 * NHS
 * Opinion
 * Healthcare industry
 * Private equity
 * Health
 * Health policy
 * Health & wellbeing
 * Private healthcare
 * comment

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MORE ON THIS STORY






MORE ON THIS STORY




 * PRIVATE EQUITY GROUP CVC PLANS €1.25BN AMSTERDAM FLOAT
   
   3d ago


 * PRIVATE EQUITY GROUPS COLLECTING MILLIONS TO RUN UK GOVERNMENT-FUNDED SEXUAL
   ASSAULT REFERRAL CENTRES
   
   13 Mar 2024


 * VET PRACTICES: THE COMPETITION WATCHDOG IS BARKING UP A PROMISING TREE
   
   12 Mar 2024


 * REVEALED: THE BUMPER PROFITS TAKEN BY ENGLISH PRIVATE NURSERY CHAINS
   
   12 Mar 2024


 * US FIRM CARLYLE TO TAKE CONTROL OF SOUTHEND AIRPORT AFTER DEBT DEAL
   
   6 Mar 2024


 * ‘HUGE TAX BREAKS’: PRIVATE EQUITY PREPARES FOR A BOON FROM CONGRESS
   
   1 Mar 2024


 * CURRYS REJECTS HIGHER £742M OFFER FROM US GROUP ELLIOTT
   
   27 Feb 2024


 * CURRYS SHARES SOAR AS CHINESE ONLINE RETAILER ENTERS TAKEOVER BATTLE
   
   19 Feb 2024


 * HOW UKRAINE’S LARGEST PRIVATE EQUITY FIRM RAISED $350M DURING A WAR
   
   23 Feb 2024


 * LABOUR VOWS TO CUT FINANCIAL ‘RED TAPE’ AND ‘UNASHAMEDLY CHAMPION’ UK SECTOR
   
   30 Jan 2024




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