Commercial Companies

The Appendix [1] lists the 35 Foundation Trusts that have declared a commercial company in their Annual Accounts. These companies range from organisations that market a new technique developed by the trust, to companies that are used to provide private patient services so that the trust does not have to declare private patient income (Table 4).

Table 4 Trusts with companies delivering private clinical services

Moorfields Eye Hospital
Northern Lincolnshire and Goole Hospitals NHS FT
Salisbury NHS Foundation Trust
The Christie NHS Foundation Trust
The Dudley Group NHS Foundation Trust
The Royal Bournemouth & Christchurch Hospitals NHS Foundation Trust

One common scheme is to create a company to provide outpatient pharmacy services to exploit a VAT loophole (for example South Warwickshire, University Hospitals Birmingham, Birmingham Children’s Hospital). However, such companies are a potential vehicle for trusts to develop more commercial services, and possibly private patient services. For example South Warwickshire has a company called SWFT Clinical Services Ltd and in the trust’s Forward Plan [2] it says that the trust intends to “develop this model further”:

It is our intention during 2012/13 to develop this model further, where this is to the benefit of our Members, patients and the local population.

Further, in a trust presentation [3] to the Governors it says that the trust can use this company to develop new business:

Develop new business opportunities: SWFT Clinical Services Ltd

Several trusts indicate that they have joint ventures with local GPs to provide primary care (Derby Hospitals, Mid Cheshire Hospitals, Newcastle upon Tyne Hospitals). Other trusts have created joint ventures to manage their estates (Calderdale and Huddersfield, Lancashire Care, Royal Berkshire, Northumbria Healthcare).

An interesting example of this is Royal Berkshire. This trust has a company called Healthcare Facilities Management Services Limited which manages the Royal Berkshire Bracknell Clinic (now renamed Healthspaces). The clinic cost £28.75m to build and has equipment (including a linac) valued at £3.44m. However, since the plan was conceived (at least 5 years ago) things appear to have gone awry: the trust has subsequently decided to transfer many of its services to the clinic and the company now rents space to Frimley Park and Heatherwood & Wexham as well as local GPs. In January 2012, the board [4] expressed concerns over the design of the facility:

The Board sought clarification with regard to the possible need to impair the Bracknell Clinic partly on the basis of the fact that the building design was not as efficient as it would have been if it had been designed as a hospital.

Earlier board papers indicate that the contract with HFMS Ltd was for 25 years. The 2011/12 Annual Accounts indicate that HFMS Ltd was paid a sum of £6.719m (this was mostly, but not exclusively for the Bracknell Clinic, the Jun 2011 board papers say the contribution for the clinic was £4.8m). Furthermore, the trust Annual Report [5] says that:

The Trust has two loan facilities, totalling £40.6m, from the Foundation Trust Financing Facility, one to finance the development of the Royal Berkshire Bracknell Clinic, on which we have started to make repayments, the other to fund the development of the Trust’s EPR project, against which there is one drawdown remaining.

This indicates that the trust has borrowed money from the government’s FTFF to invest in a property company to build a £28.8m clinic which is leased back to the trust for 25 years initially for £4.8m a year.

Some trusts have aggressive commercial policies. In 2007, Kings College Hospital created a company called KCH Commercial Services Limited specifically to oversee its commercial activities, the trust also has a partnership with Guy’s and St Thomas’ called Kings Health Partners that is being used to develop new private health facilities including the £145m King’s Health Integrated Cancer Centre [6] which is will have a private patients ward [7].

Cambridge University Hospitals are developing a biomedical campus [8] with an intention to attract international corporations. The Forward Plan says:

2020 site development strategy An OJEU process has been initiated to identify a strategic partner with whom the Trust will form a partnership to develop the Forum project consisting of an education centre, a hotel and conferencing centre and a private hospital. The Forum will provide facilities for the campus as well as local, regional and international markets and should provide a revenue stream for the Trust to support our core NHS business

University Hospital of South Manchester are also developing a biomedical park called Medipark, the Annual Report [9] says:

In 2011-12 we have already started to develop these mutually beneficial relationships, across the public and private sectors, aiming to deliver both financial and clinical benefits from these synergies. A key aspect of this is our ambition to create a world class Clinical, Education, Research and Science Park in partnership with others on our own and additional land, adjacent to UHSM. In 2011-12 we have launched the ‘MediPark’ concept internationally and believe that this opportunity, in partnership with Manchester Airport and Manchester City Council, articulates significantly our ambition to work in partnership with others to create a financial and clinical dividend for UHSM by utilising our physical and human assets more productively.

Some trusts have set up commercial companies to deliver services that NHS commissioners no longer fund. For example, Care Plus at The Dudley Group [10] provides private dermatological services of a low clinical value:

The clinics are run out-of-hours by our plastic surgeons and offer efficient, safe, consultant-delivered treatment for many procedures, including those no longer available on the NHS. Conditions we will treat include: moles, seborrhoeic warts, tattoos, torn earlobes and botox injections for excessive sweating. Private patients have the reassurance of a team of NHS consultants and state of the art facilities with access to a range of diagnostics.

Northumbria Healthcare has an ambitious capital project to build a specialist emergency care hospital at Cramlington and to renew its hospital facilities at Haltwhistle and Berwick. The trust’s Forward Plan [11] says that once the hospital at Cramlington has been completed there will be further significant investment at Wansbeck and North Tyneside general hospitals. In total the investment will be £200m. To deliver these capital projects the trust has created a Special Purpose Vehicle:

strategic priority is the establishment of a Special Purpose Vehicle company to manage our strategic capital investments This company has been created and it is called Northumbria Healthcare Facilities Management Ltd.

This is wholly owned by the trust, but the purpose of the SPV is not just to finance the building of the new hospital, the plan say that it will:

deliver the capital programme in the most economic manner and run the schemes from a maintenance aspect in future

The latter statement implies that the SPV will run the new hospital (and the refurbished hospitals).

One of the most bizarre companies is Careplus Skin which is owned by The Rotherham NHS FT. This company is described as a “consultant led service” [12] delivered by “dermatology trained nurses”:

the consultant led service is provided by a friendly experienced team of dermatology trained nurses and NHS professionals

The service? Laser hair removal, similar to the service delivered in a high street beauty salon.

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[4] – 1 – Chairmans Briefing appendix 1 Summary Board of Directors Minutes February 2012.doc
[7] £145m cancer care revolution