Brenda Allan, KONP Primary Care Working Group
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Background
In August 2023, Operose/Centene announced plans to sell its operations in the UK, because they were not profitable, despite being paid 14% more per patient than AT Medics, from whom it bought 50 GP practices in London in 2021. The sale affects 640,000 patients, including those in sixteen other practices across England.
On 6 December 2023, the London Integrated Care Boards (ICB) announced that the proposed sale was to HCRG Care Group Holdings Ltd, (known as Virgin Healthcare Holding Ltd until 2021). The majority holding in HCRG is T20 Osprey Midco Ltd, and T20 Pioneer Midco Ltd, in turn owned by Twenty 20 Capital, a private equity company.
Estimates suggest the sale could raise £51.2m, and Operose has already sold its network of 53 UK hospitals (Circle Health) to Pure Health, a Middle Eastern company, for £948 million.
Scrutiny of the sale by AT Medics to Operose in 2021 by the five London CCGs, was ‘light touch’ at best, and driven by NHSE. There was no consultation with patients, and it appears little active involvement of the CCGs. It attracted significant opposition then, and patients do not want a repeat of this process. However, there has been a worrying lack of communication from the ICBs about the plans for patients, who first learned of it in the general media.
In the light of serious concerns about the sale and proposed change of ownership, KONP’s Primary Care Working Group believes it is crucial that ICBs urgently conduct:
◼︎a rigorous procurement exercise and scrutiny of HCRG, and their owners T20, regarding their service track record, financial viability, long term commitment, and suitability to provide primary care
◼︎extensive, well publicised consultation with patients and the public
◼︎serious consideration of alternative ownership and contractual options.
Concerns
Our main concern is for patients to receive a high quality, safe, easily accessible, and stable service, offering continuity of care, long recognised as key to good health outcomes and reduced mortality. Stability and sustainability in organisational and workforce arrangements are essential to achieving this. However, the proposed sale and change of control to HCRG/T20 will further undermine that.
ICBs should conduct a very thorough and wide-ranging due diligence process into the complex web of companies involved, with regard to their poor service track record; lack of transparency; the instability caused by rapid sales and premature contract termination; and complex organisational and financial structures making due diligence difficult or impossible.
ICBs should introduce an effective sanctions regime for contract non-compliance.
Operose and HCRG (Virgin) track record
Operose practices employ 6 times more physician associates compared to the national average and fewer GPs. They have only 0.6 FTE GPs for every 2000 patients, compared with the NHS average of 1.2 FTE GPs. This casts doubt on there being sufficient GPs in these practices to see patients, never mind supervise Physician Associates and others. This is a serious concern given the current worries about appropriate regulation and supervision for PAs, and the critical shortage of GPs.
An example is Haringey’s St Anne’s practice with low patient satisfaction levels, an annual shortfall of nearly 20,000 GP appointments, compared with national targets, high staff turnover, and a barely functioning PPG.
If Operose was not the answer in 2021, HCRG is definitely not the solution in 2024.
Virgin and HCRG have a poor history in delivering primary and other healthcare, according to the CQC. They have taken over well performing services that then became inadequate under their watch, terminated contracts early if renegotiation fails to yield additional funding, have refused to share information on the grounds of commercial confidentiality, and are extremely litigious if they fail to win contracts, or have them terminated. Patient care should be the deciding factor in contract awards, not the fear and costs of legal challenge by commercial companies.
Examples include:
- Virgin Care took over Sutherland Lodge Surgery in Chelmsford which had been rated outstanding by the CQC, but within two years of being run by Virgin in 2018, it received an inadequate rating, despite being paid more money for the service than the previous GPs.
- The CQC has raised concerns about Virgin Care’s use of receptionists to triage patients, following deaths.
- Virgin handed back the contract for an elder care service in East Staffordshire, because the CCG would not offer additional funding.
- In 2022 after the acquisition of Virgin Care by Twenty20 Capital, Bath, Northeast Somerset, Swindon, and Wiltshire CCG, decided not to extend a community services contract beyond 2024, because of uncertainties arising from the acquisition, including ongoing contractual and financial risk.
- In 2021 a Virgin director on the Partnership Board in Bath, North Somerset, Swindon, and Wiltshire made it clear that they were reluctant to share any information with the public.
- A judge ruled that taking a £100m contract away from two Lancashire hospitals and awarding it to Virgin/HCRG, threatened “disruption and damage to the provision of the whole range of healthcare”.
Yet these companies are operating with taxpayers’ money; commercial confidentiality should not trump accountability and public scrutiny.
Complex structures, financial opacity and short-term business model
The London ICBs claim that the contracts for the fifty practices are still held by AT Medics, even though they sold the business in 2021, and their six directors immediately resigned. Although HCRG, incorporated in September 2023, filed accounts in 2022, T20 Osprey, incorporated as a private company in November 2023, and T20 Pioneer, incorporated in August 2022, have published no accounts (Companies House).
The separation of contract holding and ownership, and the very complex ownership, organisational and financial structures of Virgin/HCRG/T20 makes scrutiny and accountability, and the due diligence necessary for procurement almost impossible; private equity companies operate without accountability to shareholders and are not publicly listed.
Private equity’s business model typically relies on funding purchases by about 70% debt, 2% by the firm itself, and 28% by their other partners. They generally sell within 3-7 years, retaining 20% of the sale profit and handing the rest to their partners. If possible, they leave the acquired entity with responsibility for the debt. Companies acquired by private equity firms are ten times more likely to go bankrupt. This would be destabilising for patients, staff and communities, as the Social Care sector has experienced.
To achieve the rapid profits the model requires cost cutting and extra income generation. In primary care this could lead to reductions in staffing, expertise and skill levels, overreliance on remote and digital contact, raising charges for e.g. administration, cleaning, maintenance services and the acquisition of even more practices, creating an even greater destabilisation when they pull out, like Operose, or Babylon, because of disappointing profits.
Procurement and contract monitoring
The assurances that ICBs say they are seeking will be worthless, as was found with the AT Medics sale to Operose. There appear to be few/ no consequence for contract terms not being met.
Lack of consultation and publicity
The sale will inevitably result in a change to the services offered by the practices. Every new commercial owner makes changes to staffing numbers, skill levels, and the range and quality of services offered, and needs to make a profit.
ICBs must conduct a full and widely publicised consultation on the proposed sale so the public, patient and carers can participate meaningfully in the decision making.
Alternatives
The KONP Primary Care Working Group are aware of good alternatives that ICBs and their Primary Care Committees could adopt, that would secure a safer, more stable service and better value for money:
- Enable PCNs and GP Federations to take over the Operose practices or support a merger of the Operose practices with other practices.
- Award a GMS contract to PCNs to run practices, as has happened in Hoddesdon and Broxbourne PCN. Hertfordshire and West Essex made this decision to secure the long-term sustainability of the practice and care provided.
- The shortage of GPs, and particularly those wanting to be partners might be improved if practices were paid even a percentage of the 14% extra per patient that commercial practices receive, as with extra resources, the task of running practices would be more attractive.
- Longer term, establish within Integrated Care Systems a body, e.g. PCN, GP Federation or a new body e.g. a primary care board, to hold NHS GMS contracts.
- Encourage practices to convert to anEmployee Ownership Trust (EOT) as inMinehead, Somerset. Dubbed a John Lewis model it gives all staff shares in the company. EOTs cannot be sold and thus the practice become a community asset, fixed by their GMS contract to the community they serve. GP EOT accounts are open and transparent.
KONP’s position on primary care ownership and contracting is that Alternative Provider of Medical Services (APMS) contracts, which have been mandated by NHSE since 2014, with few exceptions, should be phased out and no new ones awarded. All practices should be on GMS contracts, run by GPs or salaried services run by other NHS bodies, as outlined in the alternatives listed previously, and not up for sale.
What you can do
There is urgent need to alert the public, media and politicians locally and nationally to what is happening. to Joint health overview and Scrutiny Committees – every integrated care system area has one – and to ICB Primary Care Committees
◼︎ Contact councillors on the JHOSC and Health and Social Care leads
◼︎ Use FOIs to ICBs to demand more information
◼︎ Write to and engage local MPs who can raise questions in Parliament and demand meetings with the ICBs to raise concerns
◼︎ Use local and national social and traditional media and any contacts who can spread the word, both health focused and general e.g. local newspapers, Mumsnet, Next Door
◼︎ Join with other health and campaigning organisations -e.g. We Own It, Doctors in Unite, SHA and others and local groups.
◼︎ Contact the patient forums (PPGs) at the GP practices concerned and support their actions (see attached list of affected practices from We Own It, 2021). https://weownit.org.uk/blog/here-are-gp-practices-taken-over-us-health-insurance-giant-centene.
Brenda Allan, chair of KONP Primary Care Working Group 13 January 2024
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