Market Opportunities for US

Health Providers

In the New UK NHS

Prepared By

Navigate Consulting

For: Client XXX

September 2014

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Executive Summary

Background to the New NHS

The NHS is a much loved British institution, however strained public finances mean it has become virtually impossible to preserve the NHS as it is without seriously damaging other important public

services or raising taxes significantly. The NHS in England has to find up to £30 billion (US$50 Billion) in efficiency savings by 2020, to cope with the gap between essentially flat funding and rising demand and costs. Aware of this the incoming Conservative Government set about developing a radical reform process, which was legislated in the Health and Social Care Act of 2012.

There are five pillars to this act, but the most important to independent service/private healthcare

providers if the fifth, which aims to allow increased healthcare market competition for a majority of NHS healthcare services. So far 77 categories of service have been opened to bidding from Any Qualified

Provider (ACP), British or international. Procurement is managed on a regional and local basis by the 211 Clinical Commissioning Groups (CCGs) across the UK. CCG’s are GP-led commissioning consortia which replaced the prior Primary Care Trusts under the 2012 Health and Social Care Act. In 2012/13 CCGs accounted for 91% of all NHS spend or £93.7 Billion (US$155.5 Billion)1.

The Potential Market for Independent Service Providers (ISPs)2

LaingBussion Healthcare Analysts estimated the UK independent healthcare market to be valued at

£40.5 Billion ($US 67 Billion) in 2012/13. This estimation though only captures the first 6 months of the new system and thus the 2013/14 value of the independent sector is likely to have grown considerably as the process of tendering gathers pace. For example in the period June 2013 to June 2014 £13.5 Billion (US$21.5 Billion) of contracts were awarded, which was a 304% increase on the prior year. 70% of these were won by private providers.

Service sectors representing key opportunities for international ISPs

Having analysed in depth the segment size, growth rates, ISP share and projected future share of each

health service segment; the areas TSAG see as those of greatest mid-long term opportunity for international providers include the following;

Acute Care

The private acute sector encompasses healthcare provided by the independent sector (both private and voluntary), medical/surgical and mental health hospitals and clinics, as well as healthcare provided to private patients in NHS hospitals in the UK.

In the acute care sector, around 71% of private acute care services are distributed through independent

hospitals and clinics. According to Laing & Buisson, there were 454 independent acute medical/surgical hospitals in the UK. Major providers of private acute care services include Netcare’s General Healthcare Group, Spire Healthcare, HCA, Nuffield Health and Ramsay HealthCare UK. Between them, the five largest hospital operator groups own 210 acute medical/surgical hospitals withman overnight bed capacity of 7,354, or an estimated 79% of the UK independent acute sector bed total. The total value of the acute care segment grew at a CAGR of 5.5% between 2008 and 2013.

1 Note all US to GBP conversion rates are based on the wholesale interbank rates of August 28th, 2014. Whereby 1 GBP = US1.66

2 Note – Throughout this document the acronym ISP refers to Independent Services Providers or private providers

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Behavioral Health/Mental Health

Outpatient mental health services are predominately provided by community health and this appears to be one of the areas of greatest opportunities for ISPs.

Allocation of spending on community and mental health services to ISPs has continued to rise year on year. The independent sector has become a more important provider of NHS community and mental health services and in 2012/13 was worth £1.57 Billion (US$2.6 Billion). ISP’s share of the mental health services market increased from 12% to 17.5% in just one year to 2012/13 If current trends continue is likely to dominate the lion’s share of expenditure by 2025.

Inpatient mental health services are provided both by the NHS and ISPs.

The four largest inpatient and outpatient mental health service providers are Partnerships in Care,

Priory Healthcare, St Andrews Group and Cygnet HealthCare. Together they operate around 43% of independent mental health hospital beds and generate around 53% of sector revenue.

Other providers include Care Principles, Castlebeck Group, Huntercombe Hospitals, Alpha Hospitals, Cambian Healthcare and St Luke’s Group.

Community Health Services

Community Health Centers in the UK are clinics staffed by a group of general practitioners and nurses.

Typical services covered are family practice and dental care, but some clinics have expanded greatly and can include internal medicine, pediatric, women’s care, family planning, pharmacy, optometry, lab, and more.

In 2012/13 20% of all expenditure on community health services was spend on care provided by ISPs; an increase of 34% on the prior year. The proportion (by value) of community health services provided by the independent sector increased from 12% in 2010/11 to 18% in 2012/13

Residential and Non-Residential Home Care

With the aging British population residential care homes and end-of-life care services represent a clear growth opportunity for ISPs.

The combined value of the care market for older people alone (Local Authority funded, voluntary and private expenditure), is estimated to be worth £22.2 billion (US$ 36.8 Billion) and is growing at 4% per annum, of which £13.4 billion (US$ 22.2 Billion) is attributable to residential care and £8.8 billion (US$14.6 Billion) to non-residential care.

Around 92% of care home places are provided by the independent sector across the UK. About 89% of

home care hours purchased by councils in England are provided by the independent sector. The remaining 11% are provided in house by Local Authorities.

The companies with the largest portfolios of homes for older and physically disabled people include Southern Cross Healthcare, BUPA Care Services, Four Seasons Health Care and Barchester Healthcare. As of July 2012, these companies owned or leased 106,000 registered care home beds between them, accounting for 28% of the UK’s for-profit capacity for older and younger physically

disabled people

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Telecare and Telehealth

The UK Government in 2012, established a clear objective that by 2017 “significant progress will be made towards the 3 million people with long-term conditions being able to benefit from telehealth and telecare”.

Clinicians and patients, however, have been less enthusiastic. Many have concerns about the perceived lack of robust evidence on cost-effectiveness of telehealth, which indicates the telehealth industry will need to develop new networks, relationships and metrics to demonstrate the benefits of the wider adoption of the technology.

Indeed, a January 2014 survey of Clinical Commissioning Groups (CCGs) suggested that delays and lack of interest from clinicians and patients have undermined progress on rolling out telehealth and that some CCGs were withdrawing their investment.

Nonetheless even if adoption is slower than providers hope for, telehealth services will represent a significant mid-long term market opportunity for ISPs. Clearly the margins and value of telehealth services to providers are far greater than telecare. Additionally it is likely the competitive space at present is less crowded than telecare, which would potentially provide first mover advantage to secure significant market share.

Figure 1: UK Healthcare Segments-Growth/Share Matrix

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Penetrating the UK NHS Healthcare Market

International providers must be prepared to commit to the market for the long haul. As discussed each contract procurement process takes on average a year to complete. The market is already competitive with many well established UK providers (as shown in detail in Appendix E).

Nonetheless the UK is at the very beginning of the most substantial reform of the NHS in its history, value opportunities for Independent Service Providers (ISPs) is only likely to grow year on year and international firms entering in the next two to three years will still be considered early movers, with all the attendant advantages of such.

Standard Due-Diligence Procedures Apply to UK Healthcare Market Entry Strategies

This document details much of the first of the key processes in determining both the attractiveness and

viability of the UK Healthcare market for international ISPs. As with any market entry strategy careful consideration must also be given to customer analysis, the firm’s potential position and its business capabilities. The key processes of which are detailed in figure 1 below.

Figure 2: Key Stages in Assessing the UK Market Attractiveness

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Any international provider aiming to compete for CCG contracts must establish an on-the ground

presence in the UK. A practical early entry strategy would be to recruit UK staff experienced with the new CCG procurement system, in addition to experience in the service field the firms wishes to compete in.

Figure 3: International ISPs also need to consider a range of commercial and operational issues that will affect their go-to-market approach in the UK

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Table of Contents

EXECUTIVE SUMMARY ......................................................................................... I

TABLE OF CONTENTS .................................................................................................. I

1. INTRODUCTION .......................................................................................... 2

1.1 CONTEXT ....................................................................................................... 2

1.2 OVERVIEW OF THE HEALTH AND SOCIAL CARE ACT 2012 ................................................ 2

1.3 PURPOSE OF THE REPORT ..................................................................................... 3

1.4 HOW THE NEW NHS IS STRUCTURED ....................................................................... 4

1.5 DEVELOPING THE CLINICAL COMMISSIONING GROUPS (CCGS) ......................................... 4

1.6 THE CCG PROCUREMENT PROCESS ......................................................................... 5

1.7 MARKET DEVELOPMENT, SIZE AND SCOPE .................................................................. 6

1.7.1 WHICH NHS SERVICES ARE GOING TO MARKET? ................................................ 8

1.7.2 POTENTIAL INDEPENDENT SECTOR/PRIVATE MARKET SIZE AND SCOPE ....................... 8

1.8 SEGMENTS OF INTEREST TO INTERNATIONAL PROVIDERS ............................................... 11

1.8.1 BEHAVIORAL HEALTH/MENTAL HEALTH ......................................................... 11

1.8.2 COMMUNITY HEALTH SERVICES .................................................................. 12

1.8.3 CHRONIC DISEASE MANAGEMENT ............................................................... 13

1.8.4 DIAGNOSTICS ...................................................................................... 13

1.8.5 ELDERLY AND END-OF LIFE CARE ................................................................ 14

1.8.6 HOME HEALTHCARE ............................................................................... 14

1.8.7 INTEGRATED HEALTHCARE SERVICES ........................................................... 15

1.8.8 PRIMARY CARE ..................................................................................... 15

1.8.9 MUSCOLOSKETAL SERVICES (MSK) ............................................................ 16

1.8.10 TELECARE/TELEHEALTH ........................................................................... 17

1.8.11 PREVENTATIVE HEALTH ........................................................................... 18

1.9 THE COMPETITIVE LANDSCAPE – A SELECTION OF PRIVATE PROVIDERS BY SERVICE SECTOR ........ 19

APPENDIX A: DETAILS OF KEY PROCUREMENT STAGES .................................... 21

APPENDIX B: PROCUREMENT DECISION TREE .................................................. 24

APPENDIX C: LIST OF ALL UK CCG’S ................................................................. 25

APPENDIX D: PREVENTATIVE HEALTH RECOMMENDED ACTIVITIES ................. 31

APPENDIX E: IN-DEPTH PRIVATE PROVIDER PROFILES ................................... 32

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1. Introduction

1.1 Context

The NHS is the name given the four publicly funded healthcare systems in the countries of

the United Kingdom. It was formed in 1948 following legislation passed in 1947. Each system operates independently, and is politically accountable to the relevant government: the Scottish Government, Welsh Government, the Northern Ireland Executive, and the UK Government which is responsible for England's NHS.

The NHS is now 66, but strained public finances mean it has become virtually impossible to preserve the NHS as it is without seriously damaging other important public services or

raising taxes significantly. The NHS in England has to find up to £20 billion (US$33.2Bn) of efficiency savings over the next four years, to cope with the gap between essentially flat

funding and rising demand and costs. Aware of this the incoming Conservative Government set about developing a radical reform process, which was legislated in the Health and Social Care Act of 2012.

1.2 Overview of the Health and Social Care Act 2012

The Health and Social Care Act 2012 introduced radical changes to the way that the NHS in England is organised. The legislative changes from the Act came into being on 1 April 2013 and include five key reforms:

A. A move to clinically led commissioning. Planning and purchasing healthcare services for local populations had previously been performed by England's 152 primary

care trusts (PCTs). The Act replaced the PCTs with 211 clinical commissioning groups (CCGs), led by clinicians. CCGs now control the majority of the NHS budget.

B. An increase in patient involvement in the NHS. The Act established independent

consumer champion organisations locally (Healthwatch) and nationally (Healthwatch England) to drive patient and public involvement across health and social care in England.

C. A renewed focus on the importance of public health. The Act provided the

legislation to create Public Health England (PHE), an executive agency of the Department of Health. PHE's aim is to protect and improve the nation’s health and to address health inequalities.

D. A streamlining of 'arms-length' bodies. The Act conferred additional responsibility on the National Institute for Health and Care Excellence (NICE – formerly the National Institute for Clinical Excellence) to develop guidance and set quality standards for social

care. The Health and Social Care Information Centre (HSCIC) was also tasked with responsibility for collecting, analysing and presenting national health and social care data.

E. Allowing healthcare market competition in the best interest of patients. The Act aimed to allow fair competition for NHS funding to independent, charity and third-

sector healthcare providers, in order to give greater choice and control to patients in choosing their care. To protect the interests of patients under these new arrangements,

Monitor was established as the sector regulator for health services in England. Monitor issues licences to NHS-funded providers, has responsibility for national pricing and tariff (in conjunction with NHS England) and helps commissioners ensure that local services continue if a provider is unable to continue providing services.

Implication - Clearly to independent sector/private providers the final of these five key

reforms represents the market opportunity. It is estimated that in the year July 2013 to June 2014, £13.5Bn (US$22.4Bn3) worth of contracts across all sectors were advertised. This compares to £3Bn (US$5Bn) in the previous year, a 347% increase year on year.4

3 Note all US to GBP conversion rates are based on the wholesale interbank rates of August 28th, 2014. Whereby 1 GBP = US1.66

4 *The 2013-2014 figure includes all contracts advertised through the Official Journal of the European Union and the Supply2Health website

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1.3 Purpose of the Report

The extensive reforms being undertaken at the NHS following the passing of the Health and Social Care Act of 2012 have opened previously unavailable opportunities for international healthcare providers to market their products and services to the NHS.

The purpose of this report is to provide international providers with a preliminary overview of potential opportunities that the new NHS structure presents for their firms. A particular focus of this report is the operations and commissioning structures of the 211 CCGs that will commission a wide range of healthcare services and products for their populations. We

will outline in detail the procurement process that is relatively standardized across the CGGs. We will also assess (as far as is possible with the information available) the size of the market;

Nationally across healthcare groups and services

By specific healthcare service/products that offer significant opportunities to

international providers. These include

o Diagnostics

o Community health o Residential homes, elderly and end-of-life care o Home healthcare o Integrated health services o Musculoskeletal health o Behavioral health (Mental Health)

o Telecare and Telehealth o Chronic disease management o Preventative health

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1.4 How the New NHS is Structured

Figure 4: The New NHS Structure

1.5 Developing the Clinical Commissioning Groups (CCGs)

Clinical commissioning groups (CCGs) are one of the main components of the government’s reforms to the health and social care system. In April 2013, these newly established, clinically led organizations replaced primary care trusts as the commissioners of most services funded by the National Health Service (NHS) in England, and now control around two-thirds of the NHS budget. There are 211 CCGs in England as of 2014.

In simple terms Clinical Commissioning Groups are groups of General Practices that work

together to plan and design local health services in England. They do this by 'commissioning' or buying health and care services including:

Secondary care

Community services

Mental health services

Rehabilitation services

All general practices in England are now legally obliged to be a member of a CCG. The

intention is to encourage clinicians to play a greater role in deciding how funds are spent in order to shape services to meet local needs. CCGs are responsible for commissioning primary, secondary and community care services for their local populations. Figure 5, below illustrates the CCGs footprint across Metropolitan London;

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Figure 5: Clinical Commissioning Group Footprints - Example London

Source: NHS.co.uk

1.6 The CCG Procurement Process

The process of procurement can be complex and time-consuming and a number of organisations have been set up to help with the process. CCGs and trusts can gain support

for the procurement process from the Commissioning Support Units specifically set up to support the CCGs, or from a number of other organisations, including what are known as regional procurement hubs and the central organisation NHS Shared Business Services.

If a CCG or a hospital trust wishes to procure a service it now has a number of options: it

can enlist the help of its local Clinical Commissioning Unit (CSU) or it could approach a regional procurement hub, HealthTrust Europe or NHS Shared Business Services to organise a competitive tendering process.

However there is also another option - the use of a framework agreement or pre-tendered contract. Framework agreements are negotiated by the hubs or other public procurement organisations, such as NHS Shared Business Services, HealthTrust Europe, NHS England and Monitor. A competitive tender process is carried out and depending on the amount of business under the framework, several companies are chosen to be on the framework. CCGs and trusts can then choose from the contracts available from the approved

companies. For example, in November 2013 NHS Shared Business Services advertised for providers for a framework agreement for patient transport. The value of the work offered under the Framework agreement is £515 million (US$855 million), which is likely to be split between many different companies successful in the tendering process. Once a framework agreement is in place, theoretically providers can be chosen by CCGs or Trusts

without the need for any further tendering process and out of public scrutiny.

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Figure 6: Outline of the Typical CCG Procurement Process

Source: 2014 NHS Procurement Guidelines for CCGS

In Appendix A, a more detailed description of the procurement process at each of the

stages illustrated above is outlined, while in Appendix B a procurement decision tree

framework used by the Barnsley CCG but common to most CCGs is illustrated. The decision tree guides procurement managers as to under what circumstances services should be put to competitive tender.

1.7 Market Development, Size and Scope

The figures provided in figure 5 below are from the Department of Health 2012/13 Annual Report. As indicated CCG commissioned services accounted for £93.7 Billion ($US155.5 Billion) in 2012/13. This constitutes 91% of all NHS spend in England (Note: this does not include NHS Scotland, Northern Ireland and Wales)

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Figure 7: The Flow of Money under the New Structure

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1.7.1 Which NHS Services are going to market?

In 2012 the government asked Primary Care Trusts (which in 2013 became Clinical Commissioning Groups) to select areas where it could license alternative providers to help create competition and extend patient choice. Known by the name Any Qualified Provider

or AQP this scheme allowed competition around a list of 53 treatments and types of community based care. This has since been extended and there are currently 77 types of care listed on the supply to health website where competition for patients is taking place. These are shown in figure 8 below

Figure 8: Services Which Any Qualified Provider May Bid For Include The Following

1.7.2 Potential Independent Sector/private Market Size and Scope

the 2012-2013 edition of Laing’s healthcare Market Review calculates that revenues generated by a wide range of independent providers delivering services such as elderly

care homes, homecare and private hospitals stood at £40.5Bn (US $67.2Bn) in 2012/13 (the last period that figures are available for). The ISP market value by each major sub-sector is shown in figure 9 below

This however is prior to the reforms of 2013 and with the greatly expanded list of services (now 77) available for tender to Any Qualified Provider (AQP) the current and future market will be considerably larger.

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Figure 9: UK Independent Healthcare Market Value by sub-sector

As a brief updated synthesis of the performance of the independent sector in the new regime, this sections begins with the key findings of an audit of contracts awarded by CCG’s to providers over the period July 2013 to June 2014. By reviewing contract value summaries and recording submissions and awards on the official websites Tenders

Electronic Daily-Supplement to the Official Journal of the European Union and Supply to Health we have been able to develop a picture of what services have been tendered, who

is winning them and how much money is involved.

Key Findings;

£13.5 billion (US$ 21.5 Billion) worth of contracts to run or manage clinically related NHS services were been advertised in the 12 months to June 2014. This is more than three times the value of the previous year.

70% of the contracts awarded (98) since June 2013 have gone to private providers.

The types of care most involved in tendering and the Any Qualified Provider scheme are Diagnostics (93 contracts), Mental Health (37 contracts), Pharmacy (33), Home Care (30), GP services and Out-of-Hours (25), Musculoskeletal Services (21), and Community Health (17).

Contracts to provide community healthcare (which often includes Mental Health) typically cover the widest range of care – often catering for the complex health needs

of older patients. A number of CCGs have chosen to bundle these services into a single super tender. One such contract to provide community health services in Cambridgeshire and Peterborough is the most wide ranging yet and is worth (£800m-£1bn+).

In our sample from TED and Supply to Health, mental health and GP services were those most frequently involved in competition and outsourcing in the period June to December

2013. These are also areas where private sector involvement has been longer established. However there is now a far wide range of treatment and care that alternative providers to the NHS are now able to bid to run or manage.

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Figure 10: Services Most Frequently Procured Through the Market (June to Dec 2013)

Source – Tenders Online Daily, Supply to Health

The ten CCGs with the largest spend on non-NHS providers in the year June 13 to July 14

are shown in figure 11 below.

Figure 11: July 2013 – June 2014: CCGs with the Highest Spend on Non-NHS Providers. GBP Million

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1.8 Segments of Interest to International Providers

1.8.1 Behavioral Health/Mental Health

Outpatient mental health services are predominately provided by community health and this appears to be one of the areas of greatest opportunities for ISPs/private providers.

Mental Health services were the second most commonly outsourced services in the six months to December 2013. It should be noted that many mental health contracts are being bundled with integrated community health service contracts that encompass a range of services. This often necessitates ISPs to form consortiums with other services providers to

bid for the bundled community services contracts.

Allocation of spending on mental health services to ISPs has continued to rise year on year. Funding for independent sector mental health service providers increased by 15 per cent in real terms between 2011/12 and 2012/13 alone while funding for NHS provided mental

health service decreased by five per cent. ISP’s share of the mental health services market increased from 12% to 17.5% in just one year to 2012/13.

Figure 12: Expenditure on mental healthcare by service providers, 2010/11 to 2012/13 (£billion)

Recent Community Health Contracts Awarded to ISPs

In February 2014, Cumbria CCG awarded an £13.8 million ($US 23 million) one year mental health contract to the Priory Group

June 2014, Birmingham Children’s Hospital Foundation Trust selected a consortium of

public, private and voluntary organizations to deliver mental health services for young

people in Birmingham. The five year contract is worth £100 million (US$166 million). The consortium comprises the public organizations Birmingham Children’s Hospital, Worcestershire Health and Care Trust and Birmingham Metropolitan College. They are

joined by two private companies – the Priory Healthcare Group and mental health

consultancy Beacon UK – and by The Children’s Society, a charity.

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1.8.2 Community Health Services

The government has now opened up 69 community health services to competition. The services include some child and adolescent mental health services, diagnostics and weight management. Private companies and charities can now apply to join a list of approved

health providers alongside existing NHS services. The idea is that NHS patients are given a choice of providers - with the help of their GP. Each provider, including existing NHS services will be paid according to how many NHS patients choose their service. In 2012/13 20% of all expenditure on community health services was spend on care provided by ISPs; an increase of 34% on the prior year.

Figure 13: Annual change in CCG spending on independent sector providers (ISPs) and NHS providers of community health services

The proportion (by value) of community health services provided by the independent sector increased from 12 per cent in 2010/11 to 18 per cent in 2012/13

Figure 14: Expenditure on community healthcare by service providers (£billion)

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Recent Community Health Contracts Awarded to ISPs

In March 2013: Serco was awarded a three-year £140 million (US $232 million) contract to provide community health services for NHS Suffolk. Serco will provide community and specialist nursing, the management and operation of community

hospitals, speech and language therapy, specialist children’s services and equipment services.

October 2013 - Virgin Care won the £500m (US $830 million) Surrey community services. It involves eight community hospitals in south west and north west Surrey, as well as sexual health services and prison healthcare across the whole county.

April 2014, The Calverdale CCG community health contract worth £1,055,000 (US $1.75 Billion) per annum has been put to tender. It requires the development of a

multidisciplinary team built on primary care and supported by specialists including geriatric medicine, community nursing, mental health and rehabilitation.

April 2014, Bristol CCG has put its £250 million (US $415million)community health services to tender, 17 providers has entered the process including 12 ISPs

1.8.3 Chronic Disease Management

The combined effect of a rising number of people with chronic conditions being admitted

to hospital, plus the growth and ageing of the population, will increase total pressure on hospitals and other acute services in England by three per cent a year in real terms. As a result the NHS is looking to move where feasible, patients with chronic conditions to a home care service model.

Recent Chronic Disease Contracts Awarded to ISPs

May 2014, South East Staffordshire awarded the 3 year Pulmonary Rehabilitation Service contract for the management of Chronic Obstructive Pulmonary Disease

(COPD) for 450 eligible patients to BOC Health Ltd. The contract value is £350,000.

1.8.4 Diagnostics

Common diagnostic services include pathology, radiology services, endoscopy and cystoscopy services (endoscopy procedures look inside the bowel and stomach and cystoscopy procedures look inside the bladder) and laboratory services (tests on blood and tissue samples).

A number of these services have been open to competition for several years and there are

many ISPs competing in the sector.

As of 2012 Pathology services in the UK are primarily delivered by the NHS, which accounts for 70% of the market. It is estimated that the pathology service market is worth £2.5 bn (US$ 4.15 Billion) per annum. Companies such as Spire Pathology Services, Quest Diagnostics, Unilabs-IHS, GSTS and Integrated Pathology Partnerships operate in this market.

Recent Diagnostics Contracts Awarded to ISPs

In June 2014, Basildon and Thurrock University Hospitals Foundation Trust teamed with the private laboratory Integrated Pathology Partnerships, to reconfigure and run pathology services across south Essex; the contract is valued at £135 million over five years.

June 2014, 4Ways Healthcare Limited won a two year contract for medical imaging

services from the East of England Collaborative Procurement Hub at a value of £6.8 million ((US $11.3 million)

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1.8.5 Elderly and End-of Life Care

The number of residential care homes (without nursing care) was 12,848 at the end of 2012/13. The number of registered nursing homes was 4,664 homes. The number of nursing home beds was 218,678 in 2012/13.

Residential care home provision, comprises 7,420 registered home care agencies. Other community care services, such as supported living comprised 2,034 registrations at the end of 2012/13.

The combined value of the care market for older people alone (Local Authority funded, voluntary and private expenditure), is estimated to be worth £22.2 billion (US $ 37.2 Bn), of which £13.4 billion is attributable to residential care and £8.8 billion to non-residential care.

Around 92% of care home places are provided by the independent sector across the UK. About 89% of home care hours purchased by councils in England are provided by the

independent sector. The remaining 11% are provided in house by Local Authorities.

Several ISPs have recently been investing in the high end sector of the care home market. For example, Barchester, Sunrise Senior Living, and Maria Mallaband Care. The Anchor Trust has also recently invested in a high priced care home in Surrey. In July 2013

Four Seasons announced its intention to invest in the market for self-funded residential care.

Recent Elderly Care Contracts Awarded to ISPs

September 2014: Virgin Care won a contract from Cambridgeshire and Peterborough CCG to run services for older people, including end of life care. The contract is worth £750 million to £1.1 billion.

August 2014, Avery Healthcare Services won the contract to provide nursing

services to elderly residential homes on behalf of the Northhampton General Hospital

Trust at a value of £8 million over two years.

May 2014, NHS Devon CCG awarded Bluebird Care and Support a Personal Care for End of Life, a two contract valued at £4.5 million.

1.8.6 Home Healthcare

Moving patient care out of acute hospitals and into the community has been a UK-wide priority for over a decade. The majority of people in receipt of homecare receive it through

local social services, which assesses need for help according to certain eligibility criteria. Most councils contract out the supply of homecare services to the independent sector, which now provides over four fifths of publicly funded homecare.

However the homecare market appears to offer limited value to international providers, because with council budget cuts in recent years the independent sector is finding that contract prices offered by local authorities often fail to keep

pace with inflation and other statutory burdens on employers and prioritize cost over quality.

To illustrate in 2011-12 the average unit cost of “in house” local authority homecare had risen to £35.50, while the average unit cost of homecare to authorities from using independent providers was £14.70. Effectively the independent sector is operating at less than half the cost of the statutory sector.

During 2011-12 an estimated total of 517,000 adults of all ages received homecare through

their local authority

Gross annual public expenditure on older people’s homecare in 2011-12 was an estimated £3.2 billion (US $5.3Bn), and overall expenditure on day and domiciliary care across all adult age groups totaled nearly £7.8 billion (US $ 13Bn).

The main purchasers of homecare are local authorities who are estimated to buy 80% of the hours of care provided by the independent sector

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Recent Home Health Care Contracts Awarded to ISPs

July 2014, BUPA Home Healthcare was awarded the home delivery parenteral chemotherapy and parenteral biologics for the Derby CCG at a value of £8.5 million over three years.

1.8.7 Integrated Healthcare Services

The healthcare services will include but not be limited to: Primary Care, GP and Nursing services, Healthcare Administration, Mental Health Services, Sexual Health, Services, Clinical Substance Misuse Services, Allied Healthcare Services (e.g. Chiropody/Podiatry, Physiotherapy etc), Pharmaceutical Services, Dental Services, Radiology Services, Continuity of Care and in some cases as shown in figure 15 below social services are brought into a region’s integrated care framework.

Figure 15: Example north Norfolk Integrated Care Model

Recent Integrated Healthcare Contracts Awarded to ISPs

June 2014, G4S won a 5 year integrated Healthcare Services contract for four immigration removal centres valued at £55.4 million.

April 2014, Virgin Care was awarded the Integrated Healthcare contract at HMPs Norfolk and Waveney worth £54.5 million over three years.

1.8.8 Primary Care

Primary care includes GP services, dental, pharmaceutical services, prescribing costs, ophthalmic services and range of other services. In 2012/13 NHS expenditure on primary care was £21.4 Billion ($US 35.5 Billion). The costs and sector share of each primary care service is shown in figure 16 below.

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Figure 16: Primary & Secondary Care Expenditure and Share of Market, 2011/12 & 2012/13

Recent Primary Care Contracts Awarded to ISPs

In May 2013, Virgin Care was awarded the contract to manage primary care at HMP Bullingdon in Bicester.

April 2013, Medacs Healthcare was awarded GP services contracts for Derbyshire CGG values at £8.8million per annum.

1.8.9 Muscolosketal Services (MSK)

Muscolosketal services in 2010/11 MSK accounted for £5 Billion in expenditure. The NHS intention is to move a majority of hospital outpatient services to a community setting;

including muscolosketal services.

The MSK services considered appropriate (on a case by case basis) for community care include;

Physiotherapy services

Rheumatology services

Trauma and Orthopaedic services

MSK related Podiatry services

Recent Muscolosketal Services Contracts Awarded to ISPs

In October 2012, Virgin Care took over the running of physiotherapy services at the Conquest Hospital in Sussex.

In August, 2014, Bedfordshire Clinical Commissioning Group awarded its’ five year £120m contract for musculoskeletal integrated service to private provider Circle. The contract will see Circle organise the service which was previously handled by more than

20 separate contracts.

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1.8.10 Telecare/Telehealth5

The use of telecare has evolved rapidly in the UK, telehealth is a more recent development, but the use of telehealth in the UK is accelerating, putting the country at the forefront in Europe. In England, the expansion has been driven by initiatives such as the Department

of Health's (Department's) Whole System Demonstrator Programme; the “3 Million Lives campaign” and the Concordat between the Department and the telecare and telehealth industry. There have also been national initiatives in Scotland, Northern Ireland and Wales.

Currently, the UK telecare market is most mature for first generation telecare (social alarms), which are widely used compared to second-generation equipment like tracking sensors, and third-generation equipment like ambient assisted living devices.

The UK is arguably a leading nation in this respect with a total estimated annual spend of

£106 (US$ 176 million) million in 2010 (compared to £154.8 million in Europe). Projected

spend in the UK by 2015 is £251 million (US$ 416 million) (a 12.5 percent compound annual growth rate (CAGR), compared to £277 million in Europe.

The estimated spend on telehealth in Europe in 2010 was some £148 million, of which £35.7 million (US$57.7 million) was spent in the UK. This spend is expected to increase to £296 million and £70 million (US$116 million) respectively by 2015. The combined UK

telecare and telehealth market was £141.7 million (US$ 235 million) in 2010 and is expected to reach £320 million (US$ 531 million) by 2015.

In the UK, the telecare and telehealth market is highly fragmented with over 80 players, including over 25 players on the National Telehealth Framework. Tunstall is the dominant player, providing telecare sensors, monitoring software and monitoring centres. Other leading firms include Doboco, O2 Healthcare, Chubb Community Care, Just Checking, Phillips Healthcare, Care Innovation, Bosch, Tynetec, Telesupport and

Invicta Telecare.

The telecare market in 2010 comprised 90 percent public and 10 percent private spending. There were around 1.6 million users each spending on average around £66 (US$ 110) on telecare (including alarm installation and response centres). The highest penetration of telecare was within the over 65 age group. The Department of Health estimates that the total income from telecare in the UK could rise to £7.15 billion (US$11.9 Billion) by 2020, a growth rate of 19 percent from 2010. The market for private response centres could

exceed this growth rate as local authorities move to more outsourcing.

Figure 17: The Potential UK Telecare Market

5 2014 – Deloitte Life Sciences; Global Review of Telecare and Telehealth Markets

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Preliminary research seems to indicate telehealth services to represent a significant mid-

long term market opportunity for private providers. Not only has the government made the widespread adoption of telehealth a strategic priority, but clearly the margins and value of telehealth services to providers are far greater than telecare. Additionally it is likely the

competitive space at present is less crowded than telecare, which would potentially provide first mover advantage to secure significant market share.

1.8.11 Preventative Health

Objectives of the Service

Provide comprehensive, integrated lifestyle services across priority areas

Reduce health inequalities and decrease the life expectancy gap

Provide services that meet individual needs including those of marginalised communities

Offer interventions based on current evidence-based practice and develop innovative solutions

Work with the CCGs to decrease the prevalence of smoking over the next five years.

Key NHS Service Provision

Adult Weight Management

Child Weight Management

Smoking Cessation

Consistent and accurate messaging

Health Trainers

Outreach NHS Health Checks

Signposting

Integration and Innovation

In Appendix D an illustration of the UK NHS recommended Preventative Health activity programmes and stages is illustrated. Also the perceived role of the three entities, public sector, non-profit and private sector in the preventative health programme going forward is outlined in Appendix D

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1.9 The competitive landscape – A selection of private providers

by service sector they have bid for

GP / COMMUNITY CARE

Virgin Care / Assura 24 networks of GP provider companies, each comprises several GP surgeries, probably over 400 GP surgeries altogether. Also delivery of community services, musculoskeletal, sexual health, integrated children’s services. Rapidly expanding judging by press releases in 2012.

Care UK Day care and homes for elderly. GP services, diagnostics, CATS, treatment centres, mental health services (eating disorder service), learning disability services.

The Practice Provider of primary care services and delivers specialist clinical services to GPs, the MoD and PCTs. Network of surgeries. Acquired United Health Primary Care in 2011 from United Health UK – six practices. Recent contract to provide ENT services in London, ophthalmology services in Dorset, cataract services in Croydon.

United Health Wide range of services for NHS – Health Needs assessment, GP Commissioning, clinical services redesign, performance & contract management, Care solutions, Medicines management. No longer involved with GP practices

Harmoni Large range of services, including out of hours, NHS 111, GP-led health centres.

Serco Range of services, including out-of-hours, prisons, long-term condition management e.g., contract to run all of Suffolk community health services

Nestor Primecare Home care, care homes, mental health services, children’s services, out-of-hours, dentistry and primary care (as Primecare).

HOSPITALS

Circle Private hospitals: Circle Bath, Circle Reading; clinics: Windsor, Nottingham; NHS hospitals: Hinchingbrooke

General Healthcare (BMI, Netcare)

Owned by General Healthcare with over 70 facilities UK-wide. GHG also consists of Care Fertility, a private specialist in fertility treatment, and Netcare, a network of clinics set up in 2002 in the UK by South African company Netcare, which undertakes work under contract to the NHS.

Spire / Classic Second largest private healthcare hospital group in the UK with 37 hospitals. The major part of Spire’s business (61% in 2010) is from the private medical insurance market, but NHS admissions accounted for 25% of its business in 2010, followed by 14% from self-paying customers.

HCA International HCA International is one of the smaller private hospital groups in the UK, with a network of only six hospitals and four outpatient clinics, all in the London area. Partnerships with leading NHS hospital trusts.

Ramsay (plus Capio) Ramsay Health UK has a network of 22 acute hospitals in the UK delivering both private treatment and care under contract to the NHS.

MENTAL HEALTH SERVICES

Partnerships in Care Largest independent provider of secure mental health facilities across the UK.

Priory Group Provider of acute mental health care, secure and step down services, specialist education, complex care and neuro-rehabilitation services, fostering and care homes.

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DIAGNOSTICS

Alliance (Lodestone) Diagnostics for the NHS and independent sector.

InHealth Group Ltd InHealth provide diagnostics for NHS patients throughout the UK and Ireland.

IT

Capita IT, patient engagement, HR, payroll, estates

CapGemini IT

McKesson IT

Atos Healthcare Atos Healthcare is a business division of Atos Origin, a leading International information technology (IT) services company, providing Hi-Tech Transactional Services, Consulting, Systems Integration and Managed Services for healthcare services

Residential Homes/Elderly &

End of Life Services

Care UK Ltd Residential and nursing care homes (also primary and secondary healthcare)

BUPA Care Services BUPA Care Homes (CFG) PLC is a division of the medical insurer

British United Provident Association. The company has over 300 care homes in the UK, offering expert residential, respite and nursing care, and specialist homes in dementia and other conditions. 70% of BUPA’s care home residents are state-funded.

Four Seasons Health Care Four Seasons owns and operates over 400 care centres and nursing homes, employing over 21,000 staff. Its Care Homes division provides services include dementia care, short-term respite care and end-of-life palliative care

Barchester Healthcare. Barchester Healthcare Ltd is a UK leading care home provider which Caters primarily for self-paying elderly residents. The company now cares for more than 10,000 people at over 200 different locations across the UK

Note – Appendix C contains detailed profiles of the major private providers active in tendering for NHS contracts

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Appendix A: Details of Key Procurement Stages

Figure 18: Procurement Stages

The key stages of the procurement process for the CCG Services

Pre-Qualification Stage – requirements and evaluation

Invitation to Submit Outline Solution Stage

Dialogue Stage

Invitation to Submit Final Tender Stage

Some early key Commercial Terms

Timescales and next steps for Potential Bidders

Pre Qualification – The Market Engagement Event (Action 4 on the model above)

Purpose:

Facilitate a fair, open and transparent procurement process

Take feedback from the market on interest in the procurement

Allow Bidders an opportunity to speak to the team and ask questions

Help bidders and the CCG understand market barriers and deliverability

Helpful for Providers that are not familiar with the process

Provide an understanding of the process the CCG’s requirements

Facilitate a better quality response to Pre-Qualification Questionnaire (PQQ) process

Ensure bidders are clear on the rules of the procurem

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Pre-Qualification Questionnaire (PQQ) (Action 6)

This is the first stage of the selection process

The PQQ seeks to test the Potential Bidders across three areas:

o Capacity and Capability (“technical ability”) (procurement and services)

o Economic and Financial Standing; and

o Eligibility to enter into a public services contract.

Requirements will be appropriate to the scale / scope of services to be procured

Outcome: a short-list of Bidders to take forward to Invitation to Submit an Outline Solution

Taking forward between 3-5 Bidders to the Invitation to Submit Outline Solution

Invitation to Submit Outline Solution (“ISOS”) and Invitation to Submit Final Tender

(“ISFT”) – About the Bid / solution

PQQ Evaluation Result

To pre-qualify a Potential Bidder must:

Have no outstanding (or insolvable) “red-flags”;

Score above a predetermined level (e.g. 2.00 on scale of 0-4) under the Capability & Capacity Criteria

Pass the Financial & Economic Standing criteria

Be Eligible under the Public Contract Regulations

Output is a “long-list” of pre-qualified Potential Bidders given and Invitation to Submit Outline

Solution (“ISOS”)

Invitation to Submit Outline Solution (“ISOS”) (Action 7)

The CCG will provide detailed requirements for the delivery of services

Bidders will be required to present their outline solutions to how they will meet the CCGs requirements

The outline solution is evaluated – but there is no ‘final-selection’ during this stage.

Dialogue with bidders (Action 8)

Following evaluation of Bidders’ outline solutions, dialogue meetings will be held with each Bidder

The meetings will seek to establish:

Further details behind the proposals put forward by Bidders

Discussions on how the service specification can be updated to add extra value to services and allow increased cost effectiveness

Discussion on potential output measures that can be put in place

Following the Dialogue stage – the CCG will work to finalise the specification for services – which will then be subject to a final consultation

Invitation to Submit Final Tender (“ISFT”) (Action 10)

A final specification is provided to Bidders

Bidders are requested to put forward their final detailed proposals for delivery of the requirement and the final Bid Price

Evaluation of the final tender will result in [one] preferred bidder being selected to take forward to contract award stage

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The procurement process can be long, an example below from the Brent CCG for home

based Musculoskeletal Services essentially took 12 months, from announcement to service commencement.

Figure 19: Procurement Timeline Example-Brent CCG MSK Services

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Appendix B: Procurement Decision Tree

Figure 20: Barnsley CCG Procurement Decision Tree

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Appendix C: List of All UK CCG’s

CCG Name Commissioning Board Region

NHS Airedale, Wharfedale and Craven CCG North

NHS Bradford City CCG North

NHS Bradford Districts CCG North

NHS Leeds North CCG North

NHS Leeds South and East CCG North

NHS Leeds West CCG North

NHS Coventry and Rugby CCG Midlands and East

NHS South Warwickshire CCG Midlands and East

NHS Warwickshire North CCG Midlands and East

NHS Bath and North East Somerset CCG South

NHS Wiltshire CCG South

NHS Bedfordshire CCG Midlands and East

NHS Luton CCG Midlands and East

NHS Bracknell and Ascot CCG South

NHS Newbury and District CCG South

NHS North & West Reading CCG South

NHS Slough CCG South

NHS South Reading CCG South

NHS Windsor, Ascot and Maidenhead CCG South

NHS Wokingham CCG South

NHS Birmingham CrossCity CCG Midlands and East

NHS Birmingham South and Central CCG Midlands and East

NHS Solihull CCG Midlands and East

NHS Dudley CCG Midlands and East

NHS Sandwell and West Birmingham CCG Midlands and East

NHS Walsall CCG Midlands and East

NHS Wolverhampton CCG Midlands and East

NHS Dorset CCG South

NHS Bristol CCG South

NHS North Somerset CCG South

NHS South Gloucestershire CCG South

NHS Calderdale CCG North

NHS Greater Huddersfield CCG North

NHS North Kirklees CCG North

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CCG Name Commissioning Board Region

NHS Wakefield CCG North

NHS Cambridgeshire and Peterborough CCG Midlands and East

NHS Eastern Cheshire CCG North

NHS South Cheshire CCG North

NHS Vale Royal CCG North

NHS Warrington CCG North

NHS West Cheshire CCG North

NHS Wirral CCG North

NHS Kernow CCG South

NHS Cumbria CCG North

NHS Erewash CCG Midlands and East

NHS Hardwick CCG Midlands and East

NHS North Derbyshire CCG Midlands and East

NHS Southern Derbyshire CCG Midlands and East

NHS North, East, West Devon CCG South

NHS South Devon and Torbay CCG South

NHS Gloucestershire CCG South

NHS Swindon CCG South

NHS Bolton CCG North

NHS Bury CCG North

NHS Central Manchester CCG North

NHS Heywood, Middleton & Rochdale CCG North

NHS North Manchester CCG North

NHS Oldham CCG North

NHS Salford CCG North

NHS South Manchester CCG North

NHS Stockport CCG North

NHS Tameside and Glossop CCG North

NHS Trafford CCG North

NHS Wigan Borough CCG North

NHS East and North Hertfordshire CCG Midlands and East

NHS Herts Valleys CCG Midlands and East

NHS East Riding of Yorkshire CCG North

NHS Hull CCG North

NHS North East Lincolnshire CCG North

NHS North Lincolnshire CCG North

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CCG Name Commissioning Board Region

NHS Ashford CCG South

NHS Canterbury and Coastal CCG South

NHS Dartford, Gravesham and Swanley CCG South

NHS Medway CCG South

NHS South Kent Coast CCG South

NHS Swale CCG South

NHS Thanet CCG South

NHS West Kent CCG South

NHS East Leicestershire and Rutland CCG Midlands and East

NHS Leicester City CCG Midlands and East

NHS West Leicestershire CCG Midlands and East

NHS Lincolnshire East CCG Midlands and East

NHS Lincolnshire West CCG Midlands and East

NHS South Lincolnshire CCG Midlands and East

NHS South West Lincolnshire CCG Midlands and East

NHS Halton CCG North

NHS Knowsley CCG North

NHS Liverpool CCG North

NHS South Sefton CCG North

NHS Southport and Formby CCG North

NHS St Helens CCG North

NHS Darlington CCG North

NHS Durham Dales, Easington and Sedgefield CCG North

NHS North Durham CCG North

NHS Great Yarmouth & Waveney CCG Midlands and East

NHS North Norfolk CCG Midlands and East

NHS Norwich CCG Midlands and East

NHS South Norfolk CCG Midlands and East

NHS West Norfolk CCG Midlands and East

NHS Barnet CCG London

NHS Camden CCG London

NHS Enfield CCG London

NHS Haringey CCG London

NHS Islington CCG London

NHS Barking & Dagenham CCG London

NHS City and Hackney CCG London

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CCG Name Commissioning Board Region

NHS Havering CCG London

NHS Newham CCG London

NHS Redbridge CCG London

NHS Tower Hamlets CCG London

NHS Waltham Forest CCG London

NHS Newcastle North and East CCG North

NHS Newcastle West CCG North

NHS North Tyneside CCG North

NHS Northumberland CCG North

NHS Brent CCG London

NHS Central London (Westminster) CCG London

NHS Ealing CCG London

NHS Hammersmith and Fulham CCG London

NHS Harrow CCG London

NHS Hillingdon CCG London

NHS Hounslow CCG London

NHS West London (K&C & QPP) CCG London

NHS Bexley CCG London

NHS Bromley CCG London

NHS Greenwich CCG London

NHS Lambeth CCG London

NHS Lewisham CCG London

NHS Southwark CCG London

NHS Gateshead CCG North

NHS South Tyneside CCG North

NHS Sunderland CCG North

NHS Croydon CCG London

NHS Kingston CCG London

NHS Merton CCG London

NHS Richmond CCG London

NHS Sutton CCG London

NHS Wandsworth CCG London

NHS Hartlepool and Stockton-on-Tees CCG North

NHS South Tees CCG North

NHS Mid Essex CCG Midlands and East

NHS North East Essex CCG Midlands and East

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CCG Name Commissioning Board Region

NHS West Essex CCG Midlands and East

NHS Hambleton, Richmondshire and Whitby CCG North

NHS Harrogate and Rural District CCG North

NHS Scarborough and Ryedale CCG North

NHS Vale of York CCG North

NHS Corby CCG Midlands and East

NHS Milton Keynes CCG Midlands and East

NHS Nene CCG Midlands and East

NHS Mansfield & Ashfield CCG Midlands and East

NHS Newark & Sherwood CCG Midlands and East

NHS Nottingham City CCG Midlands and East

NHS Nottingham North & East CCG Midlands and East

NHS Nottingham West CCG Midlands and East

NHS Rushcliffe CCG Midlands and East

NHS Aylesbury Vale CCG South

NHS Chiltern CCG South

NHS Oxfordshire CCG South

NHS Blackburn with Darwen CCG North

NHS Blackpool CCG North

NHS Chorley and South Ribble CCG North

NHS East Lancashire CCG North

NHS Fylde & Wyre CCG North

NHS Greater Preston CCG North

NHS Lancashire North CCG North

NHS West Lancashire CCG North

NHS Somerset CCG South

NHS Basildon and Brentwood CCG Midlands and East

NHS Castle Point, Rayleigh and Rochford CCG Midlands and East

NHS Southend CCG Midlands and East

NHS Thurrock CCG Midlands and East

NHS Barnsley CCG North

NHS Bassetlaw CCG North

NHS Doncaster CCG North

NHS Rotherham CCG North

NHS Sheffield CCG North

NHS Fareham and Gosport CCG South

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CCG Name Commissioning Board Region

NHS Isle of Wight CCG South

NHS North East Hampshire and Farnham CCG South

NHS North Hampshire CCG South

NHS Portsmouth CCG South

NHS South Eastern Hampshire CCG South

NHS Southampton CCG South

NHS West Hampshire CCG South

NHS Cannock Chase CCG Midlands and East

NHS East Staffordshire CCG Midlands and East

NHS North Staffordshire CCG Midlands and East

NHS South East Staffs and Seisdon and Peninsular CCG Midlands and East

NHS Stafford and Surrounds CCG Midlands and East

NHS Stoke on Trent CCG Midlands and East

NHS Ipswich and East Suffolk CCG Midlands and East

NHS West Suffolk CCG Midlands and East

NHS East Surrey CCG South

NHS Guildford and Waverley CCG South

NHS North West Surrey CCG South

NHS Surrey Downs CCG South

NHS Surrey Heath CCG South

NHS Brighton & Hove CCG South

NHS Coastal West Sussex CCG South

NHS Crawley CCG South

NHS Eastbourne, Hailsham and Seaford CCG South

NHS Hastings & Rother CCG South

NHS High Weald Lewes Havens CCG South

NHS Horsham and Mid Sussex CCG South

NHS Herefordshire CCG Midlands and East

NHS Redditch and Bromsgrove CCG Midlands and East

NHS Shropshire CCG Midlands and East

NHS South Worcestershire CCG Midlands and East

NHS Telford & Wrekin CCG Midlands and East

NHS Wyre Forest CCG Midlands and East

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Appendix D: Preventative Health Recommended Activities

Figure 21: UK Preventative Health Activity Guidelines

Figure 22: Perceived Role of Enties in Preventative Health

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Appendix E: In-Depth Private Provider Profiles

Virgin Care Ltd

Virgin Care Ltd was founded in March 2010 when Virgin acquired a majority stake in Assura Medical; the renaming took place in March 2012. Assura began life in 2003 as a property investment company, The Medical Property Investment Fund Limited (MPIF), which then became Assura Medical in 2006. The property arm of Assura continues to trade as a separate company listed on the LSE as Assura Group Ltd.

Primary care and community care. Virgin Care has two arms to its business: 24 GP-led provider companies that provide NHS services through networks of GP surgeries; and community-based NHS services

In October 2012 Virgin Care announced that it would be taking over all jointly owned GP-provider companies, to give Virgin Group 100% ownership of Assura Medical. Over 300 GPs had to relinquish stakes in the partnership. Previously, each GP provider company was owned 50% by the surgery GPs and 50% by Virgin; each GP provider company was run by a board consisting of locally elected

GPs and one Virgin representative. Each GP-led provider company consists of a network of a number

of GP surgeries, some of only three surgeries whilst others contain over 20 surgeries. Altogether 358 surgeries were listed as being part of these provider companies in mid-2012.

Assura Medical, prior to its takeover by Virgin Care, also tendered for contracts with PCTs and won a number of community-based services, including a musculoskeletal service in Hampshire, a dermatology service in Reading and sexual health services in Teeside. Since Virgin’s takeover of Assura Medical, the company has targeted much larger, more high profile contracts with the NHS.

The most recent financial data for Virgin Care are the accounts filed with the UK Companies House for the year ending 31 March 2012; this was prior to acquisition of 100% of Virgin Care by the Virgin Group. Virgin Care had revenue of £1.4 million in 2012 and a net loss of £9.9 million.

In March 2010 Richard Branson’s Virgin group bought a majority share of the medical division of Assura Group setting up Assura Medical as a company in its own right. Although GPs still had a stake in the GP provider companies, Virgin Care had the controlling stake in the company as a whole. With

the October 2012 announcement of an ending of the 50:50 GP-provider companies, the Virgin Group will have complete ownership of the business.

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Prior to the takeover by Virgin Care, Assura was extremely successful at winning contracts through its GP partnership companies, with in 2009 around 68 NHS contracts and 12 contracts awarded for GP-led health centres. In mid-2013 Virgin Care reported that it operates over 200 services including community-based intermediate NHS services, GP-led walk-in and healthcare centres, urgent care

centres, out of hours, community diagnostics and GP practices. As Virgin Care alone the company has gained some large contracts and is tendering for many more, including as follows:

September 2013: Virgin Care was among a shortlist of four ISPs/private providers for a contract from Cambridgeshire and Peterborough CCG to run services for older people. The contract is worth £750 million to £1.1 billion. The company or consortium that is awarded lead provider status will both provide services for older people, including end-of-life care, and be responsible for coordinating care for older people.

May 2013: Contract to manage primary care at HMP Bullingdon in Bicester.

July 2012: Virgin Care awarded preferred bidder status by NHS Devon and Devon County Council for a contract to run a range of core NHS and social care services for children and young.

June 2012: Virgin Care and GPs provide a new sexual health service in Oldham.

June 2012: Virgin Care selected as preferred bidder by NHS Sussex for a contract to provide a new community musculoskeletal service in Hastings and Rother.

March 2012: Virgin Care signed a contract with NHS Surrey to deliver community services across much of the county from 2012 to 2017. The £500 million contract covers community health services in South West and North West Surrey, as well as some provided county-wide such as prison healthcare and sexual health services. The services will continue to be known as Surrey Community

Health providing NHS healthcare for Surrey patients.

December 2011: Virgin Care selected as preferred bidder by NHS Coventry to provide health services at the Anchor Centre and Meridian Practice for the homeless, asylum seekers and refugee

patients in the city.

October 2011: Assura Medical chosen as preferred bidder to provide the urgent care service at Croydon University Hospital.

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Care UK Ltd

Founded in 1982 as Anglia Secure Homes. In 1994 the company became Care UK plc and in 2010 Care UK Ltd. Founded by John Nash (Chairman 1992-2010), venture capitalist.

Primary and secondary healthcare, residential and nursing care homes, community care and support for people with learning disabilities, mental health services and out-of-hours services.

Care’s product and service portfolio includes eight NHS treatment centres, 12 GP-led healthcare centres, four GP out-of-hours services, four NHS Clinical Assessment & Treatment Services (CATS), primary care services in 13 prisons, 90 nursing and/or residential care homes with more than 3,500

beds, 118,000 hours of homecare a week, 17 mental health homes and hospitals and learning

disabilities services for 550 individuals

Its acquisition of Harmoni in November 2012 added Out of Hours GP care covering approximately 8 million people, plus additional GP-led health centres, referral management centres, 111 telephone services, offender healthcare, urgent care and IT services.

Care UK has grown through a process of acquisition and organic growth. Recent acquisitions include in 2011, 27 homes from Southern Cross, following the companies collapse, adding around 1,550

beds and in July 2012 Whitwood Care Limited, a residential learning disabilities provider based in Yorkshire. Care UK is also actively building new care homes.

A notable move in November 2012 was the acquisition of Harmoni for £48 million, significantly expanding Care UK’s OOH business, including 12 NHS 111 contracts, and prison healthcare business. Following the deal Care UK is reported to provide unscheduled care to approximately 15 million people across England.

Harmoni has been active in the development of telehealth, most recently in May 2012, Harmoni, the Qatar Science & Technology Park (QSTP), and Corinium Technologies signed an agreement to use RASAD, an ICT telehealth platform developed and owned by Qatar Science & Technology Park (QSTP) and ASPETAR (the Gulf region’s first orthopaedic and sports medicine hospital in Doha), as part of the UK’s long term health care management programme. Harmoni will use RASAD to remotely monitor patients with conditions that require regular medical observation, such as pulmonary vascular disease.

For the financial year ending September 2012 Care UK reported total revenue of £490.3 million and a net loss of £4.1 million. It is estimated that following the acquisition of Harmoni, Care UK will have a turnover of £700 million.

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In March 2010 Care UK was acquired by Bridgepoint in a deal worth £432 million and Care UK was removed from the public markets. At the same time Care UK’s management and Bridgepoint noted that they had identified a string of potential acquisition targets.

Care UK has a large number of contracts with PCTs and local councils. An example of recently won

contracts reported in late 2012 are to operate two GP practices in Newcastle and an out of hours service across Hampshire. The future of Care UK's walk-in clinics is uncertain, however, due to the transfer of NHS budgets to new clinical commissioning groups on 1 April 2013. As a result, Care UK has had to close walk-in centres in Newcastle, London Victoria and Liverpool and others may follow.

Social Care

Residential Care

Care homes (90 homes with approximately 5,400 beds), plus day care places

Community Services

Care worker visits and live-in support for people in their own homes (around 150,000 care hours for approximately 14,000 people delivered per week)

Mental Health

18 facilities including independent hospitals, mental health homes and specialist facilities

Health Care Services

10 specialist hospitals (ISTCs) 5 specialist Clinical Assessment and Treatment Services (CATS) 19 GP practices

10 walk-in centres Health services in 16 prisons 12 NHS 111 services

OOH services covering approximately 8 million people

Other major contracts acquired with Harmoni are as follows:

GP-led health centres in North East Essex (North Colchester) and Stoke (Hanley Health and Wellbeing Centre).

Suffolk Integrated Healthcare, a joint venture between Suffolk GPs and Harmoni delivering sexual health services, a minor injuries unit, a community hospital contract and out of hours services in Great Yarmouth and Waveney.

Hillingdon Health, a joint venture between Hillingdon GPs and Harmoni delivering an Urgent Care Centre.

Gryphon Health, a joint venture between North Somerset GPs and Harmoni delivering a GP led health center and admissions avoidance service.

Bucks Urgent Care Alliance, delivering an out of hours service, a GP led health center and a referral management service in Buckinghamshire.

Harmoni for Health is the offender healthcare division of Harmoni and specializes in both the provision and facilitation of integrated offender healthcare services in the UK.

Hermes service in East Sussex - Harmoni provides a telephone triage service for GPs and healthcare professionals, staffed by a call center team of nurses and coordinators. It manages all unscheduled care (excluding mental health) and provides cover for 750,000 patients.

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Serco

Serco began life in 1929 when Radio Corporation of America formed a UK subsidiary, RCA Services Limited, to support the country's growing cinema industry. Following a management buyout in 1987, RCA Services Limited was renamed Serco Limited. In 1988, the company achieved a full listing on the London Stock Exchange as Serco Group plc.

Serco is one of the world’s largest outsourcing companies, operating in numerous sectors, including defence, education, local government, facilities management, health, leisure and transportation. In health in the UK Serco operates in the areas of out-of-hours, custodial health services,

community care, facilities management, pathology services, occupational health, and forensic medical services.

Serco’s major business is with public sector organisations worldwide; in 2012 this represented 90% of its business. The company has followed a policy of expansion into every area of the public sector worldwide. The UK provides around 60% of its business.

In 2011 Serco reported revenue of £4.6 billion and net profit of £175.2 million. Health revenue is included in the sector Civil Government, which represented 26% of Serco’s total revenue in 2011

at £1,199 million in 2011, up 6% on 2010. In 2012 Serco reported a revenue of £4.9 billion and pre-tax profits of £302 million, a 26.7% increase on the previous year.

Serco is a public company with shares traded on the London Stock Exchange.

April 2006: Five year contract to provide Out Of Hours service in Cornwall and Scilly Isles valued at £6.1 million. In 2011 the contract was renewed for a further five years valued at £6.4 million.

2009: Formed GSTS Pathology a joint venture with Guy's and St Thomas' NHS Foundation Trust providing pathology services. The 50:50 joint venture was under a ten-year contract valued at around £250 million to Serco. In December 2009 GSTS won a contract to provide pathology

services to Bedford Hospitals NHS Trust

2011: Serco acquired the company that manages Braintree Community Hospital, Essex, which delivers NHS care on behalf of Mid-Essex Primary Care Trust. The hospital provides a range of clinical services, including day surgery, outpatients, imaging, physiotherapy, endoscopy, a rapid assessment unit and a 24-bed inpatient ward.

March 2012: Serco was awarded £130 to £180 million contract at East Kent Hospital University Foundation Trust for services including cleaning, catering, portering, security, waste management,

switchboard, pest control, staff accommodation, helpdesk and ward housekeeping.

March 2012: Serco was awarded a three-year £140 million contract to provide community health services for NHS Suffolk. Serco will provide community and specialist nursing, the management

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and operation of community hospitals, speech and language therapy, specialist children’s services

and equipment services.

September 2012: A partnership agreement with South Warwickshire Hospital Trust was signed. The nature of this partnership is unclear. It is referred to as an “innovation partnership” that “will

seek to use the expertise and skills that both organisations have to improve the care delivered to our patients, whilst delivering best value.”

September 2013: Serco is one of ten organisations to pass the pre-qualification stage in a bid to win a contract from Cambridgeshire and Peterborough CCG to run services for older people. The contract is worth £750 million to £1.1 billion. The company or consortium that is awarded lead provider status will both provide services for older people, including end-of-life care, and be responsible for coordinating care for older people.

In addition, Serco currently provide Hospital Facilities Management services at the following hospitals:

Forth Valley Royal Hospital, Larbert, Stirlingshire

Leicester Royal Infirmary, Leicester

Norfolk and Norwich University Hospital, Norwich

Derriford Hospital, Plymouth

Wishaw General Hospital, North Lanarkshire

Latest Developments

Serco has announced plans to withdraw from the clinical health services market in the UK after making a multimillion pound loss on its NHS contracts.

The group has revised upwards the estimate of the costs of running the contracts to term, resulting

in an additional non-cash exceptional charge of £3.9m in the period (year ended 31 December 2013:

£17.6m).

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Ramsay Health Care UK – a subsidiary of Ramsay Healthcare

(Australia)

Established 1964 in Australia by Paul J Ramsay

Private hospitals, orthopaedics, general surgery, cardiac surgery and eye surgery. Ramsay Healthcare operates 116 hospitals in four countries, with 10,000 beds and 30,000 staff. The

company treats over one million patients per year. In the UK Ramsay Health has a network of 22 hospitals, nine treatment centres and four neurological units in the UK delivering both private treatment and care under contract to the NHS.

Through a process of acquisition in its home market Ramsay Health has become Australia’s largest private hospital operator. Acquisitions have included other private hospital groups, with the largest being of Affinity Healthcare in 2005, which increased Ramsay’s hospitals from 35 to 69. Ramsay also has a history in Australia of moving into the public hospital sector.

Ramsay Healthcare’s first foray outside Australia was to Indonesia where it now runs three private hospitals; these were acquired with the acquisition of Affinity Health in 2005. Then in 2007 the company acquired Capio, at the time the fourth largest operator of private hospitals in the UK. The company’s focus for expansion switched to France in 2010, with the March 2010 acquisition of 57% of the French hospital company Group Proclif SAS, now known as Ramsay Santé. Ramsay’s expansion in France has continued, with the May 2011 acquisition of the Clinique Convert hospital, which Ramsay notes is a first step in expanding the Ramsay Santé business, with plans for further

expansion. The company currently operates nine hospitals in France.

In a March 2011 briefing for the company’s investors in the UK market the company noted that the NHS bill (at that time) was positive for the company and that a key priority for the company was to influence national policy. In November 2012 Ramsay noted that in the UK it is planning to “commence strategy of broadening our service delivery platform” and that “Health care reform is expected to provide continuing opportunities for the private sector.”

In the UK Ramsay’s business is conducted through Ramsay Health Care UK Operations Ltd. The most recent accounts available from Companies House are for the financial year ending 30 June 2011.

Full accounts are published by the Australian parent company, Ramsay Health Care. Accounts are available for the financial year ending June 2012. Revenue was up 6.4% to A$3.9 billion and net profit was A$245.9 million, up 23% on the previous year. The UK contributed 14% to operating revenue and UK revenue rose 3.0% during the year to £363.8 million.

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In 1997 Ramsay Health Care was floated on the Australian stock exchange and became a public company. The five largest shareholders as of June 2012 are as follows (2):

Paul Ramsay Holdings (36.2%)

HSBC (11.98%)

J P Morgan (9.91%)

National Nominees Ltd (8.44%)

BNP Paribas Nominees (2.32%)

In November 2012 Ramsay reported that NHS admissions had risen 11.3% compared to the financial year 2011 and now comprise more than 65% of UK admissions. According to a Guardian

report Ramsay Health Care is the third biggest supplier to the NHS receiving £30 million in revenue in 2010/2011.

Ramsay Healthcare runs NHS treatment centres (ISTC) and performs surgery at nearly all its hospitals and clinics for the NHS.

In 2010 Ramsay Health was a bidder in the tender process for running Hinchingbrooke hospital; Ramsay eventually withdrew from the process in August 2010.

In October 2012 Ramsay Healthcare was reported to be one of the bidders for the new contract to run the Nottingham ISTC beginning in 2013; this is currently run by Circle Health.

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The Practice plc

Founded in 2005 by Dr Ajit Kadirgamar and Dr Jeremy Rose, both GPs, plus Peter Watts, a businessman.

Primary care, community care and secure health. The Practice Plc has a network of surgeries, including walk-in centres, plus contracts to run community services in the area of ophthalmology, dermatology, sexual health, and ear, nose and throat (ENT) services, and health services at four prisons and an immigration removal centre. The business is an unlisted limited company with three divisions covering surgeries, properties and services.

In the outset, The Practice’s strategy was to offer to take over the running of the infrastructure of existing GP practices including the premises. It offered 100% purchase or a partial equity release scheme for GP premises and then employed the GPs as medical staff with the possibility of share options in The Practice plc. The company has targeted GPs selling their premises, down-sizing for retirement or needing expansion funding. By mid-2010 The Practice had 16 contracts with GP surgeries. In October 2011, The Practice provided GP services to around 180,000 patients at 60 surgeries, including eight walk-in centres, and more than 100 community-based outpatient NHS

clinics per week. The Practice also had 800 employees, including 220 clinicians.

The most recent accounts available for The Practice Plc at Companies House are for the 15 month period to the end of March 2011. The company made a loss in this period of £2.5 million and as of March 2011 had debt of £3.3 million. The company paid £88,300 in tax.

The Practice’s major investor is the venture capital fund MMC Ventures Ltd. The initial investment

of £865,000 was in 2006. This was followed by a further £1.4 million in October 2007 and £1.1 million in July 2007.

June 2013: Contract to provide a community ophthalmology service from Salford CCG

January 2012: Contract to provide a pilot service for cataract treatment in Croydon

July 2011: Primary care ophthalmology service in Weymouth and Bournemouth.

July 2011: Contract to provide an expansion of The Practice’s (ENT) services in London.

November 2010: Contract to provide community-based ophthalmology for Solihull NHS

August 2010: Contract to provide a community-based ophthalmology service for NHS Worcestershire

May 2010: Contract with NHS Harrow to provide primary care ENT services in West London.

2009: Contracts to provide primary medical services for HMP Winchester and HMP Kingston

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HCA International - the international arm of HCA [Hospital Corporation America]

1968 in Nashville, Tennessee, USA by Dr. Thomas Frist, Jr., Jack C. Massey and Dr. Thomas Frist,

Sr.

HCA is one of the USA’s leading provider of healthcare services, a company comprised of 163 hospitals and 110 freestanding surgery centres in 20 US states and the UK and employing approximately 199,000 people. Approximately 4-5% of all inpatient care delivered in the USA is provided by HCA facilities.

HCA International operates six hospitals in central London: The Harley Street Clinic, The Lister Hospital, London Bridge Hospital, The Portland Hospital, The Princess Grace Hospital, and The

Wellington Hospital. HCA International also has a range of outpatient and diagnostic centres.

HCA has four joint ventures with NHS hospitals: a blood and bone cancer treatment centre with the University College Hospital London; a young person's cancer unit, The London Gamma Knife Centre, at St Bartholomew's Hospital in The City of London; Harley Street at Queen's, a private patient cancer centre at the Queen's University Hospital in Romford; and with the Christie cancer hospital in Manchester, The Christie Clinic, a private patient unit for cancer patients from across the North of

England.

HCA International’s primary source of income is the corporate market and international clients. HCA has not sought contracts with CCGs, but its strategy with the NHS has been to set up joint ventures through its HCA NHS Ventures business. The company has four partnerships at present. It is a member of the Private Hospitals Alliance, who collectively share 80% of the UKs private hospitals, a group formed to influence the Government’s healthcare policy.

The most recent accounts available from Companies House for HCA International are for the financial

year ending 31 December 2011.

In March 2011, HCA raised $3.8 billion in what was at the time the US’s largest private-equity backed initial public offering (IPO). Following the IPO the three private equity companies and the Frist family continued to own a majority share of HCA (62% in December 2011).

HCA International does not have contracts with CCGs, but works with the NHS on joint ventures

through its HCA NHS Ventures business.

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Spire Healthcare

2007

Private hospitals. Spire Healthcare is the second largest private healthcare hospital group in the UK with 38 hospitals (including the recently completed Montefiore Hospital, Brighton.) Spire undertakes a wide variety of treatments, but major areas of business are fertility, obesity treatment, cosmetic surgery and cancer treatment.

Spire was formed through the buy-out of 25 BUPA hospitals in 2007 by the UK private equity firm Cinven. The hospitals were rebranded as Spire Healthcare and a further 11 hospitals were added in 2008.

For 2013 Spire reports that providing care for NHS patients’ accounts for nearly 25% of its business revenue. Furthermore, Spire was reported to be the eighth largest provider of healthcare services to the Department of Health in 2012, being paid approximately £27 million. Spire notes that NHS work is a supplement to its own private business and, as far as can be ascertained, Spire’s NHS work to date comes from the use of the Choose and Book system.

In 2012, Spire Healthcare reported revenue of £739 million, up 9.6% on 2011, and an operating profit of £129.7 million, however the company reported a loss of £130.5 million for the year. The loss was due to finance costs of £190.3 million (£183.3 million in 2011), plus exceptional finance costs of £129.1 million.

The parent company of Spire Healthcare is Spire Healthcare Co-Invest Limited Partnership, a limited partnership registered in Guernsey. Rozier (Guernsey) Limited, a subsidiary of

Cinven Limited, has a significant interest in the partnership. Cinven is keen to sell Spire and in January 2013 completed a partial refinancing in order to reduce Spire's heavy debt burden and make it more attractive to buyers. This saw 12 of the company's 38 hospitals sold and then leased back. In 2014 Cinven indicated its desire to sell on Spire, with a consortium fronted by CVC Capital Partners - a London based private equity firm - and also backed by the Abu Dhabi Investment Authority (ADIA) in the running to purchase the company.

Spire Healthcare is part of the Choose and Book system for NHS patients and in 2012 23% of its income came from NHS work, up from 20% in 2011. In 2012 it was reported that Spire was part of the bidding process to run the Nottingham Independent Treatment Centre

from 2013; this contract was eventually won by Circle, however. Furthermore the company is reported to be cultivating its relationships with new Clinical Commissioning Groups.

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General Healthcare Group (GHG)

1970 when the US company AMI acquired its first UK hospital, but since then the company has undergone several name and ownership changes.

BMI Healthcare (private hospitals) and Netcare (clinics). BMI Healthcare operates acute

private hospitals, and is the largest provider of private healthcare facilities in the UK, with 61 hospitals UK-wide. Netcare is a network of clinics set up in 2002 in the UK by South African company Netcare, which undertakes work under contract to the NHS.

GHG views NHS reforms as an opportunity to expand its business. The CEO in 2010, Adrian

Fawcett noted “We are entering a new, exciting era, driven by the forthcoming healthcare reform that will ultimately change, to our benefit, the landscape in which we operate.”

Fawcett was replaced in early June 2011 by Stephen Collier, a barrister by training. In an

interview in August 2012, Collier noted that NHS work is “pretty critical” to GHG and that the firm could “do very well” out of policies such as Any Qualified Provider.

GHG’s leading shareholder, South African company Netcare, made clear in 2006, when it acquired GHG, that the UK provides an opportunity for expansion for Netcare as there is little opportunity for expansion in its home market. The company's reasons for expansion in the UK were described: "We have targeted the UK healthcare market for expansion, as

the long-term demographic trends and prospects for development of the private acute care market as well as partnership with the NHS, offer significant future growth potential.”

When Netcare acquired a majority share in GHG in 2006, GHG was split into two operating companies BMI OpCo, the healthcare operating company, and a property-owning subsidiary containing the subgroups GHG Propco 1 and GHG Propco 2. GHG Propco 1 has substantial debts (see Concerns – Financial Instability).

According to Netcare’s annual report for the financial year ending 30 September 2012,

GHG recorded a profit on continuing operations of £5.7 million. If exceptional items (the £862.8 million) and discontinued operations are included GHG recorded a loss of £825.3 million.

GHG carries out a large amount of NHS work at its hospitals via the NHS Choose and Book

system.NHS services through Netcare UK include surgical centres and ophthalmic units (specialising in cataract operations).

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InHealth

2004

InHealth provides diagnostics and imaging services to the NHS and private hospitals and clinics, including MRI, CT, X-Ray, DXA, Nuclear Medicine, Mammography, Ultrasound,

Interventional Cardiology, Audiology, ENT, Endoscopy and Physiological Measurement. The company employs about 1000 people, including clinical specialists and patient referral teams. Its servicesare provided from over 280 locations in the UK and Ireland and they work with a significant majority of NHS Trusts in the UK covering over 200 hospitals and over 80 community health clinics. The company saw over 500,000 patients in 2011. InHealth is a Choose and Book provider, fully integrated with the NHS Image Exchange Portal (IEP). InHealth’s Preventicum subsidiary conducts private health check-ups,

including full MRI scan.

InHealth’s business strategy has included acquiring existing diagnostic companies such as Preventicum and Vista Diagnostics. Some subsidiaries of the InHealth Group include, Molecular Imaging Solutions Ltd, Euroclinics UK Ltd, Preventicum UK Ltd, e-Locum Services Ltd and Vista Diagnostics Ltd. Most recently in February 2012 InHealth acquired 76% of Prima Diagnostics.

In the company’s 2012 annual accounts, director and CEO Richard Bradford states “we believe that the market opportunities within the diagnostics sector continue to be significant albeit the market is currently fragmenting as services are being reconfigured between primary and secondary care. We believe the advent of AQP procurement for GP Direct Access Services will allow us to expand our strong position in the South East to other

parts of the UK.”

InHealth’s accounts for the financial year end September 2011, the most recent available,

give the company revenue of £63.2 million with profit of £2.4 million. In 2010/11 InHealth received over £10 million from the Department of Health for work carried out on behalf of the NHS

InHealth is a private company owned by The Damask Trust, the trustees of which are Ivan Bradbury and the Embleton Trust Corporation Ltd.

During 2010/2011 InHealth provided over 400,000 diagnostic tests of which over 80% were for NHS patients. Contracts reported by InHealth include the following:

NHS PET/CT South – Delivers 10,000 scans per year from 18 locations on behalf of the Department of Health.

London NHS Diagnostic Service – Delivers a range of 10 diagnostic tests from over 60

locations

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NHS Leicestershire and Rutland – Provided Echocardiography and BNO services to GP's

within this PCT for over 4 years.

Southampton ENT – Provides audiology and ENT service to Southampton City patients. Also provides MRI, X-Ray, Ultrasound and Audiology as part of the local AQP.

York DXA (AQP) – Offers patients in York and surrounding areas DXA scans as an alternative to nearby hospitals.

Derby/Peterborough (AQP) – Provides patients with access to audiology, assessment, hearing aid fitting and on-going repairs/maintenance.

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Alliance Boots

Boots the Chemist was founded in 1849 in Nottingham and has long been an icon of the British high street. In 2006, Boots merged with European pharmacy wholesaler Alliance Unichem Plc to form Alliance Boots (AB). One year later, the company went private in a £12 billion leveraged buyout, led by executive chairman Stefano Pessina and US private equity firm Kohlberg Kravis Roberts (KKR). In 2012, US pharmacy chain Walgreen’s bought a 45% stake in Alliance Boots, with an option to buy the remaining 55% in 2015.

Pharmacy retail, wholesale and clinical homecare business. Boots is the largest community

pharmacy chain in the UK, with nearly 2,400 pharmacies trading under the Boots banner. It is the largest single employer of pharmacists and pharmacy technicians outside the NHS,

with 6,700 pharmacists and at least 2,500 technicians.

Alliance Boots’ subsidiary Alcura focuses on clinical homecare, which is funded through the NHS, and also provides clinical trial support.

Outside of the UK, Alliance Boots is primarily a pharmacy wholesaler—the biggest in Europe, in fact—although it hopes to expand its retail footprint and other healthcare

services in Europe as well.

Alliance Boots also has major wholesale investments in Turkey and China.

Alliance Boots is seeking opportunities to develop new services through the Any Qualified Provider contract model. In its pharmacies, the company has begun offering tests for diabetes and treatment for asthma sufferers along with its prescription services. AB says it is seeks to provide more healthcare services such as medicine check-ups, weight

management programmes, smoking cessation advice and flu vaccinations in the retail pharmacy setting. The company expects its partnership with US pharmacy chain Walgreens to “further enhance our capability to deliver such services, many of which are at a more developed stage in the US.”

In the UK, the company has at least 16 GP surgeries in its stores and has announced plans to open up to 100 over the next 2-3 years. The company also has a dentist surgery in in Manchester and plans to open more.

Through its subsidiary Alcura, Alliance Boots has branched into an area of community healthcare known as ‘clinical homecare’ and participates in contracts that reach into millions of pounds. Clinical homecare includes medicine administration, delivery and support within the home for patients.

For example, Alcura is a provider of intravenous nutrition to patients in their homes as part of a £37.9 million contract with the Commercial Medicines Unit of the Department of Health.

The clinical homecare industry estimates sales of £1.5bn in 2012, with growth of nearly a

quarter on the previous year.

Alliance Boots’ global results for the year ending 31 March 2013 record revenues of £22.4bn and trading profit before tax of £1.265m. The company makes a significant portion of its revenues off public health care systems. Approximately 40% of Alliance Boots’ UK revenue comes from services that are mainly paid for by the NHS. This includes revenues from dispensing prescription drugs, which came to £2.2 billion for the year ending 31 March

2013.

Additionally, Alliance Boots UK wholesale division generated an estimated £1.82 billion in revenue from independent pharmacies, which includes funds coming indirectly from the NHS. Alliance Boots subsidiary Alcura UK Ltd. reported nearly £100 million in sales for the year ended March 31 2012, a portion of which comes from NHS contracts.

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The company has pharmacy contracts with the following NHS trusts:

Surrey and Sussex NHS Trust (East Surrey Hospital)

Sheffield Teaching Hospitals

Derby Hospitals NHS Trust

Birmingham Heartlands Hospital

The Christie NHS Foundation Trust, Manchester

Great Western Hospitals NHS Trusts (Swindon)

Alliance Boots holds the following contracts to provide regular monitoring for patients requiring blood thinner medications to avoid dangerous clotting:

South Tyneside NHS Trust

Brighton and Hove NHS Trust

Alcura participates in NHS contracts worth over £80 million, often together with other companies in multiple-award contracts. The company already has at least 16 GP surgeries in its stores and has plans to expand in this area.

Boots has a 49% stake in David Ormerod Hearingcare Ltd which operates 340 Boots hearingcare centres. David Ormerod also has AQP status with the following trusts under its trading name Community Hearing Care Services:

Gateshead PCT

South Tyneside NHS Trust

Sunderland Teaching Hospital NHS Trust

Lifeways Group

Established in 1998 initially under the ownership of Japanese investment bank Nomura

and then in 2007 when August Equity backed a buyout for an undisclosed sum.

With offices throughout Britain, over 5,000 employees and contracts with more than 100 local authorities and primary care trusts, Lifeways is a provider of supported living, community based and residential services for people with learning disabilities, mental

health and forensic needs, physical disabilities and people needing ongoing social care support

Organically growth has been achieved through successful tender wins backed by tighter management systems rolled out as part of a £1m internal investment programme. The company has also acquired ten smaller businesses in the past four years and continues to pursue its buy and build strategy by seeking further acquisitions.

EBITDA has grown by 77% a year, from an annualised £2.2m in 2008 to over £10.9m in

2011 based on turnover rising from £36m to over £72.5m. Turnover for 2011/12 was £115m, with EBITDA at over £22m.

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Barchester Healthcare

Established in 1998 initially under the ownership of Japanese investment bank Nomura and then in

2007 when August Equity backed a buyout for an undisclosed sum.

With offices throughout Britain, over 5,000 employees and contracts with more than 100 local authorities and primary care trusts, Lifeways is a provider of supported living, community based and residential services for people with learning disabilities, mental health and forensic needs, physical disabilities and people needing ongoing social care support

Organically growth has been achieved through successful tender wins backed by tighter

management systems rolled out as part of a £1m internal investment programme. The company has also acquired ten smaller businesses in the past four years and continues to pursue its buy and build strategy by seeking further acquisitions.

EBITDA has grown by 77% a year, from an annualised £2.2m in 2008 to over £10.9m in 2011 based on turnover rising from £36m to over £72.5m. Turnover for 2011/12 was £115m, with EBITDA at over £22m.

Circle (healthcare partnership)

Circle is an employee co-owned healthcare company based in Britain, co-founded in 2004 by social entrepreneur Ali Parsa and Consultant Ophthalmologist Massoud Fouladi.

It has independent hospitals in Bath and Reading, and an NHS Treatment Centre in Nottingham.

In November 2011, it was awarded a contract to run the first National Health Service(NHS) hospital franchised to an independent provider, and began the contract in February 2012.] Circle's independent hospitals, CircleReading and CircleBath, also provide NHS care under the NHS Choose and Book scheme.

Circle is a partnership, in which clinicians and healthcare professionals are given the power to run their own services. The flattened organizational structure is said to allow quality and efficiency to

remain high, through the creation of ‘clinical units’

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BUPA Healthcare

BUPA is a highly diversified global healthcare provider. In the UK its two largest business units are BUPA Care Homes and BUPA Health insurance which are profiled below.

BUPA Care Homes (CFG) PLC

Company Structure

BUPA Care Homes (CFG) PLC is a division of the medical insurer British United Provident Association. The company has over 300 care homes in the UK, offering expert residential, respite

and nursing care, and specialist homes in dementia and other conditions. 70% of BUPA’s care home residents are state-funded. The company also operates care homes in Spain, Australia and

New Zealand.

Financial Results

In the year ending 31st December 2012, turnover at BUPA Care Homes (CFG) PLC grew by 1.3%, to £549.6m. Its pre-tax profit, however, fell from £56.3m to £50.5m over the same period.

BUPA Insurance Ltd

Company Structure

BUPA Insurance Ltd leads the UK market for private medical insurance, with an estimated share of around 41% according to Laing & Buisson. The company is also present in other parts of the world, having recently assumed market leadership in Australia by acquiring the local health provider MBF, while its partnership with Max India means it now competes in one of the world’ fastest-growing

economies. However, the company also exited from the Irish market in 2008 in the wake of regulatory changes.

In the UK, the company’s private medical insurance (PMI) is known as BUPA Heartbeat, and covers inpatient and outpatient treatment by company-approved practitioners. BUPA’s insurance arm also includes BUPA Wellness, which is an occupational health and wellbeing services and assessments division. On a worldwide basis, the company has approximately 400,000 customers located throughout 19 countries.

Current and Future Developments

In October 2010, BUPA sold its UK business, BUPA Health Assurance Ltd, to Resolution Ltd — a financial services group that owns Friends Provident and AXA Life. The decision reflects BUPA’s intention to focus on its healthcare businesses, including its health insurance products and services in the UK that offer private medical, health cash and international private medical insurances.

BUPA launched a new multi-million pound advertising campaign in March 2011 to promote products and services that it offers beyond its health insurance offering. The Helping You Find Health

campaign features a TV advertisement with ’real-life’ BUPA customers. The cast ranges from a

physiotherapy patient to a care home resident in order to show the range of products that are available from BUPA, depending on peoples’ requirements. The company also announced plans to improve the quality of its cancer cover by no longer selling corporate health insurance schemes which feature overall cost or time limits for cancer treatment.

Financial Results

In the year ending 31st December 2010, turnover at BUPA Insurance Ltd decreased marginally by 0.1%, to £2.18bn. Meanwhile, its pre-tax profit fell by 16.4% from £120.6m to £100.8m.

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Nuffield Health

Company Structure

Nuffield Health is the largest healthcare charity and now represents one of the UK’s leading operators of private hospitals, all of which provide a range of healthcare services. Examples include general surgery, laser treatments, cosmetic and plastic surgery, eye surgery, advanced diagnostics and weight loss surgery. In February 2008, Nuffield Health sold nine of its hospitals to General Healthcare Group for a sum of £140m.

Nuffield Health also operates a network of more than 50 health and fitness clubs across the UK. The

company strengthened its position in this sector through the acquisition of Health Club Investment Ltd (which operates Cannons Health & Fitness) for £170m. In addition, Nuffield Health also owns and operates a health screening division, having acquired Vanguard, a mobile surgery operator, in 2004. This was rebranded as Nuffield Health Mobile Services in 2008.

Current and Future Developments

It was reported, in May 2011, that Nuffield Health took a controlling interest in Medica Report Ltd,

the market leader providing teleradiology services to the NHS.

In April 2011, Nuffield Health partnered with Commidea, the card payment processing solutions provider, and installed a new electronic payment system in most of its hospitals and in its UK contact centre. The Ocius for PC enables the 30 Nuffield hospitals to capture all chargeable treatments on their system, speeds up the payment process and simplifies invoice settlements for patients.

Financial Results

In December 2012, Nuffield Health reported a turnover of £652.4m and pre-tax loss of £53.2m.

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