Thursday 31 July 2014

Healthcare UK: A Conduit for Market expansion? Part one of a Two Part Report

Healthcare UK was set up in order to sell NHS expertise abroad, but following a series of Freedom of Information requests, Social Investigations can reveal that far from benefitting the NHS, 80 per cent of all contracts gained through Healthcare UK have ended up in private hands.

Memoranda of Understandings made between China and the UK show that in exchange for financial support for UK companies from Chinese investment, the government has promised to provide information on UK health ‘policy’ and offer China’s main financial investment arm access to ‘confidential’ information.

The vast majority of corporations involved in the international agreements are kept hidden through commercial confidentiality but enough evidence has emerged to show how Healthcare UK acts as a conduit for commercial companies in a bid to expand the ‘domestic market’ here in the UK as well as increasing the market abroad.

This is Healthcare UK, unlocking deals for UK companies, some of who are based in tax havens and whose investors have donated to the Conservative party. All in the name of the NHS.

“Good news for the NHS”
The original idea of exporting UK health expertise began under the Labour government, and took place towards the very end of their tenure. The intent behind this project according to then Health Secretary Andy Burnham, was to tap into the “exceptional knowledge and intelligence within the NHS” with “investment of taxpayers’ money and funds raised going straight back into (the) NHS.” In addition the Labour government wanted to generate ‘demand in international markets’ and broker ‘partnerships’ of an unspecified nature.

By the time Labour had lost the election, NHS Global as it was then known, had failed to gain any
contracts for the NHS or anyone else through the programme. This lack of interest didn’t deter the coalition, who continued the project with a similar message that selling the NHS abroad was “good news for patients” and the NHS.

In the coalition’s 2011 ‘Plan for Budget Growth’ the government provided a snippet of detail beyond the sound bites that had hitherto emerged (though not much), of what activity would take place abroad.

The Government’ it said, ‘will establish a proactive, entrepreneurial NHS Global to make the most of the NHS brand internationally and to offer support and advice to NHS trusts…act as a point of contact for NHS organisations’ to create ‘international customers’ and ‘international opportunities.’ Furthermore, the new NHS Global would ‘represent the interests of the NHS and allow the NHS to shape the final business model.’

The programme was eventually named Healthcare UK, a joint initiative between the Department of Health, the newly formed NHS England and UK Trade and Investment. Not long after its launch, Health Minister Anne Milton saidThis is good news for NHS patients, who will get better services at their local hospital as a result of the work the NHS is doing abroad and the extra investment that will generate”.
Yet despite these claims, a freedom of information request revealed that just 2 out of 21 contracts obtained through Healthcare UK have gone to ‘public’ organisations, with the vast bulk of 17 ending up in the hands of private companies worth over £281 million.

The beneficiaries
Records of individual contracts won through Healthcare UK, that resulted in an export or non-export deal are termed “business wins”. Information provided to Healthcare UK on these “business wins”, is considered by UK Trade and Investment of which Healthcare UK is a part, to be ‘commercially confidential’ and therefore hidden from pubic view.

According to a Department of Health spokesperson, there is no “such public interest in favour of disclosure…Any unauthorised disclosure of commercially confidential information would be detrimental to companies and would give rise to an actionable breach of confidence…there is a strong public interest in maintaining the confidence in order to secure successful outcomes for British businesses and the attendant economic improvements for the country.” In other words corporate success is more important than the public’s right to know.

Concern over what contracts are being gained and what commercial companies are benefitting is heightened by the fact that Serco, who are under investigation by the Serious Fraud Squad, sit on the Healthcare UK board.

This block on information also prevents us knowing who the two ‘public’ organisations are, listed as having won contracts worth £251,000. Are they NHS organisations or not?

Rather confusingly, a further information request directed at the Department for Business Innovation and Skills (DBIS), said NHS organisations have achieved “£45 million of business wins” through support from Healthcare UK. However, as the DBIS admitted, they do not keep records of revenue generated by NHS institutions through Healthcare UK, or whether those institutions were already exporting their expertise prior to the existence of Healthcare UK. It would appear; the Department of Health, Healthcare UK and UK Trade and Investment don’t know what one another are doing or saying.

One NHS organisation that has expanded abroad is The Leeds Teaching Hospitals, who signed a MOU with the King Hussein Cancer Centre of Jordan in 2013. Whether this agreement is part of the NHS "business wins" is not certain because Healthcare UK has blocked the information. In keeping with the general secrecy surrounding these deals, the Leeds Teaching Hospitals also cited “commercial interests” for refusing to answer what costs were involved in running the MOU with Jordan and or any revenue that may have been gained. In echoes of the response from the Department of Health, a spokesperson for the Teaching Hospitals said withholding of this information was more in the “public interest” than any “accountability, transparency, and financial probity”.

Those that we know
When Earl Howe was questioned on Healthcare UK in the House of Lords, he said, the new trade arm, which has an annual cost of £3 million to run, would not “just apply to a few elite organisations.”

Despite most companies preferring anonymity, a few companies have given permission for their names to be public and it would appear the elite are well and truly present.

One successful company in a Chinese deal, is accountancy giant KPMG, who have signed up as a business consultant for
a ‘high-end private hospital project’ in Beijing. They will work alongside multinational contractor Arup, who will design the building.

Another beneficiary of Healthcare’s global expansion is Circle Partnership, whose background and presence in the highest echelons of government, highlights exactly why those gaining contracts must be made public.

Circle are part-funded by Odey Management Ltd, who are
based in the low tax jurisdiction of the Cayman Islands. One of the main shareholders is Robin Odey who has given £251,000 to the Conservative party. Circle’s former employees Nick Seddon and Christina Robinson work in the No10 Health policy unit and as a special adviser to Jeremy Hunt respectively. It would appear that moving from a private health company into the power base of government is a natural career path these days.

Further parliamentary connections to Circle include Conservative peer
Baron Higgins of Worthing, who holds in excess of £50,000 worth of shares in Lansdowne UK Equity Fund, another investor in Circle. In case that isn’t concerning enough, Circle Holdings, the controlling body of Circle, is based in the low tax jurisdiction of Jersey; quite how that benefits the NHS and its patients is unclear.

Circle’s involvement?
Circle’s involvement in China is connected to CITIC Trust Co, part of China’s main investment group. In a government press release at the end of last year it said, Healthcare UK has “signed a Memorandum of Understanding with the CITIC Trust and Circle Partnership to unlock commercial deals for UK companies in areas such as primary care services, to provide integrated care and education and training.” In addition, according to their website, Circle will help developintegrated healthcare services for elderly patients’ and act as an adviser on ‘clinical’ matters.

Yet, despite the government trumpeting Circle Partnership’s involvement, Healthcare UK apparently has no idea what Circle is actually doing in China.

In response to a request on Circle’s involvement in Healthcare UK and what information they may be privy to, the government said, “We are not aware of any contract between CITIC and Circle to perform this function (of unlocking deals) and within the CITIC-Healthcare UK MOU no individual company is identified to carry out this function.”

What is known, is that Conservative MP Ken Clarke, who recently resigned from his post as the Minister without portfolio, met with Paolo Pieri, CFO and Tom Muir, the Director of Communications of Circle Partnership in June last year. According to the Cabinet Office, “They discussed the Healthcare UK priority markets of China, the Middle East and Brazil, with a focus on forthcoming events and trade missions…Circle outlined their overseas interests”. It sounds highly improbable that they do not know Circle’s role is in China.

Moreover, if so many contracts are landing in the hands of private companies, how can Healthcare UK claim to be for the benefit of the NHS? After all this was the justification given for selling the ‘NHS brand’ abroad and based on Circle’s role of unlocking ‘commercial deals for UK companies’, it would seem the NHS won’t get a look in.

If the NHS is not benefiting, then who is and in what way? 

Go to part two here.

Healthcare UK: A conduit for Market expansion? Part Two of Two Part report

This is part two of a two part report on Healthcare UK. See part one here first.

Expand the ‘domestic market’
The use of the ‘
NHS brand’ to sell healthcare abroad has greatly benefited commercial organisations, with over 80% of contracts landing in private hands. This disproportion towards private healthcare contracts is also taking place on a much larger scale in the NHS. Since the Health and Social Care Act officially began in April 2012, research carried out by the NHS Support Foundation revealed 70% of NHS contracts have ended up with private firms amounting to billions of pounds worth of income.

What this amounts to is an aggressive expansion of the UK healthcare market, which although not mentioned in government propaganda, is their intent. Healthcare UK was also meant to benefit the NHS, but contained in the memorandum signed between Healthcare UK and the Chinese Ministry of Health, it is clear that the main areas of cooperation are designed towards channeling contract opportunities towards private companies. See Appendix 1

The financial awards from China are potentially
immense with David Cameron claiming the Chinese healthcare market will grow by $400 billion by 2017. China is seeking to develop a “safe, effective, convenient and affordable” healthcare system to both urban and rural areas by 2020; furthermore, Premier Li Keqiang recently stated he wants to “open the door for private capital”. It is no wonder Cameron wants the UK private sector to be a part of that process.

Access to Policy
A further MOU held between Healthcare UK and CITIC Trust, a Chinese investment arm of the CITIC Group, reveals the extent of cooperation required for their partnership to work. ‘Citic’ it reads, will provide ‘financial support for selected UK healthcare companies wanting to ‘extend their business in China’. In return, Healthcare UK will act as a ‘source of information’ on the ‘UK healthcare industry’, receive access to health ‘policy’, ‘confidential’ information, as well as be invited to form partnerships with ‘UK healthcare organisations.’

When asked about the nature of the ‘confidential’ and policy information provided to CITIC, Ian Cranshaw the Chinese lead for Healthcare UK said, “The confidential information referred to would likely be commercial in confidence type information”. However, he failed to address the policy information that would be imparted. Will CITIC be in advance notice of policy so that it can better select its investments? Will CITIC receive policy before parliament or the people?

The secretive nature of Healthcare UK beyond the marketing publications that adorn its website, means such questions remain unanswered.

Selling debt
The opportunities for private companies don’t end there. A further MOU made between Healthcare UK and the health Bureau of the Eastern coastal province of Zhejiang contains a much wider level of agreement.

These include the design of ‘Health policy and regulation’, ‘Training Medical Staff’, establishing primary care provision, and ‘Systems for national and private insurance’. In addition Healthcare UK will find UK companies to aid China in ‘public and private hospital finance, construction, operation and regulation (PFI)’.

The policy of PFI in the UK has been catastrophic for the NHS with the treasury predicting a total financial burden of £242 billion. PFI continues to plague NHS Hospital Trusts to the point of near bankruptcy, which led to the first takeover of the running of an NHS hospital in Cambridgeshire by Healthcare UK beneficiaries Circle.

Elite private companies largely run PFI, and it is the cruelest of irony that more PFI opportunities should be made by using the ‘NHS brand’. Companies like construction firm Interserve, who have Conservative Peer Lord Blackwell as a director, have raked in millions of pounds through selling some of their PFI interests. Serco and Carillion, who both have representatives on the board of Healthcare UK, have also gained major revenue through PFI schemes, and this particular avenue in China, will do nothing for the NHS.

In order to gain “business wins” in the Zhejiang province, Healthcare UK provides pilot programmes from which they aim to gain contracts for those involved. Yet here again, Mr Cranshaw explained “the pilots involve private UK companies rather than NHS institutions”, and as the pilot schemes are ongoing, what these pilot schemes are and who is involved face commercial restrictions.

The government has claimed the three agreements with China will provide £120 million to the UK economy, though how they have reached that sum is currently unclear and a request for a breakdown of these figures has been made. Of course any deals that are confirmed will not necessarily have the names of the companies attached and so we will be unclear whether those gaining contracts are based in low tax jurisdictions; have donated to any political party or indeed held meetings with government officials.

The push to be involved in the global healthcare market is well under way. Private companies dominate the list of firms put forward by Healthcare UK to operate in China and the contracts won.

The NHS is staring into the barrel of the Health and Social Care Act legislative gun, weighed down by debt and deliberate underfunding. The idea that an overstretched NHS can compete financially or even manage to operate an international trade arm is highly questionable. Healthcare UK appears as yet another government vehicle designed for the market over that of the NHS that has very little intention to benefit patients.

When the government announced the Chinese deal, the NHS was not
mentioned in their press release and based on the contracts won and the money gained so far, the NHS will be but a minor beneficiary of the global expansion that markets in their name.

Appendix 1

The five areas of cooperation listed in the agreement with Zhejiang MOU are:

Digital healthcare – Multiple commercial companies providing telehealth, telecare technology
Healthcare training and education – this could be NHS but majority of organisations mentioned in the Healthcare UK publication ‘China and the UK: partners in healthcare' are private
Hospitals: Planning, design, built management equipment – KPMG (business consultants), Arup (design, contractors)
Care for the elderly - Circle
Primary healthcare including implementing a GP system - Circle