Spire Healthcare

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Spire Healthcare is one of the UK's largest private hospital company with 39 hospitals and 8 clinics. The company was founded in 2007 and is a public company with shares traded in the UK. The company's revenue is from personal medical insurance (PMI) patients, NHS patients and self-paying patients. In 2020 and 2021, Spire received millions from NHS England for staff and capacity to support the NHS during the Covid-19 pandemic. The company is now benefitting from the massive NHS waiting lists. It is also listed on the NHS England framework contract for purchasing additional activity from the independent sector. The company is expanding in GP services, chronic disease management, and occupational health services. In October 2023, Spire acquired Vita Health, a separate overview is available.

Last updated: February 2024

Strategy

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.

The company now has 39 hospitals and eight clinics.

Spire Healthcare's revenue is derived from three major sectors: personal medical insurance (PMI); the NHS; and self-paying customers. In 2020 and 2021, Spire's revenue was highly dependent on the NHS as the Covid-19 pandemic closed its hospitals to PMI and self-paying patients for several months. As the pandemic eased, Spire has experienced a massive increase in self-pay patients driven by the growing NHS waiting list, which stood at over 7 million by early 2023.

In 2022, the mix of total revenue was 45% PMI, 28% Self-Pay, 25% NHS and 2% Other. Comparable figures for FY21 were 43% PMI, 26% Self-Pay, 28% NHS and 2% Other, which shows a shift to private pay during recent years.

In the company's first half 2023 results, the company's management note that the company plans to make selective investments in new services that are designed to attract new patients and meet more of their healthcare needs. The company plans to move towards becoming an integrated healthcare provider, with services in primary care, diagnosis, occupational health and long-term condition management.

The acquisition of The Doctors Clinic Group (DCG) in December 2022 was part of this strategy for expansion of primary care, as well as entering the occupational health sector, with the acquisition of Maitland Medical and Soma Health as part of the same transaction. The company is restructuring this business into two units, Occupational Health and Primary Care.

Spire's private GP service grew by 46% in 2022, cashing in on people's difficulties in getting an NHS GP appointment. The company saw increased demand for its private GP services during H1 23, with the number of GP appointments up by 41% and revenue by 45% like for like in H1 23 compared to the prior year period across DCG and Spire Hospital GP services.

The company continues to expect a major growth opportunity in those patients who self-pay, however it also plans on continuing to be a 'partner' for the NHS. The company is listed on NHS England's framework for additional capacity (see Contracts).

Spire opened new hospitals in Manchester (costing £67m), Bushey (£23m) and Nottingham (£60m) in early 2017, as well as five additional operating theatres at existing facilities over the previous two years. In January 2017 Spire announced a move into the private GP market. The company has set up a network of GP clinics in its hospitals around the country. Spire is not the first private company to do this, HCA, Nuffield and BUPA all have private GP services within their clinics.

In early 2021 Ramsay Healthcare launched a bid to acquire Spire Healthcare. However, several of Spire's leading shareholders opposed the takeover, including Fidelity International and Toscafund Asset Management, and in June 2021 urged other investors to reject Ramsay's offer of 240p per share, which valued the company at around £1 bn. The opposition forced Ramsay to increase its offer to 250p per share and £1.2 bn. The reason for the opposition to the original offer notes Toscafund was that "operating conditions in the private healthcare market [in the UK] are set to be strong for some years to come." Toscafund continued to oppose the increased offer for the same reasons - it undervalued the company. However, the board of Spire unanimously recommended it to shareholders and many supported it.

The merger was rejected by shareholders in late July 2021.

Financials

Spire Healthcare was floated on the stock exchange in July 2014 valued at £850 million.

Latest results for Spire, the first six months of 2023, show strong growth in revenue from private work, up 10.4% compared to first half 2022 with PMI up 15.6% and an increase in self-pay revenue (2.5%). Revenue from NHS patients was up 17.1% compared to 1H 2022. Total revenue was up 13.1% to £676.5m. Profit after taxation was £12.7m (H1 22: loss of £0.6m).

For 2022, Spire Healthcare reported revenue of £1,198.5 million up from £1,106.2 million in 2021. The company made a profit of £8.2 million, compared to a loss of £8.9 million in 2021. Revenue growth was 8.3%, driven by increased private treatment; private revenue up by 14.5%

In 2022, private revenue rose by 14.5% to £876.7m compared to 2021. PMI revenue growth in FY22 was 13.7% to £538.7m. The private GP service grew by 46%. Spire has expanded its GP services through the acquisition of The Doctor’s Clinic Group in December 2022, as well as entering the fast-growing occupational health sector, with the acquisition of Maitland Medical and Soma Health as part of the
same transaction.

At the end of H1 22, the Group announced that it has signed a new four-year agreement with Bupa, to provide services to its UK health insurance customers through to March 2026. Since the year end, similar contract renewals have been signed with Aviva and Vitality, both over three years.

The mix of total revenue during FY22 was 45% PMI, 28% Self-Pay, 25% NHS and 2% Other. The comparable figures for FY21 were 43% PMI, 26% Self-Pay, 28% NHS and 2% Other. Revenue from self-pay has been increasing, in 2019 it accounted for 18.2%, with 50.1% from PMI, and 29.1% (£285.7 million) from the NHS.

Spire reported that in 2022 NHS commissioning was lower than the significant support provided to the NHS by Spire Healthcare in 2020 and 2021 due to COVID-19. As a result, NHS revenue was down 6.1% at £295.4m. The company has now moved back to engagement with NHS GPs and local commissioners to maximise referrals via the electronic referral system (eRS). By the end of 2022, overall referrals were still marginally behind pre-pandemic levels, but orthopaedic referrals were significantly outperforming 2019.

In October 2017, Mediclinic International, a South African company, put in an offer to acquire Spire International for £1.3 billion in cash and shares. This offer was rejected by Spire in November 2017.

In May 2021, Ramsay Healthcare, an Australian company, put in an offer to acquire Spire for £1 billion. Opposition from leading shareholders, however, led to the failure of this takeover bid by July 2021. The shareholders said the two offers, the second an increase on the first offer, undervalued the company.

Contracts

Elective care contracts

NHS patients are sent to Spire hospitals via the e-referral system. The company is listed on the framework for outsourcing care listed by NHS Shared Business Services.

Covid-19 contracts

In March 2020, Spire was part of the deal with the government for using all its premises and staff for NHS patients during the Covid-19 pandemic. NHS England block-booked almost the entirety of the private hospital sector’s services, facilities and nearly 20,000 clinical staff for the foreseeable future to help cope with the surge of covid-19 patients. The agreement only covered England and added around 8,000 hospital beds, nearly 1,200 more ventilators, more than 10,000 nurses, 700 doctors and 8,000 other clinical staff. This deal, which means the NHS is paying all operating costs for the hospitals, has been a lifeline for the company, as the lockdown meant that no private work was possible.

In June 2020, a £5 billion deal to extend the March deal to help the NHS clear the backlog of work was agreed by NHS England and the private hospital companies, however this was blocked by the Treasury.  The Treasury did not believe the deal represented good value for money and that the evidence was not substantial. The block-contract basis of contracts with private providers continued, however, as NHS England prepared a new four-year framework contract for increasing capacity. In December 2020, the leading private providers, including Spire, were reported to be in advanced talks with NHS England over a new three-month outsourcing contract, which aims to provide a ‘smooth transition’ to the four year framework contract, which began at the end of March 2021. Spire was reported to be signed up to the NHS Increasing Capacity Framework contract by June 2021, which is valued at £10 bn over four years.

In October 2020, the HSJ reported that Spire was the recipient of the second largest contract for staff and capacity from NHS England, according to a series of contract award notices, however the time period of 2020 this covered is unclear. The contract with Spire amounted to £345.9 million.

These block contracts have been criticised after leaks revealed that the capacity paid for by NHS England at companies such as Spire and Circle/BMI was very under-utilised. HSJ reported that two-thirds of the private sector capacity that was block-purchased by the NHS at a cost of an estimated £400 million a month went unused by the NHS over the summer, despite long waits for operations.

In January 2022, Spire Healthcare became one of ten independent providers which signed a contract to provide extra capacity for the NHS under a three-month deal if Omicron leads to unsustainable levels of hospitalisations or staff absences. The deal, agreed by Sajid Javid, the health secretary, will mean the providers are paid to be on standby, with the NHS ordered to pay the private hospitals up to £270m, even though they may not treat any NHS patients in return. Leaked letters showed that Amanda Pritchard, head of NHS England, raised grave doubts over the contract, which instructed the NHS to pay private hospitals £75m to £90m a month from NHS England funds for the next three months. The deal could mean the NHS has to pay independent hospitals up to £525m if they did end up treating any NHS patients.

The agreement also includes Practice Plus Group,  Nuffield Health, Circle Health Group, Ramsay Health Care UK, Healthcare Management Trust, One Healthcare, Horder Healthcare, Aspen Healthcare and KIMS Hospital.

Concerns

Enforcement actions and Violation Tracker

Using the website Violation Tracker, a UK wide database of enforcement actions brought against companies by government regulators in England, Scotland, Wales and Northern Ireland, as of January 2023, Spire Healthcare has 3 enforcement actions from 2016-2022. The database is readily accessible and can be searched by the public for up to date information on enforcement actions.

Care Quality

In May 2018, a CQC report found that two in five private hospitals are failing to meet safety standards. The private hospital sector was warned by Jeremy Hunt, the then Health Secretary, to put its house in order if it wished to partner with the NHS. Of major concern is that some private hospitals currently avoid liability by saying a clinician is not an employee if something goes wrong. In addition, a clearer process is needed for managing a patient if their health deteriorates in private care and they have to be transferred to the NHS in an emergency.

The breast surgeon Ian Paterson, convicted in 2017 of of multiple charges of wounding with intent due to his botched operations, worked within several Spire hospitals. In 2017, Spire settled all current and known claims against the company relating to his practice at Spire. Spire paid £28.7 million in relation to this settlement, plus related costs, of which £26.1 million has been paid.

The report of the Independent Inquiry which was set up following the conviction and imprisonment of Ian Paterson, was published in February 2020. Spire Healthcare was criticised for not doing enough to follow up Paterson's patients. As a result of this criticism, in December 2020, Spire began a recall of 5,500 patients. Earlier in 2020, senior coroners in Birmingham launched new inquests into 23 of Paterson’s deceased patients at the request of West Midlands Police.

In the company's 2019 annual report, it noted that five of its hospitals are now rated ‘Outstanding’, up from three in 2017, and 85% are rated ‘Good’ or ‘Outstanding’ by the CQC or regional equivalents.

In February 2011 MP Ian Duncan Smith called for an inquiry into the death of a patient with bowel cancer at Spire’s Roding Hospital in Essex in 2009. The patient died of a heart attack and questions have been raised over the hospital’s resuscitation procedure. Furthermore, the patient’s death was recorded as carcinoma of the colon rather than heart attack, and it was only due to information from a nurse who had worked at the hospital that the true nature of the patient’s death came to light.

Financial Stability

Over the years the financial stability of Spire Healthcare has been questioned. The company has massive debts and as it leases several of its properties, it is subject to rent increases and disputes. In 2019, the company's debts were £420.8 million. However, this is considerably lower than the £1.3 billion worth of debt in 2013.

Price-fixing

In mid-2020, the Competition and Markets Authority (CMA) fined Spire Healthcare and six ophthalmologists a total of over £1.2m for illegal price fixing at the Regency Hospital in Macclesfield. Spire Healthcare Ltd and Spire Healthcare Group plc were fined £1.2m while the six consultants received fines of between £642 and £3,859after admitting they had agreed to fix self-pay fees for initial consultations at £200 over a two-year period.

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