As Virgin Care the company became a major player in the market for NHS services following its entry into the healthcare market in 2010. Over the past decade the company has been awarded contracts worth well over £2 billion, with several large contracts in community health. Virgin Care has probably been the most active private company in the area of NHS contracts for community health and in 2016 the company made the move into adult social care. Despite the scale of Virgin Care's business and contracts with the NHS, the company reported little in the way of profit and also paid little tax.
As Virgin Care, the company entered the market for NHS services in 2010 and since then has successfully bid for a wide range of contracts to provide services in the NHS, including: primary care services – GP practices, urgent care centres, minor injury units and walk-in centres; intermediate care services; community services – wheelchair services, prison healthcare, sexual health, community hospitals, neuro-rehabilitation, frail/elderly care, health visiting, district nursing, services for children with complex mental, physical and sensory learning difficulties, end of life care; and social care services.
Many of these services are provided within large contracts that span both health and social care; Virgin has been one of the only private companies to bid for such large complex contracts.
In late 2017, Virgin Care Private was launched, the company's first venture in purely private healthcare. This business venture opened its first health and wellbeing centre in Birmingham in January 2018. The centre provided GP services, specialist consultations, diagnostics and tests and well-being services all on a pay-as-you-go service. However, this venture has now closed.
Twenty20 Capital Ltd, the current owner of HCRG Care Group, is a private equity investment company. The company aims to make as much profit for shareholders in as short a time as possible. Such companies often buy businesses that are either non-profitable or failing and use strategies, such as asset selling, redundancies, and mergers, to create shareholder value.
Virgin Care strategy 2010-December 2021
Virgin Care’s strategy was to target large contracts containing numerous services in the area of community health and social care and increase the use of digital technology to reduce costs.
In 2012, Virgin Care was the first private company to win a large contract for community services when it took over the provision of community care in Surrey under a five year contract and the provision of children’s services in Devon.
Since 2012, the company has won a number of large contracts covering community services, including ones in West Lancashire, Essex, North Kent, Wiltshire and in Bath and North East Somerset.
When the Bath and North East Somerset contract was won in 2016, Virgin Care became the first private company to take over adult social care services, including social workers. The Essex contract won in 2017 also contains a large chunk of social care.
Virgin Care's experience in these large contracts puts the company in a good position in light of the changes planned for healthcare; a major aim of the Sustainability and Transformation Partnership (STP) programme begun in 2016 and the long-term plan published in early 2019 is to integrate health and social care to a greater extent and increase the use of digital technology. It gives the company experience in line with the integrated care systems (ICS) in the process of being put in place around England and championed in the long-term plan.
In May 2021, Virgin Care representatives were reported to be on the board of the fledgling ICS in the Bath and North East Somerset, Swindon and Wiltshire region. A report in The Lowdown noted that Virgin Care’s local managing director Julia Clarke is already listed as a member of the Partnership Board, the unitary Board which currently runs the ICS covering Bath and North East Somerset, Swindon and Wiltshire (BSW).
But a look at the Board Papers for a meeting on May 28 reveals that the Virgin boss is actively intervening to protect the company’s interests. The Lowdown reports that minutes of the March meeting reported a discussion on the extent to which private sector “partners” would be required to be financially transparent towards the other providers within the ICS “for purposes of planning the independent/private sector’s NHS related or NHS commissioned work.” They noted Virgin’s reluctance to share any information with the public.
Strategy to reduce criticism
Virgin Care was well aware of the criticism its involvement in the NHS has garnered, in particular the fact that it pays no tax in the UK and its links to a tax haven. The issue of Virgin’s links to a tax haven was a major issue in its bid for a contract to run Bristol’s children’s community health services in 2015.
Virgin Care did not win the Bristol contract, but the issue of tax avoidance did not disappear. In 2016, campaigners reiterated their concerns over tax avoidance as well as other issues whilst campaigning against privatisation of community services in Bath and North East Somerset; Virgin Care was the preferred provider for this contract.
The campaigners were unsuccessful this time; in November 2016 Bath and North East Somerset CCG and the local council awarded the £700 million contract to Virgin Care. This was the first contract under which adult social care will be privatised. An interesting aspect of this contract, however, was that the CCG and the council involved have stated that a clause was included in the contract under which Virgin would reinvest any "financial surplus" in the service. Virgin Care appears to have agreed to forego its profits in order to obtain the contract. It also indicates the high level of unease surrounding the appointment of Virgin Care within the local area. It should be noted, however, that the phrase “financial surplus” is open to considerable interpretation and it might well be a meaningless clause in reality.
Virgin Care was very successful in winning contracts with the NHS, but if it does not win, the company will turn to the courts.
In 2016 the end of Virgin Care’s Surrey-wide community health contract loomed and the whole process of tendering began again. Interestingly, the CCGs in Surrey decided to split the large contract that had been run by Virgin Care, into smaller contracts.
Virgin Care bid for but did not win the Surrey-wide children's community care contract; this was awarded to an alliance between Surrey and Borders Partnership Foundation Trust and two social enterprises, CSH Surrey and First Community Health. The three year contract was worth £82 million. Previously Virgin Care had run these services together with CSH Surrey and First Community Health.
As a result of losing the tender bidding process, in November 2016 Virgin Care launched legal proceedings against all eight commissioning organisations involved in the contract. A spokesperson for Virgin Care told HSJ that concerns about “serious flaws in the procurement process” prompted the company to launch proceedings. Speaking about the contract when it was run by Virgin and the two social enterprises, Guildford and Waverley CCG’s Wellbeing and Health Scrutiny board said that children and young people had experienced “service variation with differing access for families…a well as gaps in service provision and variation in waiting times.”
In October 2017, the legal case was settled with a payout to Virgin Care. The full amount of the payout was undisclosed, however the Surrey Downs CCG noted in governing board papers that it had paid Virgin Care £328,000. Payment was made by the six CCGs and one council involved and an August 2018 article in the Guardian puts the overall figure paid to Virgin as approximately £2 million.
In December 2017, Virgin Care was awarded a five year contract for the 0-19 year healthy child programme by Lancashire County Council. However, following a legal challenge by the NHS trusts' who were currently carrying out the work a judge overturned the decision in June 2018 stating that the scoring process by the council was flawed. The NHS trusts' continued to run the service until April 2019 whilst the council re-evaluated the bids. In October 2018, following a re-evaluation of the bids, the council re-awarded the contract to Virgin Care.
Strategy in GP services
Originally Virgin Care was strong in the area of GP services, however when CCGs were set up the company reduced the number of GP surgeries substantially. 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. This meant that over 300 GPs would have to relinquish stakes in the GP provider companies. At this point 358 surgeries were listed as being part of these provider companies.
The move by Virgin Care to acquire 100% ownership was reported to be due to possible conflicts of interest between GPs in the Virgin Care practices and the newly introduced CCGs. It appears that many GPs chose to take full control of the GP provider companies, rather than relinquish control to Virgin Care and by 2015, the number of contracts for primary care services, including GP services, held by Virgin Care had reduced substantially to 30, 19 of which were GP practices.
In recent years, Virgin Care has been awarded several contracts for GP surgeries, but this aspect of the business is much smaller than in 2012.
A Guardian article noted that Jeremy Hunt, the Health Secretary, pushed through the deal in Surrey.
Virgin Healthcare Group Holdings Ltd (Company number: 03201165) released its final accounts 30 November 2021 under this name just prior to the rebranding as HCRG Care Group. The accounts for the year ending 31 March 2021 showed a loss of £1.98 million compared to £1.83 million in 2020. HCRG Healthcare Group Holdings is now the parent company of the HCRG Group.
Virgin Care Ltd, now rebranded as HCRG Care Ltd, released its accounts for the year to 31 March 2021 in January 2022. It reported turnover for the year ended 31 March 2021 as £20.9 million (2020: £14.3 million). The company made a profit of £2.3 million for the financial year (2020: £9.9 million loss). According to the Virgin Care Ltd accounts, following the end of the Devon contract, this entity now provides back office function to other Virgin companies in 'the Care Group' and is the parent of Virgin Care Services Ltd.
Virgin Care Services Ltd (Company No. 07557877), now rebranded as HCRG Care Services Ltd, had turnover for the year ended 31 March 2021 of £234.4 million, down from £248.4 million in 2020, a fall due to its exit from the East Staffordshire Improving Lives contract. Profit before tax was £2.5 million (2020: £5.18 million) and profit after tax for 2021 was £4.45 million following tax of £45,000 (2020: £5.13 million). All revenue came from NHS contracts.
Historically, Virgin Care's financial set-up was always very complicated with a number of active companies including Virgin Care Services Ltd, Virgin Care Ltd, Virgin Care Corporate Services Ltd and several limited liability partnerships (LLPs). Virgin Healthcare Holdings Ltd. was the parent of the Virgin Care Group of companies (the 'Care Group') and was the parent of Virgin Care Ltd, which is in turn the parent of Virgin Care Services Ltd. Over the years as contracts have come to an end several subsidiaries ceased trading, including Virgin Care Provider Services Ltd in the financial year 2018/19. All these companies have no been rebranded as HCRG companies.
Prior to its takeover by T20 Pioneer Holdings, the ultimate parent was Virgin Group Holdings Ltd registered in the British Virgin Islands whose sole shareholder is Richard Branson. The British Virgin Islands is a tax haven and entities registered there pay no tax. As a result of the link with the British Virgin Islands, questions were often raised over whether tax would be paid in the UK if Virgin Care made a profit.
HCRG Care Group Holdings Ltd, now the parent company to the HCRG group of companies, is registered in Runcorn, Cheshire and was previously known as Virgin Healthcare Holdings Ltd until December 2021.
The majority owner of HCRG Care Group Holdings Ltd is T20 Pioneer Holdings Ltd (Twenty20), which took control 30 November 2021, and now owns 75% or more of the company. T20 Pioneer Holdings Ltd was registered 30 November 2021 at 33 Soho Square London and is owned by Twenty20 Capital Ltd, an investment fund.
T20 Pioneer Holdings Ltd has four directors - Katie Davies, Ian James Munro, Tristan Ramus and Jamie Webb, all also directors of Twenty20 Capital Ltd.
Historical tax information
Virgin Care Ltd is registered in the UK, however, an analysis by Richard Murphy, a chartered accountant at Tax Research UK, found 13 holding companies, some of them offshore, between Virgin Care and its ultimate parent company, Virgin Group Holdings Ltd based in the tax haven of the British Virgin Islands. Virgin Group Holdings Ltd’s principal beneficiaries are Sir Richard Branson, reported to have a net worth of £2.7bn, and his family. According to Murphy’s analysis, this type of company structure makes it unlikely that Virgin Care will pay any tax in the UK in the foreseeable future.
According to HCRG Care Group's website, the company runs 13 adult and children's community services for the NHS including community-based intermediate NHS services, and 12 primary care services, including GP surgeries, GP-led walk-in and urgent care centres. According to data collected by the NHS Support Federation, since 2010 Virgin Care has won contracts for NHS work valued at around £2.5 billion. However, this is likely to be an underestimate as several contract awards have not been reported publicly or the monetary value of the contract has not been disclosed.
Adult and Children's Community Services
Sexual Health Services in the North East
Virgin Care was awarded the contract for integrated sexual health service across the boroughs of Hartlepool, Middlesbrough, Redcar and Cleveland and Stockton-on-Tees in May 2016 by the councils of these areas. The contract was for five years with an option to extend to nine years. The five year contract was worth £36.2 million. In December 2020, it was reported that Virgin had declined to apply for the extension of the contract and so the contract was due to end in August 2021. However, in August 2021, Virgin announced that it had been awarded a new contract by The Teesside Sexual Health Commissioning Collaborative, which includes Hartlepool, Middlesbrough, Redcar & Cleveland and Stockton-on-Tees local authorities, Tees Valley CCGs, to deliver an Integrated Sexual Health Service across Teesside for the next three years.
Community Services North Surrey and North East Hampshire
In September 2019, Virgin Care and Frimley Health NHS Foundation trust were jointly awarded three contracts, together worth £17 million per year to provide community health services across the North East Hampshire and Farnham and Surrey Heath areas.
The procurement was undertaken jointly by North East Hampshire and Farnham CCG and Surrey Heath CCG. The contracts began 1 April 2020 and will run until March 2025, with a possible extension to 2027.
Healthy Child Programme Lancashire
In December 2017 Virgin Care was awarded the five year contract for the 0-19 year healthy child programme in Lancashire by Lancashire County Council. The contract covers school nurses, health visitors and many other services for young people. Previously it was run by Lancashire Care Trust under a contract that expired at the end of March 2018.
In January 2018, the two incumbent trusts, Lancashire Care Foundation Trust and Blackpool Teaching Hospitals FT challenged the contract award. The challenge meant that the formal awarding of the contract was suspended for several months. The case was heard by the Technology and Construction court, which deals with procurement disputes. The two trusts had submitted a joint bid for the contract.
In June 2018, the decision by Lancashire county council to award this £104 million contract was thrown out by a high court judge following the legal challenge from NHS trusts. The local authority’s process was deemed to be flawed in awarding this contract to Virgin Care. The judge, Justice Stuart-Smith, stated the council’s decision to score Virgin’s bid more highly than that of the NHS trusts’ was not substantially supported in its notes of the scoring procedure.
The trusts’ were granted an extension for providing services until April 2019 whilst legal proceedings continued and the council said this would stay in place whilst they considered their options. However, when the bids were re-evaluated overseen by an independent panel in October 2018, the council re-awarded the contract to Virgin Care.
West Lancashire urgent care and community care
Virgin Care was awarded two five-year contracts together worth £65 million in December 2016 by West Lancashire CCG. The community health services contract is worth £45 million and the urgent care services is worth £20 million; both started on 1 April 2017.
The services include district nurses, community matrons, IV therapy, end of life teams, GP out of hours and walk-in centres. The previous provider, Southport and Ormskirk Hospital NHS Trust, was not shortlisted for the contracts.
Essex County Council Children's services
In November 2016, Essex County Council awarded a seven year contract to Virgin Care, in partnership with Barnardo’s, to run its Pre-Birth to 19 Health, Wellbeing and Family Support Service across Essex. The contract began in April 2017.
The new service combines a range of existing services, including the Healthy Child Programme, Healthy Schools, Family Nurse Partnership and children’s centres. This contract contains social care as well as health care.
The contract is worth £354.6 million, but if further services are added and an extension of three years, the contract could be worth over £800 million.
In West Essex, the service was jointly commissioned with NHS West Essex Clinical Commissioning Group and will also include children’s community nursing, paediatrics, therapies and specialist services.
In August 2016 Virgin Care was chosen as preferred bidder to take on a seven year contract, worth around £700 million with an option to extend for three years, to coordinate over 200 health and social care services in Bath and North Somerset. The contract was awarded in November 2016 despite substantial opposition. This is a prime provider contract with Virgin Care directly delivering and coordinating services, but with the option to subcontract to other providers where appropriate. The contract has given Virgin a powerful position in the development of the region's integrated care service (ICS). In May 2021 Virgin representatives were reported to be on the board for the development of the ICS.
Virgin Care was chosen over a consortium led by the social enterprise Sirona Care and Health, which included Avon and Wiltshire Mental Health Partnership Trust, Royal United Hospitals Bath Foundation Trust, Dorothy House Hospice Care, and the GP organisation Bath and North East Somerset Enhanced Medical Services.
Under the contract, in April 2017, Virgin Care began running three statutory services – adult social care, continuing healthcare and children’s community health – from April 2017.
The deal marks the first time a council’s core adult social work services will be directly delivered by a for-profit private firm. Previous outsourcing by councils have seen social work run by local authority-owned trading companies or not-for-profit social enterprises that have been spun out of social services departments.
A range of non-statutory services such as public health nursing, integrated re-ablement and speech and language therapy are also included in the contract.
Due to the weight of opposition against Virgin Care being awarded the contract, additions were made to the contract. According to Councillor Vic Pritchard, cabinet member for adult social care and health at Bath and North East Somerset Council there is a clause in the contract that would require “any financial surplus made by the new prime provider to be reinvested into services in Bath and north east Somerset”. It is unclear whether this means the Virgin will operate not-for-profit as it should be noted that definitions of "financial surplus" can vary widely. The contract has been opposed by unions and social work leaders.
Sexual health services in Cheshire West and Chester
In December 2018, local media reported that Virgin Care has been awarded the contract for sexual health services in Cheshire West and Chester. The contract awarded by Chester Council under its public health remit will be worth £2.6 million. The previous contract was managed by East Cheshire CCG and the Royal Liverpool Hospital. Virgin Care began running the service in April 2019.
North Kent adult community services
In January 2016 Virgin won a bid to run adult community services across Dartford, Gravesham, Swanley and Swale region of North Kent. This seven year contract is worth £18 million per year and could be extended for an extra three years. Virgin Care will take the contract from Kent Community Health Foundation Trust, which reported that it lost out to Virgin Care in the area of price. Kent Community Health Foundation Trust, said it scored ”slightly higher” on quality in the assessment process.
In February 2016 Kent Community Health Foundation Trust questioned the commissioning CCGs (Swale and Dartford, Gravesham and Swanley) over their methodology in the selection procedure. In late February 2016 the Kent Trust began legal proceedings at the High Court challenging Dartford, Gravesham and Swanley CCG and Swale CCG. This challenge triggers an automatic suspension of the awarding of the contract until the case is settled or discontinued. In June 2016, however, the contract suspension was lifted and the contract could then be transferred to Virgin Care.
Community child health services in Wiltshire
In December 2015 Virgin Care won a £64 million, five-year contract, to provide community health services in Wiltshire for children, including children’s specialist community nursing, speech and language therapy and health visitors. The contract began in April 2016 and is worth £12.8 million per year. HCRG Care Group's website lists that it is still running these services in early 2022.
HCRG Care Group has 12 primary care contracts, including GP surgeries, walk-in centres, urgent care centres and one minor injuries unit. Virgin Care took over Sutherland Lodge Surgery in Chelmsford in July 2016 after cuts in PMS funding forced the GP partners to hand back the contract. The CQC had rated the surgery as outstanding. In just under two years run by Virgin, the practice received an "inadequate"rating from the CQC.
- Community dermatology in North and North East Lincolnshire, Oldham and the Wirral;
- Oldham skin clinic;
- Physiotherapy services to the NHS;
- HCRG Care has a place on the NHS England South Region Framework Agreement for the Provision of General Medical Services in Short-Term and Exceptional Circumstances;
- With NHS Coventry to provide health services at the Anchor Centre and Meridian Practice for the homeless, asylum seekers and refugee patients in the city;
- HCRG Care Group provides primary healthcare to the prisons HMP Bure, HMP Wayland, and HMP Norwich.
Other contract news/previous contracts
Elderly care in East Staffordshire
Virgin Care won a £280 million contract in March 2015 to provide services for the frail and elderly in East Staffordshire. Virgin Care was to be the prime provider under this seven-year contract and could sub-contract the work to other organisations. This was a fixed-price contract.
In April 2019, Virgin announced that it would leave the contract entirely in April 2020, three years early. The reason given was that Virgin and the CCG were unable to come to a new financial agreement. Virgin stated that it is not able to run the service on the money provided by the CCG and it is not prepared to make up the shortfall.
In March 2016, it was reported that the start of this contract had been delayed by a month and began 1 May 2016; this was due to the need to finalise some arrangements, according to the CCG and Virgin Care.
The contract covers 38,000 people with long term conditions, as well as an estimated 6,000 elderly people. It measures performance against patient outcomes such as rate of falls, admissions into hospital, diabetes blood test management and patient mortality.
The contract has been dogged by contractual and financial issues. In March 2017, CCG board papers seen by the HSJ revealed that Virgin Care and East Staffordshire CCG were in dispute over contractual arrangements. This dispute has impacted on Burton Hospitals Foundation Trust; the trust is unable to agree a contract with Virgin Care under the prime provider model due to the CCG dispute.
HSJ reported that minutes from the Burton Hospitals’ board meeting on 12 January said: “The trust would have been in a position to sign the contract had it been able to reach an agreement with Virgin Care, however, this had not been possible…Virgin Care were discussing their contract issues with the CCG and a meeting had been scheduled between NHS England, NHS Improvement, Virgin Care and the CCG…Virgin Care was clear that its issues with the CCG would need to be resolved prior to entering into a contract agreement with the trust.” This could have a major impact on the Burton Hospitals Foundation Trust's finances.
In October 2017, HSJ reported that Virgin Care was demanding more money from the CCGs. No amount has been officially confirmed, but HSJ noted "that sources have told HSJ the private provider has asked for nearly £5m extra." According to HSJ in October 2018, the CCGs did not provide an extra £5 million to Virgin Care and as a result Virgin Care has terminated parts of the contract; the company no longer acts as a prime provider commissioning services such as hospital-based services, 111 and out-of-hours services. Virgin Care does, however, continue to provide the community services, which it has direct responsibility for, including specialist nursing, community nursing, care coordination and care navigation. The CCGs involved told HSJ that from June 2019 they would contract directly with the services, instead of Virgin sub-contracting.
In July 2012 Virgin Care won a three year £131 million contract to provide a range of core NHS and social care services for children and adolescents in Devon. Extensions to this contract took place, but by 1 April 2019, Virgin Care had lost all the contracts for children's services in Devon.
The new contract was advertised in 2018, but Virgin lost out to an alliance of NHS providers and a not-for-profit organisation. The contract was eventually awarded to Devon Children and Families Alliance for community health and wellbeing services across the county. The contract is worth £166m over seven years, with the potential to extend for three years.
The alliance comprises the six main providers in the county: Torbay and South Devon Foundation Trust, Devon Partnership Trust, Royal Devon and Exeter FT, University Hospitals Plymouth Trust, Northern Devon Healthcare Trust, and Livewell Southwest (a community interest company).
Staffordshire Cancer and End-of-Life Care
Virgin Care, along with Optum and an Interserve consortium, was reported to be in the running for a ten year £535 million contract for end-of-life care in Staffordshire. A contract which was restarted after it was previously put on hold following the collapse of the UnitingCare contract in Cambridgeshire and Peterborough.
However, in July 2017 the process was abandoned entirely.
At the same time, another ten year contract in Staffordshire, this time worth £687 million and for coordinating cancer care, was being tendered. However in early April 2017 the process was cancelled over concerns of financial liability.
The procurement process for both the end-of-life care and cancer care since 2013 has cost the commissioners over £840,000.
Community services in Surrey
From April 2012 to the end of March 2017, Virgin Care had a contract worth £450 million to deliver community services across Surrey.
In 2016, the commissioners involved in healthcare in Surrey decided to break the contract into smaller contracts for the next round of procurement. By April 2016 three individual Surrey CCGs had already advertised separate contracts for community services. Virgin put in bids for at least two, although possibly for more.
Virgin was given preferred provider status for the £176 million adult community services for Guildford and Waverley CCG in August 2016. However, in February 2017 the CCG Governing Body reviewed the progress being made to mobilise the new service, and as a result it decided not to progress with Virgin and has since begun a reprocurement process; Virgin was given a six month interim contract to cover the time for the reprocurement.
Virgin Care also did not win the contract for children's community services in Surrey. However, in this case, Virgin Care began legal proceedings in November 2016 against the eight commissioning organisations involved.
Twenty20 Capital takeover
Twenty20 Capital the owners of HCRG Care Group via T20 Pioneer Ltd is a private equity investment company. Often the approach of such companies is to acquire failing companies and then aim to make maximum profit for investors in as short a time as possible, which could be by merging with another company, making strategic changes (sale of subsidiaries, redundancies) or breaking up the company and selling its assets. With every exit from an investment (sale of a company in its portfolio), Twenty20 Capital's website proudly notes that this "reinforces Twenty20 Capital’s focus on realising value for shareholders."
A recent example of the company's approach is the acquisition of the homecare provider Allied Healthcare in 2018, when it was on the brink of collapse. Allied was merged with CRG Homecare, a homecare provider business already owned by HCRG, a recruitment company owned by Twenty20 Capital. In October 2021 just three years later, Twenty20 Capital sold the combined company CRG Homecare, which is now the second largest homecare provider in the country, to homecare company Cera for an undisclosed amount.
Tristan Ramus, chairman at Twenty20 Capital, noted: "The core principles of Twenty20 Capital’s investment philosophy have driven an outstanding shareholder return in under three years. Supporting and augmenting the management team to execute challenging strategic and operational decisions has created a highly attractive, scaled and profitable platform in this highly competitive homecare services market."
Virgin Care's largest contracts are in the Bath and North East Somerset area. In early December local media reported that residents and councillors involved with the contracts had not been told of the takeover and change of ownership. They are now concerned over the standard of health care following the takeover. In a letter to the Bath Chronicle, Paula Riseborough said that she "shocked" to hear of the takeover and rebrand as the HCRG Care Group and that BANES (Bath and North East Somerset) councillors were given no prior warning of the news.
Integrated Care Systems
Campaigners' concerns that the proposals in the NHS White Paper to give statutory powers to “Integrated Care Systems” will lead to private companies sitting on ICS Boards has been proved true. Virgin Care’s local managing director Julia Clarke is listed as a member of the Partnership Board, the unitary Board which currently runs the ICS covering Bath and North East Somerset, Swindon and Wiltshire (BSW). It is feared that the presence of private companies on the boards' of ICS, will give them too much influence, and reduce transparency and accountability.
An article in The Lowdown reported that in the Board Papers for a meeting on May 28 the Virgin boss on the BSW board actively intervened to protect the company’s interests. Minutes of the March meeting reported a discussion on the extent to which private sector “partners” would be required to be financially transparent towards the other providers within the ICS “for purposes of planning the independent/private sector’s NHS related or NHS commissioned work.” They noted Virgin’s reluctance to share any information with the public.
Virgin Care representatives are also sitting on the Palliative and End of Life Oversight Group; there are two Virgin nominees, alongside two representatives of Medvivo, the private company supplying out of hours GP services and urgent care, which is also to be brought on to the ICS Partnership Board.
Since 2010 when Virgin Care was formed the holding company, Virgin Healthcare Holdings Ltd has not reported a profit but a loss each financial year. No profit means no tax is paid in the UK and this continued to be the case in the financial year up to end March 2020. However, Virgin Care’s position within the complex structure of Richard Branson’s empire has raised some questions about tax liabilities.
In March 2015, an investigation by Richard Murphy,a chartered accountant at Tax Research UK, highlighted the use of tax havens by Virgin Care and other private companies working with the NHS. The investigation found 13 holding companies, some of them offshore, between Virgin Care and its ultimate parent company, based in the British Virgin Islands, a tax haven.
Murphy’s research also found that Virgin Care borrows money solely from a Virgin holding company and reports that it will repay that loan, which will be corporation tax-deductible, when a profit starts to be recorded. That holding company is based in the UK but it, in turn, owes money to other parts of the Virgin business, whose ultimate parent company is in the British Virgin Islands. This type of corporate set-up has potential for reducing or eliminating the tax liabilities of operating companies; a company in the UK could always report a loss due to loan repayments to sister companies thereby never having to pay tax.
Virgin Care refute suggestions that the company will not pay tax at some point in the future.
Virgin's use of tax havens within its corporate structure, such as The British Virgin Islands, has led to controversy in the media. It also proved a component in a campaign against Virgin Care being awarded a contract with Bristol CCG for children’s community services. In the end the contract was awarded to a community interest group.
The whole campaign, however, highlighted a rule that many CCGs have adopted in their constitutions about the awarding of contracts to companies that use some form of tax-avoidance strategy, such as off-shore companies.
According to a report in The Independent in February 2016 Bristol CCG is now in the process of deleting the rule, after it was questioned during the tender in 2015 for children’s community services. Lawyers for the CCG reportedly feared that the rule discriminates against companies that are legally avoiding tax, thus allowing them to sue the NHS if they do not win the contract. There are a number of CCGs that are now reconsidering this type of clause in their constitution.
Care Quality Concerns
There are concerns with the way Virgin Care runs its GP services. The Sutherland Lodge practice in Chelmsford, Essex, was taken over by Virgin in July 2016 after the previous partners handed back their contracts following £400,000 funding cuts to their contract. Prior to the takeover, the practice was rated outstanding, but in May 2018 the Care Quality Commission (CQC) rated the surgery inadequate overall. The rating is based on an inspection carried out in December 2017 just 18 months after Virgin Care took over the practice. Virgin Care also received more money for the contract than the previous GPs.
Under Virgin Care the CQC rated Sutherland Lodge inadequate on four of the five key measures – the safe, effective, responsive and well-led categories – and rated it “requires improvement” in the “caring” category. The practice has been placed in special measures and if improvements are not made within six months Virgin Care could be stripped of the 10-year Alternative Provider Medical Services (APMS) contract it was awarded to run Sutherland Lodge.
There are also concerns over the way Virgin runs another GP practice in Essex; in October 2017 Nicholas Challen made an official complaint to NHS England about the treatment of his father prior to his death. He told the local newspaper that in his view "Virgin are running the surgery as a standalone profit centre, and cutting corners to make the numbers work rather than a public service, fit for purpose."
There are also issues with regard to care quality concerns one of Virgin Care’s biggest contracts. It came to light in October 2017 and was reported in The Bath Chronicle that Virgin Care managers had been asked to ‘hold off’ from contacting the CQC as the company struggled with IT issues, despite managers having a legal obligation to report concerns. As a result of these issues, in the first three months of the contract, “patients had appointments cancelled, letters and reports were not sent out, and nurses had problems updating patient records,” according to The Bath Chronicle.
Earlier in the year, in April 2017, the Wiltshire Times reported on the treatment by Virgin Care of a severely disabled girl in Wiltshire; Virgin Care took over community children’s health services in April 2016. Josselin Tilley, has a complex life-limiting syndrome; prior to the contract change, the family would be visited three nights a week by NHS carers and have bi-monthly respite visits. In mid-January their care package stopped, which has left them with no care at all for the past three months. The family has also not seen a consistent paediatrician. Virgin Care has told the family that “there have been no changes to the level of service provided”. The family’s concerns have been echoed by other families in the area.
There was another case reported in June 2019 from Wiltshire, where a five-year-old girl - Carmela Chillery-Watson - with muscular dystrophy fell short of regular physiotherapy sessions that she was previously receiving before Virgin Care took over NHS contracts. Carmela is now being offered physio sessions every 4-6 months reported her mother, Lucy Chillery-Watson. This has lead to Lucy having to research and do physio with her daughter herself as Carmela's disease progresses. Lucy has been emailing Virgin Care for over a year about the issue and they have claimed to be too short-staffed, with "not enough resources or funding". Considering Carmela has a progressive muscle disease and is offered physio every 4-6 months, a Virgin Care spokesperson said: “While there are some vacancies in our physio team locally, we still meet the needs of our patients and ensure that the care we provide meets the care plan put in place to help them."
Concerns over care quality began in 2012, when Channel 4's documentary series Dispatches focused on Virgin Care's business in a programme entitled 'Getting Rich on the NHS'. The programme reported on Virgin Care's clinic in Northampton, which patients claim has become over reliant on locum GPs and Virgin Care had failed in its commitment to extend opening hours.
The programme also highlighted problems in Teesside, where the company provides sexual health tests. The service repeatedly missed targets on the numbers of people screened for Chlamydia. A memo revealed staff were asked to take home testing kits to use on friends and family to help make the numbers up.
In September 2015 an inquest heard of the death in September 2013 of Madhumita Mandal of multiple organ failure and sepsis. Mrs Mandal visited the Virgin Care run urgent care centre in Croydon in agony and vomiting, according to her husband, where she was triaged by a receptionist with no medical training, as not seriously ill enough to see the A&E doctor but put on the list to see a nurse.
The senior coroner at the inquest said she would write to Croydon CCG, which buys in the Virgin Care service, with her concerns about the triage system, which gives receptionists with no medical training responsibility for deciding if patients need emergency treatment. Virgin Care are reported to have defended the use of a non-medically trained receptionist to triage patients and said that Mrs Mandal had been “correctly streamed”.
The problem with Virgin Care’s use of receptionists to triage patients had already been noted by CQC inspectors: Mrs Mandal died two months after a CQC inspection of the urgent care centre, in which the inspectors noted: "We were concerned that there was a risk of a patient with a serious illness or injury being wrongly streamed and their condition deteriorating." A&E doctors had also voiced fears about the Virgin Care centre's triage system, the inquest heard.
Labour MP for Dewsbury, Paula Sherriff, revealed under Parliamentary privilege in the House of Commons, that when she worked for Virgin Care the company forced patients to attend extra appointments to boost profits. Sherriff accused Virgin Care of insisting on “extra consultations before surgery, boosting their profits at the expense of the taxpayer and patient safety”.
Before she stood for parliament, Sherriff worked in Virgin Care’s dermatology service in West Yorkshire. She claims patients were obliged to book a second, follow-up appointment before receiving treatment – for a suspect mole, for example – when the NHS would previously have carried out the same work in a single booking. She added that this was among “many unethical practices” she had witnessed.
Interference in CCGs plans
In February 2016, the HSJ reported that Virgin Care had made a legal challenge over Hull CCGs plans for primary care provision in its area. Hull CCG wants to create geographical groups of practices, each operating as larger scale providers. However, the initial plan to create the groups, by inviting groups of GPs to take over practices currently run under time limited contracts, was challenged by Virgin Care.
Eight out of about 50 surgeries in Hull are run under alternative provider medical services (APMS) contracts, which are due to expire in March and three of these are run by Virgin Care. Hull CCG now has to undertake a full procurement process in four lots for the future provision of the primary medical care services currently provided through the APMS contracts. Critics note the additional cost that a full procurement process will place upon an already cash-strapped CCG. In March 2017, the four lots were awarded to new providers; Virgin Care did not bid for any of the lots.
As a result of losing the tender bidding process for a children's community care contract in Surrey, Virgin Care launched legal proceedings in November 2016 against all eight commissioning organisations involved in the contract. A spokesman for Virgin Care told HSJ that concerns about “serious flaws in the procurement process” prompted the company to launch proceedings.
Speaking about the current contract run by Virgin and the two social enterprises, Guildford and Waverley CCG’s Wellbeing and Health Scrutiny board said that children and young people had experienced “service variation with differing access for families…a well as gaps in service provision and variation in waiting times.”
The dispute was settled in November 2017 with a payment to Virgin Care by the CCGs involved. The amount actually paid to Virgin Care is unclear. HSJ saw details of a payment by NHS Surrey Downs in governing body papers, but these were removed from the website soon after. HSJ notes what happened as follows:
"However, governing body papers for NHS Surrey Downs – one of the six CCGs involved - have revealed that its “liability” in the case is £328,000. The sum was published this month in a finance paper covering October on the CCG’s website. The paper was uploaded earlier this week but subsequently removed after HSJ started to enquire about the settlement. A CCG spokesperson said the reference had been removed because “the level of detail…should not have been included in the report.” Payment was made by the six CCGs and one council involved and an August 2018 article in the Guardian puts the overall figure paid to Virgin as approximately £2 million.
In April 2017, it was revealed that Virgin Care is in dispute with East Staffordshire CCG over arrangements in the seven-year prime provider contract for frail elderly patients, people with long term conditions and intermediate care. The exact nature of the dispute had not been reported, but the dispute has had a knock-on affect on Burton Hospitals Foundation trust and could have implications for the finances of the trust.
Then in October 2017, HSJ reported that Virgin Care was demanding an extra £5 million from East Staffordshire CCG. According to HSJ in October 2018, the CCGs did not provide an extra £5 million to Virgin Care and as a result Virgin Care has terminated parts of the contract; the company will no longer act as a prime provider commissioning services such as hospital-based services, 111 and out-of-hours services.