We think of our NHS, and Social Care, as a philanthropic safety net, for those, who need protection or help; the old, young, sick, vulnerable and poor.
We do not think of the profit, that this unaccountable, monopolised service of captive consumers represents.
But successive governments have.
Over the past 20 years, they have commoditised ‘need’ by pernicious ‘modernisation’.
The ‘modernisation’ of ‘Charity’, began with the Charities Act 2006, creating a politically controlled, all powerful, Charity Commission, enabling the restructuring of independent philanthropy, into ever larger, corporately run, political bodies.
The ‘modernisation’ of the NHS, by asset stripping, marketization costs under the Health and Social Care Act,private/public partnerships, healthcare consortiums, destructive targets, and ever tighter budgetary control.
The ‘modernisation’ of local authorities, by public/private partnerships, the amalgamation of health and welfare, into local health and social care trusts, mixing budgets, and roles.
Our government is now fulfilling, the ultimate goal, health and social care services are, to be made part of a private equity portfolio, available for global investment, boosting private wealth, and, economic growth.
Enabled, by LA budget cuts, and, targeted safeguarding, and protection, to produce an ever increasing ‘client’ base, via social services, local courts, and MASH.
Our most needy, at the mercy of our most greedy.
Social workers, and courts act as assessors, and enforcers, herding the needy, into adoption, foster care, care homes, and, supported living.
More and more, are harvested, to fill the institutional ‘homes’, being built by venture capital, diverting huge sums of public money into private investment houses, increasing, not decreasing the nation’s deficit.
Why is venture capital/equity being used?
As its name suggests, venture capital, is funding of last resort, to enable small, risky companies to grow, where the risk is too high for conventional backers, but, if successful, likely to reap huge profits for investors ie IT innovations.
It is not used, to build up services, for an existing, publically funded, and ever increasing client base– the ‘needy’- with no future risk.
As David Porter, managing partner at Apposite Capital, a specialist healthcare investment firm, said
‘The UK has emerged as a favoured market thanks to its peculiarities’.
“The reason we focus on healthcare services in the UK is that there is a huge opportunity if you can navigate your way around it successfully. You have this globally unique system where 90% of healthcare is paid for by the government, and the NHS has a zero-growth budget despite demand growing’
Simon Stevens, a senior executive and board member of UnitedHealth Group for ten years from 2004 until 2014, and President of Global Health in 2009 was made the director of NHS England in 2014
So, our hard fought for NHS, the envy of the world, is used, to obtain a guaranteed, continuing investment profit, with rich pickings of its most profitable services.
And, unlike America, not based on insurance, so, unaccountable for its services.
We are left, with the perfect business model, services, provided by a few monopoly companies, receiving guaranteed, and, increasing, government controlled consumers and funding.
No competition, no possibility of complaints, and, effectively self- regulation.
80% of the residential care sector is privately own, and these companies are being taken over by venture capital, and the remaining 20% NHS public, is being privatised.
In the first six months of 2012, Terra Firma Equity, bought nursing home operator Four Seasons Health Care for £825million; Omers bought Lifeways care of 1500 learning disabled adults including Thomas Rawnsley, for £207 million, Castlebeck providing specialist care for vulnerable people, was for sale, and Bowmark Capital, bought Hesley North, a provider of autistic residential care, and education, for £75 million.
Several Care UK homes were being investigated by CQC after being taken over by venture capital see http://www.ft.com/cms/s/0/243543e4-586d-11e4-a31b-00144feab7de.html#axzz47mj5lM45
And what huge profits can be had, from public services, particularly mental health https://finolamoss.wordpress.com/2015/08/01/st-andrews-healthcares-recycled-income/
And, millions lump sum payments, to managers on venture capital purchases.
Special Needs Education, Adoption, Fostering, and Care Homes
And, look at how the remaining independent parts, of the care sector, were analysed as rich pickings, in an investment advice report;
‘All independent sector providers of special education, and children’s social care, together generated annual revenues estimated at £2.0 billion in 2011, representing 23% of the estimated total market size (independent and public sector providers combined) of £8.5 billion a year
Within the fostering sub-segment National Fostering Agency (NFA), now backed by Graphite Capital and formerly by Sovereign Capital Partners, is the largest private equity owned provider with revenues of £54 million in the year to March 2011/12 within a £1.5 billion market, which was 43% outsourced to the independent sector in 2010/11.
Being ‘asset light’ this sub-segment has relatively low capital requirements.
Private equity backed companies, have nevertheless been active in recent years in building the key component of capacity, which is the number of available foster carers.
It is widely recognised within the sector that the number of foster carers is the principal constraint ( note not the number of children in need of protection) on the further expansion of fostering as a lower cost and arguably higher quality substitute for residential care for looked after children’.
A fixed fee of an increasing £30,000 per adoption is paid to an adoption agency, see the figures for fostering in this article
And here the massive scale of the money being given to grow the fostering industry is exposed by corporatewatch here
‘We have found millions of pounds that could be reinvested in the care of children are instead leaving the system as bumper payouts to shareholders. Directors enjoy very generous pay packets, while some companies are siphoning profits out through tax havens in the Channel Islands and the Caribbean’.
If foster carers are the only restriction on industry growth, then Care Homes can be built.
An average placement in a home, costs over £150,000 per year.
Independent sector providers of care homes for younger adults annual revenues, were estimated at £3.9 billion in 2011, dominating the segment with 82%
Self Regulation and Quality Control
‘Each of August Equity’s portfolio companies, Active Assistance, Enara and Lifeways, has an independent Quality Board which takes independent decisions on quality related issues, such as health and safety and staffing levels for specific purposes.
The Quality Boards are independent and are made up of service users and professional leaders. This effectively means that August Equity and its portfolio company managements have ceded control of spending on quality to quality ‘champions’.
Most care home/supported living owners, now have a representative on the local Safeguarding Authority Board.
UK is European leader in Venture Capital Growth deals.
‘Most of the other noteworthy add-ons in the period occurred in the UK. These included OMERS Private Equity-backed Lifeways Group acquiring the learning disability division of Care UK for an estimated £66 million.’
Tax Incentives for venture capital
UK early stage investment is heavily driven by the substantial UK governmental support, provided through the SEIS (Seed Enterprise Investment Scheme), and EIS (Enterprise Investment Scheme) tax incentives (Venture Capital Trusts also play a role).
When Omers, Cambian, bought Lifeways for 403 million, Mark Redman, the senior managing director and country head for OMERS PE Europe said.
‘’The Supported Living market offers considerable long term growth potential and increasing barriers to entry ( no competition) as the social care and independence benefits of this approach become ever clearer ( only government policy for disabled adults) .
Lifeways perfectly fits our investment criteria: it is a market leader in every respect with a proven track record of top quality service (where and by what criteria), and profitable growth both organic and via acquisitions, in a market with sound long term growth fundamentals,”
So, from the care of 1500 learning disabled, in enforced supported living, including the deceased Thomas Rawnsley, the investors, in these ‘commodities’, got substantial tax breaks, a minimum £4,000 per week, six figure management salaries, and millions in buy out payments- all public money, in a time of deep welfare cuts, and austerity.
And what do the learning disabled get?
A service, neither they, nor their family can complain about, or choose, minimum cover, itinerant, zero hour workers, who are transferred with decreasing wages
team leaders, and managers, food , cage and medication, resulting in, even more profit, for the pharma industry.
And, let us not forget, our governments personal connections with the profit made by the healthcare sector
Cambian have also bought the Hesley Group which provided residential education for LD/ASD and services.