My Eye: looking at the implications of private units in NHS Foundation Trusts

July 2014


Until I was summoned to an appointment at a private hospital I’d never heard of, for a procedure I didn’t need, I was ignorant of the manner in which NHS Foundation Trusts are obliged to raise money by running private units.

For nearly two years I’ve been receiving treatment at the Kent and Canterbury Hospital under the supervision of ophthalmology consultant, Mr X, for the inflammatory condition, vitritis. The disorder impairs vision, causes discomfort and light intolerance (uviitis). First, I was investigated for suspected sarcoids and eventually treated with steroid drops, then a course of oral steroids, then a steroid implant – Ozurdex – which slowly released steroids into my eye over several months.

In March 2014, a colleague of Mr X’s, Mr Y, also a consultant, viewed scans which showed my condition had slightly improved and was certainly not getting any worse. I was advised I needed no further treatment for now and given an appointment for monitoring purposes in July, 2014.

A couple of weeks after being told I needed no further treatment, a letter arrived from Spencer Private Hospital, Margate, inviting me to attend an appointment on 18th March with Mr Z, consultant opthamologist. At the time I was in London due to family illness. I tried making contact with Spencer Private Hospital to find out what the appointment was for and why they had my details. As this contradicted what I had been told at Kent and Canterbury Hospital, I was worried as to its purpose. When nobody picked up the phone at Spencer Private Hospital, I travelled home to Whitstable from London and my partner drove me over to Margate.

Mr Z told me that he was going to give me the first of a series of three injections in my eye. When I pointed out that this did not concur with Mr X’s advice, Mr Z insisted that the injection he was about to give me was a recently-licensed drug, much better than Ozurdex, and carried fewer risks as the needle used was smaller, though there was still a risk of side effects, including retinal detachment, increased eye pressure and glaucoma. I asked Mr Z whether he had my notes from the K & C. All he had was a manilla folder with my name and hospital number inside. I noticed that a nurse who was hovering nearby had prepared a trolley with the medication ready to be injected.

When I declined on the grounds that I may be subjected to an unnecessary procedure that was intrusive and potentially risky, Mr Z walked me out to the front office where G (Outpatients Bookings/IT Administrator) was told to sort it out.

On March 21 I wrote to Mr X requesting clarification about my treatment and asking how the Spencer Private Hospital came into possession of my name and address. When he did not reply. I made a complaint that crossed with a letter from him in which he confirmed that I did not need further treatment and denied that he had referred me to the Spencer Private Wing. He said the appointment had been an administrative error. He advised me that if I received any further communication from Spencer Private Wing, just to ignore it. His response implied that he did expect me to receive further such communications.

However, after I made a formal complaint to Kent and Canterbury Hospital, I received yet another invitation from Spencer Private Hospital, again offering an appointment with Mr Z. I telephoned Spencer Private Hospital using the number for G. He was insistent that Mr X had indeed referred me for an appointment.

The response of the East Kent Hospitals University NHS Foundation Trust to my complaint was limited to the single issue of the erroneously generated appointments and did not answer my questions about the relationship between the EKHU NHS Foundation Trust and the Spencer Private Hospital. I had made clear that I did not want to be treated in a private hospital unless absolutely necessary. As things are, it is difficult enough to identify whether a particular procedure is being provided by a private company or the NHS as the latter frequently incorporate the NHS logo into their identities. Hence, many complaints against “the NHS” should be laid at the door of companies like Capita, VirginCare or Harmoni.

Part of my anxiety was due to the unexplained linkage between my treatment at an NHS unit and how this translated into receiving an invitation for private treatment. Who would have been liable had I complied with Mr Z and complications had arisen from the unnecessary treatment?

Although I believe it is illegal for NHS services to recruit patients for private NHS business[i][ref] I am concerned that my experience was not a one-off error. Another, less assertive, patient is potentially at risk of having unnecessary procedures that are charged to the NHS by private providers. Data protection within the health service is also an issue of concern.[ii][ref]


On 23rd June, 2014, Heather Munro, Divisional Head of Nursing, Surgical Division, wrote to me,


“An investigation into how you came to receive a duplicate appointment for treatment to take place at the Spencer Wing QEQMH, has now reached conclusion. Mr X is sincerely sorry that he inadvertently requested this appointment for you. Your name was erroneously included on a referral document and he deeply regrets this. The mistaken information has now been retrieved from the Administration Department in Spencer Wing QEQMH and the data has been removed from their system records.”


Ms Munro continued:

“The key actions that we are taking are: removal of erroneous referral data information from Spencer Wing QEQMH database, Ophthalmology Operations Manager to investigate introduction of a robust checking system of referrals from clinic appointments prior to them being actioned.”


The issue needs further clarification as the amendment to the Health and Social Care Act regarding NHS solicitation of private work (see footnote 1) does not mesh with the requirement of NHS Foundation Trusts to set up private units to raise money to fund themselves. It makes no sense that they would not refer NHS patients to their own privatised units, ‘erroneously’ or not. In fact, the reply I received to my complaint confirms that patients are being referred, though my own referral was ‘erroneous.’ Clinicians working across the private and NHS spheres, combined with Foundation Trusts who are forced to raise money by selling their services to privately run units, create an impression that the NHS is eating itself from within. Is the NHS actively participating in its own demise by channeling funds into privatising itself?


The relationship between the East Kent Foundation Trust and the Spencer Private Hospital is difficult to unravel. The Spencer Private Hospital website advertises breast enhancement, arm lifts, ear pinning, brow lifts, facelifts and nose jobs. It is located in the grounds of the Queen Elizabeth the Queen Mother Hospital, Ramsgate Road, Margate, Kent. Its parent company is East Kent Medical Services Limited; its CEO is Di Daw and one of its directors is Stuart Bain, CEO of East Kent Hospitals University NHS Foundation Trust.

Financial statements and directors’ reports available on line for East Kent Medical Services Limited describe the “Ultimate parent undertaking” thus:


“The company is a 100% subsidiary of Healthex Limited (incorporated in the UK) and was ultimately controlled by Invicta Hospitals Project Limited until the sale of the shares in Healthex Limited on 3 December 2012. After this date the ultimate controlling part is East Kent Hospitals University NHS Foundation Trust, the parent company of Healthex Limited. Group accounts are prepared by EKHU NHS FT.”


Loans from the parent company (the Foundation Trust) and Healthex are being repaid over 20 years till 2028 and bear 4% interest above bank rates.


Some non-executive directors hold multiple directorships and have links to pharmaceutical, defence, IT, housing development and insurance companies.

In addition to the CEO of the Foundation Trust, Stuart Bain, the Director of HR and Corporate Services of the trust, P.J. Murphy, also sits on the Board of East Kent Medical Services Limited, as do other senior personnel from the Foundation Trust.

Minutes of a company board meeting dated 27 April 2012 [PDF published on line] include an item entitled “A Review of Options on the Future Control and Management of the Spencer Private Wing Group of companies,” followed by a note reading “this item is redacted due to commercial sensitivity.”[iii]

Sophie Barnes, writing in HealthJournal Online, discloses:


“East Kent Hospitals University Foundation Trust is seeking to work with an independent provider to ‘reinvigorate’ its private patient service.”[iv]


According to Barnes, the trust is tendering for a partner to develop a private hospital at the site of the Arundel Unit at William Harvey Hospital in Ashford. The contract is worth between £30 and £45 million and will last between 15 and 25 years. She quotes an advertisement[v] in which the trust stated it was looking for a provider who can deliver a return of more than 15 per cent on any investment made by the trust. The trust also hopes that the provider will “enhance the returns from Spencer Private Hospital.”[vi]

The 15 percent return mentioned is based on profit, not turnover. An announcement about this is expected this month (July, 2014).

The Arundel Unit at William Harvey, a mental health unit, was closed in 2012 after several high profile tragedies[vii], thus creating a long round trip to Canterbury or Margate for users.[viii]

In my opinion, this follows a pattern of units being starved of resources, ‘allowed’ to fail, then privatised on grounds of ‘failure.’

On the face of it, the NHS raising money from private patients having cosmetic surgery could benefit NHS services. East Kent Medical Services Limited/Healthex was a pre-existing local company taken over by the NHS. At least they saved the cost of having to start a private unit from scratch. Given the intention of the government to shift the responsibility for healthcare away from the Secretary of State and the example set by groups of GPs who have set up consortiums which have then been gobbled up by large private companies including hedge funds, the likelihood that this kind of privatisation could have a positive outcome is low.[ix] The Bureau of Investigative Journalism found that over half of the board members in some GP consortia have links with Assura Medical, part of Richard Branson’s Virgin Group.[x]

It appears the foundation trust tried to play the system by integrating East Kent Medical Services into its structures but the government has made it easy for the financial sector to muscle in and take over such enterprises. Why should the NHS have to squander its resources on running private companies that become easy prey for equity fund vultures? Even though in this instance the company has not brought in spectacular amounts of money, the modus operandi is to make it difficult for the NHS to succeed in the private sector, then sell off the business to a hedge fund. Isn’t that how it works?

BBC Blogger Nick Triggle wrote:

NHS hospitals would be allowed to do 49% of their work in the private sector – something which could potentially mean eight in 10 increasing their private work 25-fold.

But NHS hospitals are not chomping at the bit to privatise themselves, so his use of the word ‘allowed’ is slightly misleading: ‘forced’ seems more descriptive of the situation.

However, Triggle also reported that some health managers are ‘rebelling’ against plans to create ‘greater competition’ in the NHS.[xi]

Guardian writer, Polly Curtis, notes that section 44 of the 2006 Act had, in practice, maintained a cap on private work ranging from 2-10%.[xii]

The government claimed that it had incorporated protections into the 2012 Act. However, these were introduced after Earl Howe had introduced the 49% cap. OnDecember 14, Lord Phillips of Sudbury, Baroness Finlay of Llandaff, Lord Kakkar and Lord Darzi of Denham tabled the following amendment:

299B Page 159, line 33, at end insert—

“( ) An NHS Foundation Trust may provide private health treatment and care but not so that its provision is to any significant extent detrimental to that provided for the purposes of the health service save that that shall not restrict accommodation and services not available within the health service nor restrict treatment or care where that is not a clinical priority.”

On December 14th, a further amendment was introduced by Lord Philips of Sudbury et al:[xiii]

“NHS services must not use NHS business to recruit private patient business.”

In accordance with the timetable of the Act, Monitor updated the rules on the private patient income cap for NHS Trusts on 2nd October 2012.[xiv]

Lord Sudbury subsequently withdrew his amendment, persuaded by the government’s blandishments.

While we await the outcome of the bidding to develop the Arundel Unit, let’s consider the likely contenders who involve themselves in such profitable business ventures.

Hackney Coalition to defend the NHS[xv] has identified ‘grave concerns’ about the services Harmoni has provided since it was contracted to provide Out of Hours medical care in Hackney a few years ago. They looked into the ownership of Harmoni and found that, in November 2012, the company was bought up by Care UK. In November, 2009, Care UK funded the office of former Health Secretary, Andrew Lansley. Their chair is Jim Easton, once a top civil servant in the Department of Health. According to research by the Hackney group, Care UK is, in turn, mostly owned by Bridgepoint, a private equity company chaired by Alan Milburn, the former Labour Health Secretary who pushed for opening the NHS to the private sector. An informative photographic exhibition entitled “How come we didn’t know?” by Marion Macalpine, an activist with the Hackney group, illuminates the above facts.

With the advent of TTIP[xvi], it will be impossible for companies to resist being taken over, illegal to end private contracts and illegal to stand in the way of privatisation.

Lucy Reynolds, London School of Tropical Medicine, speaking at an NHS/TTIP meeting, pointed out:

“What’s left, or what the private sector doesn’t want, is for philanthropy and charities to provide, using volunteer workers.

Since Thatcher, in fact since the 1970s, there have been waves of aggression against the NHS. First the easy bits, like catering…”

She references Oliver Letwin’s book Privatising the World, published in the 80s, and continues:

“The Health and Social Care Act is an insurance industry takeover, so health care in the UK becomes a clone of the US healthcare industry by 2020.”[xvii]

The notion that it doesn’t matter so long as healthcare remains free at the point of delivery is a common misconception. The private sector will cream off the profitable procedures and the reduced NHS will struggle to provide for the rest of us.




[i] Debate in House of Lords, December 14, 2010.

[ii] Swinford, Steven, senior political correspondent, “NHS legally barred from selling patient data for commercial use” Daily Telegraph, , 28th February 2010.

“Ministers will also bolster criminal sanctions for organisations which breach data protection laws by disclosing people’s personal data. Under a “one strike and you’re out” approach, they will be permanently banned from accessing NHS data.

The privacy drive comes after The Telegraph disclosed this week that 13 years of hospital data – covering 47 million patients – was sold by the NHS for insurance purposes.

The society of actuaries, which obtained the information, used it to provide insurance companies with guidance on how to set their prices for critical illness cover. They advised that higher premiums could be justified for most customers below the age of 50.”


[iii] East Kent Medical Services Limited, Financial Statements For the year ended 31st March 2013, Company Registration Number: 03130118

[iv] Barnes, Sophie Health Journal online


[v]East Kent Hospitals University NHS Foundation Trust (EKHUFT) wishes to identify a single partner organisation to re-invigorate the private patient services offering. EKHUFTs driver for seeking a partner organisation is ultimately to benefit NHS patients. This will be achieved by generating significant returns from private patient services delivered at EKHUFT sites and from exploitation of the Arundel Unit (an EKHUFT owned stand alone facility on the Ashford site), but also by benefitting from the operational expertise and capital investments of the partner organisations. Specifically the partnership will be expected to: • Provide a return on any EKHUFT investment of >15%; • Enhace the returns currently being provided by the SPH; • Generate financial returns significantly above the return that could obtained from alternative uses for the Arundel unit; • Build a strong private patient offering, based at EKHUFT sites, across the whole of East Kent; and • Forge a genuine partnership approach to co-development of NHS and private patient services to the mutual benefit of patients and both partners. Currently EKHUFT attracts private patient income from Spencer Private Hospitals (SPH) as well as directly in partnership with clinicians. EKHUFT is interested in tasking the market to see if a partnership can: • Bring all private patient provision from both SPH and EKHUFT under one “umbrella” organisation, this will; i) Create one interface for patients, private medical insurers, consultants and EKHUFT; ii) Generate synergy savings in terms of management and administration of the private patient offering; iii) Build a strong brand or exploit the partners existing strong brand; • Exploit the opportunity to develop a private hospital based on the Arundel Unit • Drive significant increases in market share/income/profits from the existing SPH facility in Margate; • Help consultants make the most efficient use of their time; • Increase overall market share/income/profits from all private patient services delivered from SPH and EKHUFT facilities. Any potential partner organisation should have a reputation for excellence, a background in building market share for private patient services, a strong financial management track record, experience of managing organisational change and brand development.



[vii] “Mentally ill man dies in river” and


[ix] Gainsbury, Sally, “Goodwill could net GPs £8 bn” Health Service Journal, 29th July 2010




See also: Briggs, Heather, Health Editor BBC News Website “Planned 49% limit for NHS private patients in England’, December 27, 2011.

[xiii] ibid Lord Phillips of Sudbury

‘The noble Earl then pointed me to another piece of guidance, Conflicts of Interest-Guidance for Doctors, paragraph 72(e) of which states:

“You must not put pressure on patients to accept private treatment”.

Again, that is stating the obvious. The problem is how to define “putting pressure on a patient”. If, for example, you truthfully say to a patient, “If I treat you under the NHS, the waiting list will be six weeks, but if I treat you as a private patient within this NHS institution you could be operated on within a fortnight”, then that would not constitute putting pressure on a patient. It would be in answer to the patient’s question, “What will happen, doctor, if I go private?”. None of the guidance presently covers that example or the others that the Minister cited. None of it covers the evil that my amendment seeks to address. There is a lot of stuff about the relationship between clinicians and their patients, but in no case that I am aware of does it deal with what one might call the strategic position of a doctor and the health service. It is always the relationship between an individual doctor and an individual patient, not about the general policy of a hospital, for example.’


[xiv] Monitor update on private patient income cap for NHS foundation trusts,2nd October 2012

On October 1, changes to the way the cap on the private patient income of NHS foundation trusts is enforced came into operation as a result of the Health and Social Care Act 2012. Monitor has written to the chairs and chief executives of each of the 144 foundation trusts in England outlining how these new arrangements will affect them.

In the past the limit on the amount of income that foundation trusts could earn from private patient work had to be set out in the terms of authorisation issued to each organisation by Monitor. From now on, the limit is directly enshrined in the legislation and Monitor will continue to have a role in ensuring foundation trusts comply.

Under the previous legislation, each foundation trust had its cap set individually, in many cases at the level of private income achieved ten years ago. Now the 2012 Act obliges foundation trusts to make sure that the income they receive from providing goods and services for the NHS (their principal purpose) is greater than their income from other sources.

The Act also obliges foundation trusts to publish information on all their non-NHS work and to explain its impact on the delivery of goods and services for the NHS.  In addition, any foundation trust that wishes to increase the share of its income from non-NHS sources (including  private work) by more than five percentage points in any one year must obtain prior approval from their governors.

Foundation trusts are obliged to comply with the law under their continuing terms of authorisation. Monitor can therefore act to ensure compliance, not only with the 2012 Act but also with the National Health Service Act 2006.  A condition requiring foundation trusts to ensure that they are able to comply is proposed as part of the licence that Monitor will issue to foundation trusts from next year, replacing the current Terms of Authorisation.




[xvii] Report from NHS/TTIP meeting 3rd February, 2014