Virgin Care Ltd
Virgin Care has become a major player in the market for NHS services since it entered the healthcare market in 2010. Over the past six years the company has been awarded contracts worth well over £1 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 (social workers).
Over the past six years, Virgin Care has been awarded numerous NHS contracts and now runs over 200 NHS services, but despite the scale of its invovlvement the company shows no signs of making a profit. Indeed, according to its accounts, since 2010 the company has recorded an annual loss of £9 to £10 million in the UK. As Virgin Care Ltd makes no profit in the UK, the company pays no tax in the UK. However, Virgin Care Ltd is a small entity in Richard Branson’s Virgin empire. Virgin Care’s parent is Virgin Group Holdings registered in the tax haven of the British Virgin Islands.
The ultimate owners of Virgin Care and Virgin Group Holdings are trusts registered in the British Virgin Islands whose beneficiaries are Richard Branson and his family. The British Virgin Islands are a tax haven and entities registered there pay no tax. As a result of the link with the British Virgin Islands, questions have been raised over whether tax would be paid in the UK if Virgin Care made a profit.
Virgin Care Ltd was founded in March 2010 when Virgin acquired a majority stake in Assura Medical; the renaming took place in March 2012. Assura began life in 2003 as a property investment company, The Medical Property Investment Fund Limited (MPIF), which then became Assura Medical in 2006. The property arm of Assura continues to trade as a separate company listed on the LSE as Assura Group Ltd.
Virgin Care has two arms to its business: primary care services, including GP services and walk-in centres; and community-based NHS services.
Over the past few years Virgin Care has tendered for and been successful in acquiring numerous medium to large contracts that revolve around community care. Recent contracts include ones for community health in West Lancashire, North Kent, Wiltshire and in Bath and North East Somerset, all of which cover a large number of services. In mid-2016 Virgin Care reported that it had over 250 services around England.
Virgin Care smaller contracts include musculoskeletal, dermatology, and sexual health services.
In November 2016 Bath and North East Somerset CCG and the local council made the unprecedented move of awarding a £700 million contract to Virgin Care that includes adult social care - the first time adult social care has been privatised. Another interesting aspect of this contract was that it was reported by the CCG and the council involved that a clause was included in the contract under which Virgin would reinvest any "financial surplus" in the service. What this means exactly is unclear, however.
Virgin Care has been very successful in winning contracts with the NHS and very little seems to have got in the company's way. However, in 2016 the end of its 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 and tender smaller contracts.
In 2016, Virgin Care won adult community care services for Guildford and Waverley CCG as part of an alliance with Royal Surrey County Hospital NHS Foundation Trust, Surrey and Borders Partnership NHS Foundation Trust, Age UK Surrey and Surrey County Council (see below). However, Virgin Care 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, 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.”
Originally Virgin Care was strong in the area of GP services, however since the advent of CCGs the company has 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.
Virgin Care's financial set-up is very complicated and active companies include Virgin Care Services Ltd, Virgin Care Ltd, VH Community Services Ltd, Virgin Care Corporate Services Ltd and several limited liability partnerships (LLPs). For example, the contract in Devon is with Virgin Care Ltd, whereas the contracts in Surrey and Staffordshire are with Virgin Care Services Ltd and the contracts in Croydon and Hastings area are with Virgin Care Provider Services Ltd. The primary Care contracts are with a number of different LLPs, including Virgin Care Coventry LLP, Virgin Care Leeds LLP and Virgin Care Liverpool LLP. In the year to end March 2016 there were at least 13 active LLPs.
Each limited company and LLP reports its turnover individually, however they are all subsidiaries of Virgin Care Ltd, which in turn is a subsidiary of the holding company Virgin Healthcare Holdings Ltd.
The combined turnover of the companies for the year ending March 2016 was over £215 million. According to the companies accounts not a single one of these companies paid tax in this year. The holding company Virgin Healthcare Holdings Ltd reported a loss of £1.4 million for this year and no tax was paid.
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 Virgin Care the company operates over 230 NHS and social care services for the NHS including community-based intermediate NHS services, GP-led walk-in and healthcare centres, urgent care centres, out of hours care, community services and GP practices. According to data collected by the NHS Support Federation, since 2010 Virgin Care has won contracts for NHS work valued at around £1 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.
Notable contracts won by Virgin Care, include the following:
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 start 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 current 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 begins in April 2017. The new service will combine a range of existing services, including the Healthy Child Programme, Healthy Schools, Family Nurse Partnership and children’s centres. 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.
Luton MSK Service
In October 2016, Virgin Care was awarded the contract for an integrated Community musculoskeletal (MSK) Service by Luton CCG. The MSK Service will provide a single point of contact for GPs and other healthcare professionals to refer MSK related presentations. Clinically appropriate referrals will be triaged as necessary to physiotherapy, pain management, orthopaedic and rheumatology pathways. The contract is worth £5.5 million and is five years long.
Bath and North Somerset health and social care
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.
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.
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.
Under the contract Virgin Care will run 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.
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”. However, 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 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 council's of these areas. The contract is for five years with an option to extend to nine years. The five year contract is worth £36.2 million.
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.
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 will be the prime provider under this seven-year contract and could sub-contract the work to other organisations. This is a fixed-price contract. 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 finalize some arrangements, according to the CCG and Virgin Care.
The contract is expected to cover 38,000 people with long term conditions, as well as an estimated 6,000 elderly people. It will measure performance against patient outcomes such as rate of falls, admissions into hospital, diabetes blood test management and patient mortality.
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.
NHS and social care services for children in Devon
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.
In early 2017, according to Virgin's website it was still running many but not all children's services in Devon. Devon managed support services were no longer run by Virgin.
- Community dermatology in North and North East Lincolnshire.
- Integrated Acute and Community Musculoskeletal (MSK) Service in Greater Preston CCG and Chorley and Ribble CCG worth £6.9 million awarded in November 2014;
- Virgin 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;
- Urgent care service at Croydon University Hospital;
- A £6.5 million contract to provide an integrated system for musculoskeletal services in the Hastings & Rother area;
- Primary care at HMPs Norfolk and Waveney worth over £51.5 million won in 2014;
- Sexual health services in Oldham won in 2012;
- Urgent Care centres in Sutton Coldfield won in 2011;
- Virgin provides primary healthcare to several other prisons, including HMP Coldingly, HMP Bure, HMP Downview, HMP Wayland, and HMP Highdown.
- Sutherland Lodge Surgery in Chelmsford - Virgin Care took over this surgery 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.
Staffordshire Cancer and End-of-Life Care
In November 2016 Virgin Care was reported to be in the running for the £535 million contract for end-of-life care in Staffordshire. The tender process for this ten year contract had been restarted; it was put on hold following the collapse of the UnitingCare contract in Cambridgeshire and Peterborough.
The end of life care contract has three remaining bidders: Virgin Care, Optum and an Interserve consortium. This deal is expected to be awarded in the autumn of 2017.
At the same time, Staffordshire CCGs were tendering for a ten year contract to coordinate cancer care in Staffordshire worth £687 million. There was only one bidder left for this contract - a consortium of the private company Interserve and University Hospitals of North Midlands Trust and Royal Wolverhampton Trust. However, in early April 2017 the commissioners decided that the consortium could not convince them that the bid was financially viable and the contract award was not made. The entire process 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 with NHS Surrey to deliver community services across much of the county. The £450 million contract covered community health services in South West and North West Surrey, as well as some provided county-wide such as prison healthcare and sexual health services. The services continued to be known as Surrey Community Health providing NHS healthcare for Surrey patients.
In 2016, the commissioners involved in healthcare in Surrey decided to break the contract into smaller contracts. 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. Virgin had run these services under the previous all-Surrey contract. 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.
The new contract notice issued in May 2017 is for a contract worth £132 million. According to documents on the CCG website, the “prime reason [for not continuing the contract] was a lack of confidence in the selected provider being able to implement the new service specifications in an integrated way, with the key partners that had been identified in their bid submission.” According to other CCG documents Virgin was given a six month interim contract to cover the time for the reprocurement.
This begs the question - how can Virgin, which was already running the service and working with partners, not be ready to continue with the service with the partners?
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.
A Guardian article noted that Jeremy Hunt, the Health Secretary, pushed through the deal in Surrey.
Baroness Morgan of Huyton, an ex-director of failed care home firm Southern Cross, is a paid member of the advisory committee board for Virgin Group Holdings Ltd.
Since 2010 when Virgin Care was formed the company has not reported a profit but a loss of around £9 to £10 million each financial year. No profit means no tax is paid in the UK. 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 haven’s 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.
As Assura Medical the company received little in the way of media coverage either positive or negative. However, with the takeover by Virgin Care and the winning of the £500 million contract to run healthcare in Surrey in 2012, the company has come to the attention of the media and some criticism. The announcement of the choice of Virgin Care as preferred bidder for the children’s services bid in Devon triggered a legal challenge by the mother of two children that use the service.
In October 2012 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 committment 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.”
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 has 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.