HCRG Care (Virgin Care)

There have been numerous concerns over the years with the way Virgin Care, Operose (Centene), and previous companies, including The Practice Group, operated. Some of these concerns are still relevant, but others have been included under the heading Historical Concerns below.

Twenty20 Capital takeover and the private equity approach to management

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."

The takeover of Virgin Care came as a surprise to councillors and residents in the Bath and North East Somerset areas, where Virgin managed a vast number of NHS services.

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 became concerned over what would happen to the standard of health care following the takeover. In a letter to the Bath Chronicle, Paula Riseborough said that she was "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. Councillors and other commissioners have since decided not to continue with HCRG Care Group as a provider past the end of contract date in 2024.

In a similar way, Twenty20 Capital’s acquisition of Operose has led to issues with local commissioning boards. Twenty20 Capital’s takeover took place with seemingly little regard for the formalities of registering a change in ownership for the 50 or so APMS contracts for GP surgeries (see Latest News above).

Care Quality Concerns

Over the years there have been numerous concerns over the quality of care provided by both Operose and Virgin Care. These concerns are still relevant as they could well be indicative of a management strategy, whereby costs have to be reduced as much as possible to ensure maximum profit - a strategy that private equity is famous for. 

Issues at Operose’s GP surgeries

In June 2022, an investigation by BBC’s Panorama, including sending in an undercover journalist, found that Operose had let less-qualified Patient Associates (PA) see patients without adequate supervision. There were also reports from administration staff that some correspondence has not been processed and has waited to be seen by a GP or pharmacist for up to six months.

The Panorama investigation, which was shown on the BBC the evening of 13 June 2022, sent an undercover journalist to work as a receptionist at one of the company’s 51 London GP surgeries. It was at this surgery that a GP said they were short of eight doctors and the practice manager said they hired the less qualified PAs because they were “cheaper” than GPs.

PAs have completed a science degree and two years of postgraduate studies, rather than the 10 years of medical education and training for GPs. A PA can see patients and support GPs in diagnosis and patient management, but is supposed to have supervision from a GP. At the Operose surgery the undercover journalist was told by PAs that they saw all sorts of patients, sometimes without any clinical supervision and that the practice treated them as equivalent to GPs.

Panorama’s investigation included talking to a dozen former employees from across the Operose group, from which further evidence was gathered that PAs were doing the same job as a GP, even though they had less experience and less qualifications, but they were also earning less money and so cost Operose less to employ.

Operose’s level of GPs was found by the investigation to be much lower than average, with just over 0.6 full time equivalent GPs per 2,000 registered patients, compared to the average of 1.2 full-time GPs, whereas Operose employs six times as many PAs as the NHS average.

Panorama also uncovered evidence of problems at Operose’s centre that deals with patient-related correspondence, where Panorama was told some correspondence had been waiting to be seen by a GP or pharmacist for up to six months.

Prof Sir Sam Everington, a senior practising GP at an unconnected partner-run practice, said he was concerned for patient safety after he had reviewed the Panorama footage.

The company denies putting profit before patient care and told Panorama that it has recruited 38 GPs in the past year and is in the process of recruiting more. It also pointed out that the Care Quality Commision has rated 97% of its practices as "good" or "outstanding".

In October 2022, NHS North Central London Integrated Care Board decided not to renew Operose’s contract to run the Hanley Primary Care Centre in Islington. The contract, which Operose acquired when it bought AT Medics in 2021, will now be put out to tender. The decision by the board was made based on a report that found that the Hanley surgery had an under­provision of 2.8 “working time equivalent” GPs and was carry­ing out 270 too few appointments every week. The report said: “This is deemed significant to access for the registered patient list. There was an overprovision of nursing appointments.” The retendering of the APMS contract for the Hanley Primary Care Centre was reiterated by the ICS in October 2023.

Virgin Care’s quality of care issues

Over the years there have been a number of serious concerns over Virgin Care services. There were concerns with the way Virgin Care ran 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 was placed in special measures.

There were also concerns over the way Virgin ran 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 at 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 left them with no care at all for three months. The family had 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 led to Lucy having to research and do physio with her daughter herself as Carmela's disease progressed. 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". 

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 provided 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 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.

Historical Concerns

Tax Avoidance

A major concern over Virgin Care was that it never paid tax in the UK as it never reported a profit. 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 raised 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 borrowed money solely from a Virgin holding company and reported that it will repay that loan, which will be corporation tax-deductible, when a profit starts to be recorded. That holding company was based in the UK but it, in turn, owed money to other parts of the Virgin business, whose ultimate parent company was 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 refuted suggestions that the company would 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, 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 was 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.

Issues with The Practice Group

Through its acquisition strategy The Practice Group (TPG) grew substantially until eventually acquired by Centene Corporation. In the main, TPG did not have a policy of ownership or partnerships for GPs, but employed salaried GPs at its practices, and this continued after its acquisition by Centene. Of the problems that have been reported in the media, a major component was the excessive use of locums because the company has been unable to find permanent salaried GPs with potential for a reduction in quality of care for patients.

In June 2012 TPG relinquished a contract to run the Brandon Street surgery (also known as Belgrave Health Centre) in Leicester. TPG had failed to recruit permanent GPs for the surgery and a succession of locums was used. Patient complaints noted difficulties in getting through on the phone and making appointments, rude staff, and the use of locums which meant medical history had to be gone over again and again in the limited appointment time allowed. TPG took over the running of this surgery and three others in Leicester in 2010 for five years under a £5 million contract.

In April 2012 TPG closed its Camden Road surgery in London, which it had bought from United Health, when its lease ran out. There was an outcry from patients who had been given very little notice of the decision. Both United Health and TPG were accused of running down the surgery and there was considerable use of locums. The closure triggered a public enquiry by Camden Council. Neither UnitedHealth nor TPG produced any evidence at the public enquiry. The process by which The Practice acquired United Health’s surgeries was severely criticised by the enquiry, which noted that a loophole in APMS contracts needed to be closed. A third scrutiny committee meeting to discuss the closure of the surgery had to be abandoned when both United Health and The Practice, refused to attend

In 2011 The Practice was given notice to terminate its contract for the St James medical practice in Handsworth, Birmingham, in December 2011. The Practice Plc noted that “The type of contract we have is a ten-year fixed term and the PCT have the option to terminate at the mid-point which they have chosen to do. This coincides with the unexpected termination of our lease by Vitality which means we will have no premises to practice from after December 31.” The Vitality Partnership is a GP partnership across five practices in Birmingham.

There was further controversy in January 2016 when TPG announced its intention to terminate its contract for five surgeries in Brighton and Hove following a funding dispute. This left the future care of 11,400 people in doubt. Patients have since been dispersed to other practices and only one practice, the one serving the homeless community, has been recommissioned.

Accountable Care strategy

There were concerns over Centene's record in the area of accountable care systems, in particular its involvement in the accountable care company Ribera Salud in Spain.

Centene originally owned 50% of Ribera Salud, a Spanish Healthcare company. As of July 2019, Centene now owns 90% of Ribera Salud, after purchasing a stake from Banco Sabadell. Ribera Salud is known for pioneering the development of the public/private partnership model of healthcare in Spain. Centene notes on its website that it will save the NHS money and references its “experience with Ribera Salud in Spain” which it says “is recognised by governments across the world as an example of an effective model of care……[that] produces better results for the patient at less cost to the government.”

In an article in HSJ in June 2017 Ribera Salud’s model of integrated care is also lauded and its capacity for reducing costs praised. Ribera Salud developed an integrated model of healthcare at the Alzira hospital in Valencia, which has become known as the Alzira model.

Under this model, Ribera Salud received a capitated budget from the regional government over a 15-year contract. Ribera Salud must then provide free healthcare to a defined geographical population. In return, it retain profits of up to 7.5% of turnover, but anything above this is returned to the government. The model encompasses hospital services and primary care. According to the HSJ article, the Alzira model spends 25% less than government run hospitals in the area and has been hailed as a major success for integrated care. The Alzira model has been replicated in other areas within Valencia and also in Madrid.

What neither Centene nor the HSJ article mention, is that Ribera Salud was investigated by police and there was a process underway in Valencia to take the hospitals back into public control.  The Spanish newspaper El Pais reported in November 2016 that Ribera Salud is under police investigation for fraud, including overcharging, and issues with sub-contracting. In March 2017, El Pais reported that the regional Valencia government is to do a “reversión de la sanidad privatizada” literally a reversion of privatised health, under which as the contracts or “concessions” come to an end, the hospitals will be transferred back into public management.

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 was listed as a member of the Partnership Board, the unitary Board which currently ran 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 28 May 2021 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 were 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.

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 were run under alternative provider medical services (APMS) contracts, which were due to expire in March and three of these are run by Virgin Care. Hull CCG then had 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.