'How Virgin became one of the UK's leading healthcare providers' diff viewer (0/1)

This article is from the source 'guardian' and was first published or seen on August 05, 2018 18:18 (UTC). It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/society/2018/aug/05/how-virgin-became-one-of-the-uks-leading-healthcare-providers

The article has changed 5 times. There is an RSS feed of changes available.

Previous version 1 2 3 4 Next version

Previous version 1 2 3 4 Next version

Version 0	Version 1
How Virgin became one of the UK's leading healthcare providers	How Virgin became one of the UK's leading healthcare providers
2018-08-05 18:20:19 UTC	2018-08-09 16:35:20 UTC (4 days later)
In early 2000, the Labour government realised it had a problem with the NHS.	In early 2000, the Labour government realised it had a problem with the NHS.
Alan Milburn, the then health secretary, wanted fresh ideas to help make hospitals more patient-friendly – and he asked for them from a rather unusual place: Sir Richard Branson.	Alan Milburn, the then health secretary, wanted fresh ideas to help make hospitals more patient-friendly – and he asked for them from a rather unusual place: Sir Richard Branson.
The billionaire entrepreneur knew nothing about medicine – but he could run businesses and had made stacks of money from them. His airline, Virgin Atlantic, had won awards for passenger care.	The billionaire entrepreneur knew nothing about medicine – but he could run businesses and had made stacks of money from them. His airline, Virgin Atlantic, had won awards for passenger care.
So, over a three-month period, a team from Virgin, including the group’s “brand quality director” and a general manager from the airline, visited hospitals and GP surgeries around England and Wales.	So, over a three-month period, a team from Virgin, including the group’s “brand quality director” and a general manager from the airline, visited hospitals and GP surgeries around England and Wales.
Their conclusions were stark. In 31-page report – only released publicly following a freedom of information request in 2013 – they described tatty buildings, hospitals with skips in corridors and long waiting times.	Their conclusions were stark. In 31-page report – only released publicly following a freedom of information request in 2013 – they described tatty buildings, hospitals with skips in corridors and long waiting times.
They talked of people waiting for appointments, of unhappy staff and a lack of leadership, and recommended a raft of improvements, including a new type of “poly-clinic” to take on some of the functions traditionally done by hospitals.	They talked of people waiting for appointments, of unhappy staff and a lack of leadership, and recommended a raft of improvements, including a new type of “poly-clinic” to take on some of the functions traditionally done by hospitals.
“The NHS certainly needs to change,” they wrote. “And there is a strong appetite for change among the staff.”	“The NHS certainly needs to change,” they wrote. “And there is a strong appetite for change among the staff.”
And who should take on this challenge?	And who should take on this challenge?
Eighteen years on, Virgin is in the hot seat. Branson’s Virgin Care has won almost £2bn worth of contracts since 2010 and at least one commissioning group is spending more than a fifth of its budget with the company.	Eighteen years on, Virgin is in the hot seat. Branson’s Virgin Care has won almost £2bn worth of contracts since 2010 and at least one commissioning group is spending more than a fifth of its budget with the company.
Virgin boasts of providing more than 400 services for more than 40 commissioning groups around the country, ranging from school immunisation services to sexual health services contracted by councils in the north-east.	Virgin boasts of providing more than 400 services for more than 40 commissioning groups around the country, ranging from school immunisation services to sexual health services contracted by councils in the north-east.
With such a significant stake in the NHS, and such rapid growth in the sector, there is now increasing scrutiny of Virgin – and whether it can deliver what it said was needed all those years ago.	With such a significant stake in the NHS, and such rapid growth in the sector, there is now increasing scrutiny of Virgin – and whether it can deliver what it said was needed all those years ago.
There are questions too for Branson – and why this most flamboyant of British entrepreneurs has quietly but determinedly turned to the public sector to make money – albeit in small amounts at the moment.	There are questions too for Branson – and why this most flamboyant of British entrepreneurs has quietly but determinedly turned to the public sector to make money – albeit in small amounts at the moment.
And at the heart of the empire is Virgin Group Holdings Limited, a holding company based in the tax haven of the British Virgin Isles.	And at the heart of the empire is Virgin Group Holdings Limited, a holding company based in the tax haven of the British Virgin Isles.
It is all a far cry from the mail order record business Branson began in 1970, having already failed in ventures to grow Christmas trees and sell budgerigars.	It is all a far cry from the mail order record business Branson began in 1970, having already failed in ventures to grow Christmas trees and sell budgerigars.
~~Since then, all manner of businesses have come and gone – Virgin Cola went flat, his phones ~~stopped~~ ~~ringing~~ and his health clubs are controlled by a South African private equity firm.~~	Since then, all manner of businesses have come and gone – Virgin Cola went flat, his phones business was sold (though it still operates under the Virgin brand) and his health clubs are controlled by a South African private equity firm.
Virgin Galactic is still intending to take passengers into space – propelled by money from Saudi Arabia’s sovereign wealth fund and a subsidiary of Abu Dhabi’s sovereign wealth fund.	Virgin Galactic is still intending to take passengers into space – propelled by money from Saudi Arabia’s sovereign wealth fund and a subsidiary of Abu Dhabi’s sovereign wealth fund.
Back on terra firma, and in the UK, Branson has branched into the public sector.	Back on terra firma, and in the UK, Branson has branched into the public sector.
The scale of this is set out in accounts for Virgin UK Holdings Limited – one of the main UK-based companies in his collection. They show that in 2016 rail and healthcare accounted for more than half of its £1.5bn revenue.	The scale of this is set out in accounts for Virgin UK Holdings Limited – one of the main UK-based companies in his collection. They show that in 2016 rail and healthcare accounted for more than half of its £1.5bn revenue.
The balance sheets record that revenue from healthcare reached £262m, while the company’s share of the rail business it runs with StageCoach added £566m over the year. Brand licensing brought in £58m, a hotels business added £44m and management services collected another £70m.	The balance sheets record that revenue from healthcare reached £262m, while the company’s share of the rail business it runs with StageCoach added £566m over the year. Brand licensing brought in £58m, a hotels business added £44m and management services collected another £70m.
They are not the only Virgin companies with links to central or local government. Virgin Start Up, a wholly owned subsidiary, delivers services for the government’s startup loan programme.	They are not the only Virgin companies with links to central or local government. Virgin Start Up, a wholly owned subsidiary, delivers services for the government’s startup loan programme.
In the outer reaches of the empire, Virgin Active has a deal with a local council to run a swimming pool in west London.	In the outer reaches of the empire, Virgin Active has a deal with a local council to run a swimming pool in west London.
While much smaller than the likes of Capita or Carillion, Virgin Group is growing fast and has become a regular winner of state contracts in the health sector through a complex web of companies and subsidiaries.	While much smaller than the likes of Capita or Carillion, Virgin Group is growing fast and has become a regular winner of state contracts in the health sector through a complex web of companies and subsidiaries.
Virgin does not publicly disclose all its contracts – and in government, there does not appear to be any central register of what state money is going where.	Virgin does not publicly disclose all its contracts – and in government, there does not appear to be any central register of what state money is going where.
But analysis by the Guardian suggests that the company has won contracts worth a potential £1.8bn in just the past five years. These range from a £509,000 contract to run a GP’s surgery in Bedfordshire for three years, to a £700m deal to look after more than 200 services in the west country for the next decade.	But analysis by the Guardian suggests that the company has won contracts worth a potential £1.8bn in just the past five years. These range from a £509,000 contract to run a GP’s surgery in Bedfordshire for three years, to a £700m deal to look after more than 200 services in the west country for the next decade.
The NHS contracts are operated through two companies: Virgin Care Limited and Virgin Care Services Limited. In the year to March 2017, both reported losses, meaning there was no tax to pay on their revenues. If they make a profit in future, it will be liable to UK tax.	The NHS contracts are operated through two companies: Virgin Care Limited and Virgin Care Services Limited. In the year to March 2017, both reported losses, meaning there was no tax to pay on their revenues. If they make a profit in future, it will be liable to UK tax.
Beneath them is a web of companies that hold different elements of the group – and money is transferred between them.	Beneath them is a web of companies that hold different elements of the group – and money is transferred between them.
For example, contracts to run several GP surgeries in Coventry are owned through Virgin Care Coventry LLP. They pass on profits to the parent companies and pay an annual management charge to Virgin Care Limited.	For example, contracts to run several GP surgeries in Coventry are owned through Virgin Care Coventry LLP. They pass on profits to the parent companies and pay an annual management charge to Virgin Care Limited.
Some of this complexity is a legacy of Virgin’s route into the NHS which began inauspiciously in 2008 when it announced, and then ditched, plans to open a first polyclinic in Swindon. Two years later, it bought a controlling stake in a company called Assura Medical which already provided services to 30 GP practices.	Some of this complexity is a legacy of Virgin’s route into the NHS which began inauspiciously in 2008 when it announced, and then ditched, plans to open a first polyclinic in Swindon. Two years later, it bought a controlling stake in a company called Assura Medical which already provided services to 30 GP practices.
Virgin has bought into, or bought out, other companies, too. But the complexity of the healthcare arm is also in keeping with the way the Virgin group is structured, with myriad companies which own bits of each other.	Virgin has bought into, or bought out, other companies, too. But the complexity of the healthcare arm is also in keeping with the way the Virgin group is structured, with myriad companies which own bits of each other.
Even two decades ago it was incredibly complicated, recalls one former employee. One of her jobs involved regularly updating a chart showing the group’s many subsidiaries.	Even two decades ago it was incredibly complicated, recalls one former employee. One of her jobs involved regularly updating a chart showing the group’s many subsidiaries.
“I had to manage the enormous company structure diagram which was the size of a dinner table,” she says. “It looked like an enormous family tree. I had to move things around, change names.”	“I had to manage the enormous company structure diagram which was the size of a dinner table,” she says. “It looked like an enormous family tree. I had to move things around, change names.”
This labyrinthine structure makes it difficult to work out which elements of the business are profitable and where any eventual profits end up.	This labyrinthine structure makes it difficult to work out which elements of the business are profitable and where any eventual profits end up.
Money from some of the UK-based businesses heads to the British Virgin Islands, where Branson lives as a tax exile.	Money from some of the UK-based businesses heads to the British Virgin Islands, where Branson lives as a tax exile.
As companies based there can avoid scrutiny as well as tax, the true value of the Virgin Group Holdings Limited is a mystery.	As companies based there can avoid scrutiny as well as tax, the true value of the Virgin Group Holdings Limited is a mystery.
In January, in a blog on his website, Branson pledged not to make a profit out of the NHS work: “If and when I could take a dividend from Virgin Care (which would make us a profit over and above our overall investment), I will invest 100% of that money back into helping NHS patients young and old, with our frontline employees deciding how best to spend it.”	In January, in a blog on his website, Branson pledged not to make a profit out of the NHS work: “If and when I could take a dividend from Virgin Care (which would make us a profit over and above our overall investment), I will invest 100% of that money back into helping NHS patients young and old, with our frontline employees deciding how best to spend it.”
Virgin Care told the Guardian that this commitment to reinvest profits had been signed up to by the relevant company boards.	Virgin Care told the Guardian that this commitment to reinvest profits had been signed up to by the relevant company boards.
However, campaigners are sceptical about the company’s motives. Paul Evans, the director of the pressure group NHS Support Federation, said: “Virgin Care is clearly not a charity or a not-for-profit company.	However, campaigners are sceptical about the company’s motives. Paul Evans, the director of the pressure group NHS Support Federation, said: “Virgin Care is clearly not a charity or a not-for-profit company.
“Claims that the company is not motivated by financial reward would be more credible if Virgin Care weren’t woven into a web of private companies that connect upwards to the Virgin Islands tax haven.”	“Claims that the company is not motivated by financial reward would be more credible if Virgin Care weren’t woven into a web of private companies that connect upwards to the Virgin Islands tax haven.”