London (Parliament Politics Magazine) – The UK healthcare property investor and developer Assura has locked a £500m deal to purchase Canada’s Northwest Healthcare Properties’ portfolio of 14 private hospitals in the UK.
How Will Assura’s Acquisition Impact the NHS Crisis?
The agreement comes at a time when the NHS is under massive stress, with near-record waiting checklists. The NHS crisis is encouraging more people to go private, either spending for treatment themselves or taking out insurance. To alleviate the backlog, the NHS has been outsourcing more functions, including cataract surgery, to private hospitals.
What Are the Key Features of the Purchased Hospital Portfolio?
The hospitals are scattered throughout the UK and are let on long leases to several personal healthcare providers. They include six Nuffield clinics including Woking, Edinburgh, Highgate and Cancer Centre London; five Circle clinics, including Huddersfield, Lancaster and Lincoln; two Spire hospitals, Cheshire and Claremont; and the Edgbaston hospital in Birmingham conducted by Practice Plus Group, which is shut but due to reopen in September after renovation.
Assura stated the three major strands of private healthcare – insurance, self-payment or NHS referrals – were all participating in growing demand. Top practices include cataract surgery, chemotherapy, diagnostics, such as endoscopy and colonoscopy, and orthopaedics, generally hip and knee replacements, which are processes well served to day-case units. The company stated: “The NHS system remains under considerable strain. Private providers help ease local pressure on waiting lists.”
How Is the NHS Waiting List Affecting Private Healthcare Demand?
The NHS waiting index in England reached a height of nearly 7.8m last September and is still at 7.6m patients, of about 6.38 million patients, some of whom require several procedures. Approximately 3.1 million patients have been lingering for more than 18 weeks. In late May Labour pledged to clear the NHS waiting list backlog in the UK within five years if elected. Wes Streeting, the health secretary, has expressed the health service threat becoming “a poor service for poor people” while the wealthy transformation to using private care.
What Are Assura’s Plans for Funding and Managing the Acquisition?
Assura pointed to a study from YouGov that revealed eight in 10 of people who utilised private healthcare last year would previously have employed the NHS, and research from the Care Quality Commission revealed that 56% of people had attempted to use the NHS before opting for private care.
Jonathan Murphy, the Assura chief executive, expressed the deal “means we now have connections with all tier one private healthcare providers. This represents a special opportunity to participate in the growing need for private healthcare services to enable ease growing NHS waiting lists amidst the ongoing UK healthcare crisis.”
Assura’s existing portfolio is worth £2.6bn and the deal expands its size by nearly 20%. The transaction is mostly debt-funded, but Assura intends to make some disposals in its portfolio to settle down some debt. To support the deal, the company intends to issue £100m in shares to Northwest, refinance £266m of debt, draw down £80m from its revolving credit facility and utilise £54m of cash.