It could seem a bit odd that stopping routine NHS funding for so many diagnostic tests coincides with increasing privatisation of NHS diagnostic services.
For example, in 2021 Somerset NHS Foundation Trust contracted Rutherford Diagnostics to provide a Community Diagnostic Centre (CDC) in Taunton. The press release from Rutherford Diagnostics partner Philips Health UK states,
“In addition to providing services to NHS patients, the centre will be available to private medical insurance and self-pay patients in the South West.”
This was the first of five new community diagnostics centres across the UK that Rutherford Diagnostics and Philips Health UK were due to set up, under an agreement between Rutherford Health plc and Equitix, which describes itself as “a leading global investor, developer, and long-term fund manager of core infrastructure assets.” The Equitx website says
“Equitix is majority owned by TFG Asset Management L.P., a diversified alternative asset management business that owns majority and minority private equity stakes in asset management companies. Approximately 25% of the economic interests in the Equitix group is owned by Equitix’s management team. TFG Asset Management is part of Tetragon Financial Group Limited https://www.tetragoninv.com/ , a closed-ended investment company that is traded on Euronext in Amsterdam N.V. and on the Specialist Fund Segment of the main market of the London Stock Exchange.”
In March 2021, the EQUITIX RUTHERFORD CANCER CARE Limited Liability Partnership (LLP) was incorporated, with Taunton Diagnostic Centre LP as the corporate member.
Equitix was supported by Amberside in reaching the agreement with Rutherford Diagnostics. Part of the Steer Group , Amberside Advisors provide financial and commercial advice to large scale energy, infrastructure and low carbon projects.
Rutherford Community Diagnostics Centre was apparently the first to be run as private/public partnership with the NHS – but went bust after eight months
The Rutherford Community Diagnostics Centre in Somerset was opened in September 2021 by Professor Sir Mike Richards CBE, former National Cancer Director in the Department of Health and author of an NHS England October 2020 review of NHS diagnostics capacity, Diagnostics: Recovery and Renewal. The review recommended,
“Community diagnostic hubs should be established away from acute hospital sites and kept as clear of Covid-19 as possible.”
Sir Mike said:
“I’m delighted to have formally opened the first community diagnostics centre run by the independent sector in partnership with the NHS.”
The Health Service Journal reported that Somerset NHS Foundation Trust was paying Rutherford so the NHS hospital staff can use the facility – a former Fire Control Centre which Rutherford refurbished using privately raised capital and which includes equipment provided by Phillips.
The cost to Somerset NHS Foundation Trust was discounted because its staff were to deliver activity for Rutherford’s private patients as well as NHS cases. In addition, the clinicians were to continue to provide emergency and some other diagnostic services at the trust’s Musgrove Park Hospital.
During their brief encounter, Somerset Foundation Trust and Rutherford ran the facility as a partnership underpinned by contracts, rather than creating a formal entity such as a joint venture.
Peter Lewis, CEO of the trust told HSJ,
“No one quite knows what the financial regime will look like for providers tomorrow, so that will need to be worked through, but from our perspective this is the most cost-effective way to meet the demand.”
8 months later, in June 2022, Rutherford Diagnostics’ parent company, Rutherford Health, collapsed.
According to Rutherford’s owners, Schroder UK Public Private Trust, the company had pursued a “flawed expansion strategy” from 2015 to 2019 which laid the ground for an “unsustainable funding need”.
However, when Schroders took over the UK Public Private Trust in December 2019, its executives had been talking up Rutherford Health as one of their
“exciting companies undertaking pioneering work across multiple fields…We see Rutherford Health driving change in cancer treatments, through its radiotherapy, chemotherapy and proton beam therapy.”
But in the next breath came a warning from Schroders that,
“Part of our motivation in taking over the trust was that we saw so many exciting opportunities. However, we also need to ensure disciplined portfolio management: that the holdings are the right size, that the portfolio is properly balanced and that we provide the right support to companies to help them grow.”https://www.schroders.com/en/uk/private-investor/insights/investment-trusts/in-control-of-their-destiny/
Liquidation of Rutherford Health leaves Somerset NHS Foundation Trust holding the Community Diagnostics Centre baby
Just eight months after the opening Rutherford Community Diagnostics Centre in Somerset, the partnership between the Rutherford Diagnostics Ltd, which owned the Centre, and the hospital trust was over.
The partnership had been based on a five year contract with an option to extend to ten years.
The trust quickly announced it would step in on a “short-term basis” to continue to provide diagnostic tests at the centre.
Hospital trust and Equitix together contract Alliance Medical as commercial partner in Taunton Community Diagnostic Centre
Three months later, in September 2022, Somerset NHS Foundation Trust announced that,
“Following a robust procurement process, Somerset NHS Foundation Trust has appointed Alliance Medical Ltd as its preferred partner to run the community diagnostic centre in Taunton.”
The Trust worked on the procurement process together with Equitix (the infrastructure investor and developer which had made a £55m deal with Rutherford to establish up to five diagnostic centres in the UK, including the one in Taunton), and which owned the Taunton Commmunity Diagnostic Centre building and diagnostic equipment.
Hugh Crossley, Chief Executive Officer of Equitix, said:
“Equitix…are delighted to announce that the procurement process carried out in partnership with the Trust to find a suitable new operator is now complete and that Alliance Medical has been selected as the preferred party to take over full operational responsibility.”
How does a joint NHS Trust/private company procurement process work?
We are sending Somerset NHS Foundation Trust a Freedom of Information request about how its joint procurement process with Equitix worked, and for details of the Taunton Diagnostic Centre contract that they awarded to Alliance Medical.
Alliance Medical awarded contract to run Taunton Diagnostic Centre because it’s too big for the hospital trust to run
Alliance Medical will start running the Taunton Diagnostic Centre on 1 November, and the trust is looking at developing a similar unit on the site of Yeovil Hospital FT, which the Somerset Foundation Trust is merging with next year.
According to the Health Service Journal, Somerset Foundation Trust chief executive Peter Lewis said a partner was needed because the Taunton Diagnostic Centre’s capacity is greater than the trust can make use of, with some private work likely to be carried out there as well.
This was after all the original plan when Rutherford Diagnostics was running it.
Peter Lewis said of the new ‘partnership’ with Alliance Medical,
“We don’t need all the capacity so we want others to use it – whether it’s private work or other NHS work going through the unit.
“Having a partner to help with that and take responsibility for running the centre is better for us, because we then don’t need to focus on that and can prioritise getting on with delivery.”
He added partnering with Alliance Medical would help staff recruitment, rather than having to compete with an independent supplier which operates the centre on its own.
Alliance Medical is also lead provider in the Molecular Imaging Collaborative Network, with a 10 year £350m contract from NHS England dating from 2015
According to the Alliance Medical website ,
“The Molecular Imaging Collaborative Network (MICN), led by Alliance Medical, is delivering PET-CT services to 60% of England under a … National Contract.”
There is more information here about Alliance Medical’s key role in NHS England’s privatisation of NHS diagnostics since 2014.
Alliance Medical is owned by South African company Life Healthcare
Alliance Medical was acquired in 2016 by the South African company Life Healthcare which describes its subsidiary as
“one of Western Europe’s leading providers of complex molecular and diagnostic imaging services across the United Kingdom, Italy and Ireland, with participation in ten geographies.”
The company aims at
“leveraging the experience of its international imaging business, Alliance Medical Group (AMG) to increase access and affordability of imaging to South Africans.”https://www.lifehealthcare.co.za/news-and-info-hub/life-healthcare-acquires-the-imaging-operations-of-eugene-marais-radiology/
Life Healthcare’s “encouraging trading results bolstered by the solid underlying business performance of Alliance Medical Group in its UK and European markets.”
Alliance Medical’s South African parent company Life Healthcare’s revenue climbed 4.2% to Rand 13.5 billion for the six-months to 31 March 2022.
Mark Chapman, CEO of Life Healthcare’s international business, said,
“Internationally, we expect to see continued good growth from the demand for AMG’s diagnostic imaging services in the UK, Italy, and Ireland which delivered higher scan volumes than in the previous period.”
Chapman added that Alliance Medical Group has an exciting opportunity in developing Community Diagnostic Centres (CDCs) in partnership with the UK’s National Health Service (NHS).
“Internationally, we continue to focus on long-term public private partnership solutions. CDCs provide a convenient solution in delivering imaging services closer to where people live. We have three CDCs operational and three under construction with a strong pipeline.”
Alliance Medical’s website, touting for NHS business, claims more:
“As the front-runner in CDC provision we created the UK’s first community diagnostic centre. We now operate 8 multimodality CDCs across the UK; and 35 CDCs in Italy.”
One of these is the Turner Diagnostic Centre at Colchester Hospital. I’ve not been able to identify the others.
Alliance Medical is of course an approved provider on the NHS England Community Diagnostic Centres Framework .
According to David Hare, chief executive of the Independent Healthcare Providers Network, independent diagnostics providers – who already deliver over 1 million NHS tests and scans every year – can play a key role in funding, building and running the 160 new Community Diagnostics Centres, free to use for NHS patients.