healthcare

Mental heath coalition welcomes new government spending on
psychological therapies
July 2010

The government has announced its plans to continue to invest £70m into psychological therapies designed to treat common mental health problems such as anxiety and depression. Since 2007, the Improving Access to Psychological Therapies (IAPT) scheme has focused on increasing access to talking treatment Cognitive Behavioural Therapy (CBT).

Speaking on behalf of the We Need to Talk Coalition, which campaigns on talking therapies provision, Paul Farmer, chief executive of Mind, said: "Mental health services have long been an easy target when budgets are slashed, and we are delighted that the new government will continue plans to invest in crucial talking treatments.

"However, CBT is just one of a host of therapies that can be prescribed for mental health problems, and many people are still stuck on waiting lists struggling to access other therapies that are absolutely fundamental to mental health care, such as counselling. Basic mental health treatments are still suffering the knock-on effects of a long legacy of neglect, and funding for talking treatments need to embrace the full range of therapies that can treat all kinds of mental health problems.

"The new government should use this as an opportunity to expand IAPT to include the full spectrum of treatment that huge numbers of people need urgently, and many are currently kept waiting for."

The health service is exploring the possibility of using an eye drug for patients with wet age-related macular degeneration.

The current treatment for AMD is Lucentis, which costs an average of £10,000 to treat each patient.
Lucentis is derived from Avastin, which is a lower-cost medication used for bowel cancer. The National Institute for Health and Clinical Excellence is looking into whether the cheaper drug should replace Lucentis.

Patients who suffer from AMD are treated with Avastin by minute doses being injected into their eyes.
The health service used to treat patients with Avastin in this way until 2008, when NICE recommended Lucentis.

Both Lucentis and Avastin are manufactured by the American company Genentech. The company has not agreed to apply for Avastin to be given a licence to treat wet AMD.

Cathy Yelf, of the Macular Disease Society, said: "This is an exceptional case and could lift some of the pressure on the NHS.

"But we need to get results from the trials currently going on into whether Avastin is truly safe and effective before a decision is taken," she added.

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Hammonds LLP has advised Care UK plc on the recommended takeover offer by Bridgepoint of the company. The offer was announced on 3 March 2010. The takeover has been structured by way of scheme of arrangement and is subject to shareholder and certain other approvals.

Care UK is a leading independent provider of health care and social care services. Working in close partnership with local authorities, primary care trusts and strategic health authorities, the company draws on over 25 years of experience to provide tailor-made service solutions, including residential, community, specialist, primary and secondary care. The Care UK Group is the largest operator by patient volumes of independent sector treatment centres in the UK.

Care UK has been a client of Hammonds since 2005 and the firm has acted on several corporate mandates for the company since then, including the acquisition of Mercury Health in 2007 and the acquisition of the remainder of the Partnership Health Group in 2008. The Hammonds healthcare team has also advised Care UK on a number of second wave elective treatment schemes.

Care UK relationship partner, Trevor Ingle, and corporate takeover partner, Giles Distin, led the Hammonds team, with assistance, amongst others, from Robert Shakespeare and Mark Yeo (corporate), Diarmuid Ryan (competition partner) and Sarah Nicholson (share options).

Trevor commented: "We were delighted to be able to assist Care UK on this transaction. Our healthcare team continues to experience high levels of activity across a broad range of disciplines within the healthcare sector. As this deal is testament, we are also noticing a discernable up turn in activity amongst private equity bidders for the right companies in the right space."

People off work sick will get the support they need to get back to work earlier, as new guidance is launched.

The introduction of the fit note, in place of the traditional sick note, is set to cut the cost of sick leave for employers. It is expected to benefit the British economy by an estimated £240m over the next 10 years.

From 6 April, doctors will be able to advise if a patient may be fit for work and offer advice on the effects of their health condition. Doctors will have the option to advise that their patient would be able to work, subject to the employer’s agreement, if temporary changes such as reduced working hours or amended duties could be accommodated.

Lord McKenzie, minister for the Department for Work and Pensions said: "The fit note will reduce the costs employers often have to bear when people are off sick for a long time. We know work is good for people’s health. With the right support in place, employers and doctors can work with employees to help them get back to work sooner."

Guidance on the fit note is being published following extensive consultation with business groups and medical representatives. The Department for Work and Pensions (DWP) is urging employers and doctors to visit www.dwp.gov.uk/fitnote to find out more.

Commenting on the development of the guidance, Dr Bill Gunnyeon, chief medical adviser at DWP, said: "From the outset, the development of the fit note has been a collaborative effort. It demonstrates what can be achieved when government, healthcare professionals, employers and other key stakeholders work closely together towards a common goal. We need to continue this good work once the fit note is in place to ensure it delivers the benefits it should for individuals, employers and GPs."

The new guidance has been created by the Department for Work and Pensions with the Royal College of General Practitioners, British Medical Association, CBI, Acas, Federation of Small Businesses, Chartered Institute of Personnel and Development, Association of British Insurers, British Retail Consortium and EEF, the manufacturers’ organisation. The fit note reflects medical evidence that work is generally good for health and well-being and can aid recovery for many health conditions.

Making simple, practical adjustments to help people back to work at an earlier stage will benefit both the employer and the employee. This will prevent long-term sickness absences and will also ensure employers do not lose the expertise of their staff.

Dame Carol Black, national director for health and work, said: "Work plays a significant role in determining a person’s health. The fit note is a hugely important development which means that GPs will be encouraged to think about their patient’s ability to work and provide more helpful information to patients to discuss with their employer. This is why the fit note is a win-win for both employees and employers."

As small businesses are most likely to benefit from access to further occupational health advice, a new occupational health advice line is being extended to give every small business in Britain easy access to professional occupational health advice from 1 April.

Think tank Policy Exchange’s latest report: The NHS in a period of tight funding, recommends that bold decisions should be made with regards to improving productivity and efficiency, and the cash savings that could be achieved by taking fixed costs out of the NHS.

• Performance related pay: incremental pay increases which currently cost the NHS £420m per year should be linked to wider organisational performance.

• Reducing variations in clinical practice: all NHS organisations performing as well as the top 25% could yield a productivity gain of approximately £7bn per year.

• Management capability: focusing attention on developing more doctors into managers would deliver disproportionate benefits in the short term. Top performing NHS managers should receive performance related bonuses of around £30,000.

• Decommissioning services: National Institute for Health and Clinical Excellence (NICE) should evaluate existing NHS treatments and exclude those that no-longer represent value for money.

• Transformational change projects: a full scale integrated care pilot should be set up covering any one of a number of financially challenged hospital trusts and their local health economies.

Henry Featherstone, author of the report and head of Policy Exchange’s health and social care unit, said: “Like all public sector spending bodies, the NHS is going to face an increasingly challenging financial environment. Beyond 2011, real term increases in funding are likely to be much smaller than the NHS has been used to. In order to meet these challenges, it is going to be far more politically palatable to look at the options for reducing costs, rather than fundamentally altering the principles of the NHS and relying on top-ups or co-payments.

“In the past pouring money into the NHS has not delivered value for money. However, introducing pay for performance across all NHS staff - whereby increases in productivity and efficiency were linked to incremental increases in pay - has the potential to deliver half of the savings required.”

While billions of pounds could be saved in government IT by cancelling projects such as identity cards it seems chancellor Alistair Darling has his sights on NHS IT.

But it is too late for the government not to see the National Programme for IT through: the £554m lifetime cost of the N3 broadband network run by BT to link NHS sites has all been spent, while Choose and Book has been running for some time.

The programme to provide local patient record systems to NHS trusts is running late and with only £4.5bn of the programme’s £12.7bn projected cost by 2014-15 spent, the prospect of cutting back on the project must seem tempting for Mr Darling.

That would leave the NHS with a system of patient records varying from paper in some hospital wards to computerised in many GP surgeries.

Electronic patient record systems are not a pricey indulgence as can be seen from Scotland's four-year-old Emergency Care Summary record system. France, America and Canada are looking to have electronic health records and even parts of England are making computerisation work.

The government has already given trusts in the south permission to buy such systems from an approved list, rather than the single suppliers dictated elsewhere after Fujitsu walked away from dealing with this area of the country last year.

That could be extended to the rest of the country.

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Bank Leumi (UK) funds LNT Group
November 2009

Leeds-based LNT Group has secured significant development funding from Bank Leumi’s UK division which will see a £15m rolling facility support its newly formed subsidiary company Ideal Care Homes.
Ideal Care Homes will manage a range of care homes which will be designed, developed and built by sister company LNT Construction. With substantial growth aspirations, the company will operate largely in the North and Midlands. Brackenfield Hall, a 60-bed care home in Frecheville, Sheffield, will be the first care home to open later next month.

Having been introduced to the opportunity by Leeds-based solicitor’s, Cobbetts, Bank Leumi (UK), finalised the deal in just seven days. Additionally, their package will sit alongside long-term financing from RBS, once all care homes are fully operational.

The LNT Group operates nine core companies across a range of sectors including healthcare, construction, and engineering. Group chairman Lawrence Tomlinson said: “At a time when many funders are unwilling to lend I was very impressed with how fast Bank Leumi progressed the deal. The development facility will significantly aid Ideal Care Homes growth over the coming year as we aim to expand care provision to an increasingly ageing population.”

Meanwhile Steve Cooper, Bank Leumi (UK) regional manager covering the north east region, acknowledged the particular challenges in completing this deal: “There was a real need to act quickly and terrific teamwork throughout Bank Leumi (UK)’s various departments, including direct involvement by our CEO, Lawrence Weiss, and head of corporate banking, Collin Cumberland, allowed this deal to progress in record time. In addition, it was vital that we worked collaboratively with the client’s existing bankers so that a practical working partnership could be forged between the two banks which would support the client’s future growth ambitions.”

Healthcare Finance provides $25m revolving credit facility to EmpRes Healthcare
November 2009

In Vancouver, Healthcare Finance Group Inc (HFG) has provided a $25.0m revolving credit facility to EmpRes Healthcare, Inc. (EmpRes).

EmpRes and its affiliates (formerly known as Evergreen Healthcare), headquartered in Vancouver, WA, are engaged in the operation and management of 44 skilled nursing and 5 assisted living facilities. All 49 facilities are operated under lease agreements and are located throughout California, Oregon, Washington, Montana, Nevada, and Idaho. In December 2008, EmpRes became one of the first long-term care companies to become 100% employee owned through an ESOT (employee stock ownership trust). The loan facility that HFG provided was a refinancing of an existing facility from CIT Healthcare.

Dale Patterson, CFO of EmpRes, said: "We were seeking a relationship-oriented, strategic partner with a strong understanding of the healthcare industry. We also needed a lender that had a high degree of certainty of being able to close given CIT's potential liquidity issues. HFG met those criteria on more favorable economic terms than its direct competition. HFG's entire team focused on getting this transaction closed, which allowed EmpRes and its Affiliates to focus on our continued commitment to caring for the residents we serve."

Regarding the transaction, Shane Passarelli, senior vice president of HFG, said: "As a testament to its management team, EmpRes has successfully executed on its strategy of acquiring underperforming nursing homes, integrating the operations, and improving the quality of care and financial performance of these facilities. The recent conversion to a 100% employee owned model makes perfect sense and allows earnings to be reinvested back into the operations."

Recessionary pressures may have been dominant in most operator’s minds recently but longer term obsolescence may ultimately prove to be of greater concern to the sector.

I have recently been looking at a portfolio of freehold investment healthcare properties let to a major operator in the long term care sector and a thought process was set in motion by the length of the leases granted. These were generally 35 year terms containing full repairing obligations on the part of the tenant.

My thought process led me to consider how the design and specification of care homes for elderly people has changed over a 35 year period. I was not in the profession in the 1970s but during my 25 years of valuation work in the healthcare sector, I have seen numerous homes dating back to that era, usually former Part III homes operated by a local authority.

I have also seen a gradual evolution of design and specification through the 1980s, 90s and 2000s and it occurred that there is a reasonable question as to whether care home operators taking on a new 35 year lease today should consider whether there is a risk that the building will be obsolescent by the end of the lease term.

Let me consider the various formats of purpose built care home through the past three decades:

Homes built during this period were generally bland, institutional 2-3 storey buildings with little architectural merit which had the appearance of office blocks with designs that built in potential maintenance issues such as flat roof coverings.

The homes were built on a relatively small footprint and contained narrow corridors and typical single room sizes of 100 sq ft (9.3 sqm). Shared rooms were also common, as were wards of 3 and 4 beds. The design often incorporated one substantial communal space rather than a choice of lounge and dining areas and included enormous kitchens and laundries etc. The buildings were generally inefficient in terms of energy usage.

Following the implementation of The Registered Homes Act 1984 in early 1985, a new style of care home began to be constructed by the sector incorporating better aesthetics with more consideration given to energy saving and overall building efficiency. Room sizes were generally 10 sqm for singles and twin rooms were still the norm with some homes being purpose-built with substantial numbers of twin rooms. Corridors were generally narrow, rarely much wider than 1.2 sqm and there was a distinct differential between residential care homes and nursing homes, particularly relating to communal space (Nursing home requirements were generally 2.3 sqm against residential care homes 3.7 sqm) hence many nursing homes were very cramped.

The 1990s produced a wide range of purpose-built facilities with some homes being constructed with future market requirements in mind while others were constructed to only the standards then applying. Some corporates were building 120 bed homes with no en-suite facilities while other developers were still building homes with substantial numbers of twin rooms, a good example being a home in South London which is only some 15 years old and contains 35 twin rooms within a total registration of 90.

The homes of this era contained less differentiation between residential care and nursing care and were generally built to a single standard. Corridor widths were generally better and the designs incorporated more efficient layouts for staff access to patients and catered for more dependent residents which were becoming the norm.

More recent developments have included significant improvements which would include:

So, the care home of 2010 is virtually unrecognisable from its counterpart in 1975. In addition to the various layout changes, one important factor is simply the size of the buildings which are now much larger in terms of space per resident than was the case in the past. The latest development that I have seen requires a building of some 4000 sqm for 70 beds which is 57 sq m per bed and I believe this is some 50% larger than the average requirement of the 1970s.

Will this trend in rising standards continue? Will the residents choosing care settings expect much more? People going into care in 2045 are today’s 40-50 year olds who have become accustomed to certain standards and will expect them to be available to them in a care setting. This will particularly apply to IT systems with internet access being available to each resident with fully integrated systems for communication, care and entertainment. Activities will need to be designed into the building.

I also believe that competitive pressures will play their part as operators chase the more lucrative private market in affluent areas of the country. Fees paid by local authorities are likely to be generally capped to inflation or less in the coming years and only by raising standards of presentation, star ratings and management performance will allow a home to rise above its competitors and attract the private market.

I believe that developers looking to build care homes in prime areas aiming at the private market will inevitably consider the design of their home to be as future proof as possible. I would also consider it important that prospective tenants, taking on 35 year leases, also make the same judgement.

Is the pace of change going to continue at the same rate as 1975/2009? I would suggest that the latest generation of homes that I have seen are likely to stand the test of time, although I have seen a number of homes built in the 1990’s which are in my view less competitive in the market, so the signals from the past are there to see. A building that fails to meet ‘fit for purpose’ standards before the term of the lease expires could present real problems to both landlord and tenant.

Barry Nickelson ACIB MRICS, associate director, Jones Lang LaSalle, Hanover Square

Pulse Healthcare signs new facility with KBC Business Capital
September 2009

Pulse Healthcare, a specialist health and social care staffing agency, has signed a new £15m asset-based lending (ABL) facility from KBC Business Capital, the specialist ABL division of Belgian banking group KBC Bank NV. The funding consists of a revolving accounts receivable facility intended to finance working capital to fund its growing business.

The transaction was completed in very short time, with only 14 working days from submission of applications to credit committee to completion of the transaction.

Pulse is one of the leading healthcare recruitment agencies, supplying highly-skilled health and social care workers throughout the UK. With a track record of year-on-growth and a history of success, Pulse is now the fastest growing company in its sector. Pulse is ranked in the top three by market share across each clinical discipline, and has a developing reputation in the social care and scientific sectors. Pulse has just reported sales for the six months of 2009 of £81.6m – an increase of 31% compared with the same period last year. Pulse is owned 74% by HG Capital and 10% by Fidelity Special Situations Fund.

Richard MacMillan, chief executive at Pulse Healthcare, said of the deal: “KBC listened and understood our needs and came forward with a competitive package to give us the flexibility to fund the future growth of our business.”

Alan Austin, regional director for KBC Business Capital added: “We are delighted to be able to provide Pulse Healthcare with the solution they needed to meet their ongoing working capital requirements and future expansion plans. Pulse is an exceptional business and we look forward to a long, and successful, partnership.”

A spokesman for Mills & Reeve, legal advisers to KBC Business Capital, said: “KBC closed this deal in a very short time. There is good communication between departments and the client benefited from integrated services provided by KBC Bank.”

Pulse received legal advice on the transaction by Wedlake Bell. KBC received valuation advice from Edward Symmons.

Michael Spencer from Hagley, Worcestershire, is the father of four grown-up children and has lived with MS for the last 15 years. Unable to walk, Michael relies heavily on his electric scooter to allow him to get out and about.

BUPA is trying to press down physiotherapy rates offered to private practitioners.

Many professionals reckon that a 40 minute session is often necessary for proper treatment but BUPA is attempting to press the cost for this session down to 30 minutes for £30.

A leading London physiotherapist suggested that he would employ newly qualified staff to offer 30 minute sessions to BUPA funded patients, maybe with his tongue in his cheek.

But most in the profession are annoyed at being offered the option of taking a cut in remuneration or offering their patients an inferior service.

One commented: “cost accountants do not mend broken bodies, BUPA customers need to know that concern for their welfare is being subordinated to BUPA’s profit targets.