Recent moves by Babylon Health raise more questions on how long the company will remain a partner to the NHS, as it leaves contracts in the UK and looks to save money.
In the past month the company has announced the end of partnerships with two large hospital trusts in the Midlands – University Hospitals Birmingham (UHB) Foundation Trust and The Royal Wolverhampton Trust (RWT) – as the company says they are “no longer economically viable.”
And the company’s chief financial officer, Charlie Steel, has said the company cannot ‘continue to fund the NHS forever’ as it reported on losing money on its GP services for the NHS.
The two high-profile contracts are expected to end later in 2022.
The UHB partnership, which began in May 2019, covered the launch of the symptom checker service Ask A&E, whose use the trust hoped would reduce the pressure on its A&E and hospital services. However, it was not universally welcomed by GPs in the area.
Pointing to funding problems in primary care and a lack of support for GPs, Birmingham local medical committee executive secretary, Bob Morley, said the chief executive of UHB Dr Rosser’s vision of vertically integrated care, in combination with Babylon, was “a truly frightening prospect that is going to be nothing but massively damaging for healthcare in Birmingham”.
The Ask A&E app will now be decommissioned. A spokesperson for University Hospitals Birmingham confirmed that the trust “served notice on the contract with Babylon Health in July and this collaboration will end in October”.
The 10-year partnership with RWT, signed in 2020 is now ending eight years early. The deal was to launch “digital-first integrated care” across the region. The partnership which would have allowed patients to access NHS primary, secondary and community healthcare services through a single app, also used the Ask A&E app. In April 2020, the Royal Wolverhampton Trust and Babylon made available Babylon’s newly developed Covid-19 app. Babylon and RWT then expanded its partnership in August 2021 with the launch of Babylon 360 to about.55,000 people across Wolverhampton.
Babylon has said that: “As a priority, we will work to ensure the safe and smooth transition of patients from the Babylon platform onto alternative providers.”
The company still runs its GP business, GP at Hand, in the UK, which launched in London in 2016 and in Birmingham in 2019. Since November 2017 over 113,000 people across London and Birmingham have registered with Babylon GP at Hand. However, its popularity has become an issue, according to CEO Dr Ali Parsa.
At an investor event back in May, Parsa said that the company needs to be “very cautious” about expanding its business in the UK as it loses money on every patient it sees in its GP at Hand business. The company is paid for one or two visits per year to a GP for the age cohort registered with its service, but Parsa noted that “in reality, people use us six to seven times a year and we actually lose money on every member that comes in”.
Dr Parsa also said the company is ‘overwhelmed with demand’ for GP services in the UK.
GP at Hand allows patients to access video consultations or see a GP in person at one of Babylon’s practices in London, where more than 90% of its patients are based. The company had seven practices in London, but despite the emphasis on digital-first and video consultations, there has been a big rise in demand for face-to-face consultations, forcing the company to open two new clinics in London. GP at Hand also has a clinic in Birmingham.
As a result of pressure on finances, in July, Babylon announced a series of “cost reduction actions” to generate $100m (£82.1m) in savings. Bloomberg reported that jobs will be cut, with about 100 Babylon employees in the UK and US, including from the clinical safety and compliance teams.
Recent years have seen Babylon focus its business in the USA, rather than the UK. In October 2021, the company went public on the New York Stock Exchange via a merger with Alkuri, a special purpose acquisition company (SPAC) with an implied equity value for Babylon of about $4.2 billion.
In June 2022, the FT reported that Babylon and many other small cash-intensive companies who took this approach to listing on the market, have suffered a massive fall in value as investors sell-off the shares as the companies fail to fulfil the rosy-projections given when they went public. Babylon’s market capitalization has fallen more than 90%, giving the company a market value of about $334 million. Its share price has fallen from around $11 in October to around $1.
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