There was little public attention paid to the decision last year by US health corporation Centene to spend a reported $700 million in cash to buy out the remaining 60% it didn’t already own of Circle Health and take complete control.
Circle itself, with increased resources from private equity investors, had in 2020 taken over England’s largest private hospitals chain, BMI, with 47 hospitals, 2,400 beds and turnover in excess of £900m. This enabled Circle to pick up the biggest slice of the £2bn-plus NHS contract effectively block-booking almost 8,000 private hospital beds in the first year of the Covid pandemic: Circle’s share of that contract, £468m, boosted the company’s revenue in 2020 by more than 50%.
So, with just this one major investment, Centene/Operose had leapt into pole position to exploit the turn by the NHS since the Covid pandemic struck to long-term reliance on private hospital beds to compensate for severely restricted numbers of beds available to treat waiting list patients.
It appeared that a major American takeover of health care in England – long feared by many campaigners – was seriously under way, although the lack of any Centene press release boasting of the takeover did seem uncharacteristic for a company seeking expansion of markets and profits.
Instead, just months after forking out big bucks to take over Circle, Centene in December revealed that it was reviewing its strategy, focusing on maximising its profits per share, and, as part of this, considering the possibility of “divesting” itself of all its “non-core” business, including international businesses worth around $2 billion per year out of the corporation’s $126bn turnover.
Selling off the international operations would mean disposing of both Circle in the UK and Centene’s 90% share of Ribera Salud (which owns and manages the largest private hospital in Spain and has controlling and noncontrolling interests in primary care, outpatient, hospital and diagnostic centres in Spain, Central Europe, and Latin America.)
However Centene’s core business remains very much in US insurance, where it covers 26.5 million people, primarily in U.S. government-sponsored programs including Medicaid, Medicare and the Affordable Care Act marketplaces. And its core interest is simple: profit. So now it is looking to slim down its workforce and focus on achieving 2024 earnings per share of between $7.50 and $7.75 – around 50% up on 2021.
Hence its willingness to explore options to “offload its international operations, including a U.K. hospital operator.” Sarah London, vice chairman of Centene’s board and president of the company’s health care enterprises business told Bloomberg:
“We are committed to a comprehensive portfolio review, beginning with non-core assets. Let me say it simply: if it doesn’t fit, it doesn’t stay.”
At the end of the review Centene may, of course, decide to stay and seek ways to maximise what profits it can extract from NHS contracts. But if, as expected, they do decide to pull out, their departure from England would no doubt be linked with selling on their assets to another grasping private operator, who would also need to be fought all the way.
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