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Thursday, January 15, 2015

NHS and local government contracts are turning toxic

I am surprised that it has taken so long to happen but I predict that the events of the last week will turn into an avalanche.

What am I talking about?

A week ago a company called Circle Healthcare, the first private firm to manage an NHS hospital, said it planned to pull out of its contract after two years.

Saga has just announced that it is pulling the plug on the home support services it provides to customers via NHS and local government contracts.

The reason for this is very simple. There just isn't any money to be made working for the state. The state's finances are being squeezed and then squeezed a bit more. If you think this is bad just give it a few more years.

These companies are going to focus on providing services to private payers. It is a no-brainer.

Why would a company want to see its margins squeezed to zilch whilst being open to all sorts of criticism for not providing decent services. In the UK the main opposition party is looking for any chance it can find to rubbish private providers.

It is sad but that is going to be the way of the world. If you cannot afford to pay you will get an ever diminishing level of service provided by an ever diminishing number of companies that are daft enough to work for the state.

The sooner this fragmentation happens the better. In the care home market the private payers are being forced to subsidise those that the state inadequately funds.

If you are going to have to liquidate your assets you might as well get the full benefit from doing it rather than getting a worst service because you are also paying for those the state cannot/will not fund.

There are going to be big bucks made for companies that plug the ever increasing gaps that are emerging as the level of state health and support services disintegrates. Dick Stroud

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