Credit crunch thwarts private bids

Exclusive - Private-led GP roll-out falters as healthcare firms hit by global economic crisis. By Tom Ireland and Jonn Elledge.

The global economic crisis is making primary care investment impossible for the private sector, businesses have warned.

The global shortage of capital means that the DoH policy of increasing general practice capacity may be unachievable, a health entrepreneur said.

Ali Parsa, managing partner of Circle Health, a leading private provider of NHS services said it was not far fetched to assume many private healthcare firms may be struggling to survive.

Mr Parsa said creating more health centres and moving services into the community was not possible when private companies' share prices were so low.

'Access to capital has been diminished and shareholders will be more restrictive about what money is spent on. Policy makers need to think about this very carefully,' he said.

Virgin Healthcare announced last week that due to the current economic turmoil it had abandoned plans to take over an NHS practice in Swindon and scaled back its plans for a chain of health centres.

The company's chief executive, Mark Adams, who is stepping down, said: 'We were wildly optimistic a year ago that conditions were right for a rapid roll out. Now we're more cautious about consumer spending power next year.'

Other major players in the UK said they remain confident. A spokesman for UnitedHealth said it was expanding and recruiting more staff, while Dr Mark Hunt, managing director of Care UK, said the company was continuing to grow. 'This will affect companies whose models depend on property or patient spending,' he said.

Mr Parsa said his own firm had anticipated the capital crisis, but added that many others were unprepared for its impact. 'The government needs to make it easier for GPs and everybody to deliver what it wants,' he said.

Professor Nick Bosanquet, director of health policy at Imperial College, London, added that private firms may be unable to 'buy a share of the market' by making loss-leading bids for services because they were struggling financially.

GPC chairman Dr Laurence Buckman warned that the DoH was unlikely to ditch plans for private involvement.

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