US corporation takes £50 million ‘dividend’ from its UK care services

In a recent edition of Private Eye, they ran a story about Cygnet Health Care, a private company that runs residential and care services across the UK, stating that it is ‘entirely publicly funded by the NHS and local councils. Patients with learning difficulties in its care were slapped, kicked and abused. And now its owners are getting a £50m dividend.‘ (https://twitter.com/PrivateEyeNews/status/1319606653520695303)

According to Private Eye, the £50 million dividend was paid to the US parent company using a well-recognised tax avoidance mechanism of paying interest on a ‘loan’ to another part of the same company to make sure the company does not register a trading profit, and therefore does not pay any corporation tax.

Cygnet in the UK is a subsidiary of Universal Health Services, Inc. which acquired it for £205 million in 2014. UHS is an American company that provides hospital and healthcare services, and which has annual revenues of over $11 billion. Cygnet is also the company that bought up and ran Wharton Hall, where in 2019 an undercover BBC Panorama programme found endemic abusive care practices – see https://www.bbc.co.uk/news/health-48367071.

Now, my personal dealings with this organisation leads me to believe that this is a company that, despite being able to extract a £50 million dividend, historically has grossly underinvested in its staff. Quite probably also related to this same issue, they also historically had massive staff turn-over – 63% in one year in one service in Leeds if my memory serves me right. Although Intensive Interaction was claimed to be central to their care for some of their service users, their unwillingness to pay for training was evident in hardly any staff being, in my view, sufficiently trained in the approach. Again according to my memory, over all the time I was Intensive Interaction Project Leader in Leeds, they only sent two staff (albeit two excellent and committed staff) on our 3-day Intensive Interaction training, and I presumed that was because it was provided free as part of our NHS Intensive Interaction ‘client’ pathway.

Now, I am not in principle against a plurality of care providers; a range of good quality, caring and committed services providers (with the right motives) can bring a range of service development benefits – but I am in principle against corporations taking money out of services when those services are under-resourced and their staff inadequately rewarded and insufficiently trained, supervised and supported.

On their website Cygnet state that they have ‘a reputation for delivering pioneering services and outstanding outcomes for the people in our care. Our expert and highly dedicated care team of 10,000 employees empower 2864 individuals across 150 services to consistently make a positive difference to their lives … We maintain a good relationship with our quality regulators and undergo regular inspections, with 83% of our services rated ‘Good’ or ‘Outstanding’.’

In PR terms that sounds great, but that prompts me to ask – “what about the other 17%?” – couldn’t the £50,000,000 dividend have been better invested in making those services better i.e. at least ‘Good’? … and anyway, Wharton Hall was rated ‘Good’ by CQC in 2017 despite them being given warnings about inadequate staff training, long staff hours and excessive use of agency staff (see BBC news link above) – that all sounds familiar to me, and again evidences poor staff retention (especially of the best staff members), again presumably for the same reasons mentioned above.

So where does all this leave us – well personally, absolutely fuming that those in charge of our current care system allows this – to me it feels like a £50 million slap in the face for some of our most vulnerable fellow members of society and for those that care for them, rather than look to gain a ‘tax-free’ dividend from them.

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