Spire hit by fall in NHS referrals and £27m compensation payout
Iain Withers SPIRE Healthcare shares have dived on a double blow for the private hospitals group, with NHS referrals down and £27m having to be set aside for compensating victims of rogue breast cancer surgeon Ian Paterson.
Shares in the FTSE 250 company fell 18.6pc to 252.2p after it revised down forecasts for the full year following an abrupt fall in NHS referrals this summer. The UK’s second largest private healthcare provider said the drop in July and August had led to “significantly lower than anticipated revenues” and it now expects second-half revenues to be flat on the previous year, while margins are forecast to be as much as 0.7pc lower at around 16.1pc.
The downbeat outlook came after it said it would pay £27.2m in compensation to around 750 private patients who suffered at the hands of Paterson.
Paterson was jailed for 15 years in May on more than a dozen counts of wounding with intent and further wounding charges for carrying out unnecessary treatments on Spire and NHS patients in the West Midlands between 1993 and 2012. His sentence was increased to 20 years on appeal last month. A further 270 NHS patients have separately received £17.4m. Spire had been facing civil proceedings in the High Court next month.
Spire’s compensation fund ate into half-year after-tax profits, which were down three quarters to £8.9m for the six months to June. Revenues edged up 2.4pc to £481m.
Simon Gordon, interim chief executive of Spire, told he believed the level of compensation being offered to Paterson’s victims was a “good outcome for everybody”. He said he was “confident” Spire had learned from its mistakes and “gone further” in tightening checks and processes than had been recommended by an independent report by investigators Verita three years ago.
He added: “You can never rule out the possibility of a clinician doing something they shouldn’t. But I have far greater confidence we will pick them up very early, share that information and come to a quick conclusion on whether that conduct can be accepted in that environment.” NHS referrals were down due to a more “aggressive demand management strategy” adopted at “fairly short order” by the public health service, he said.
Spire is hoping growth in its self-pay business, where patients pay on demand rather than via health insurance, will make up for any shortfall in NHS custom. “It is 20pc of our business and growing significantly,” Mr Gordon said.
A permanent chief executive to succeed Garry Watts, who stepped back to his role of non-executive chairman, is expected by the end of the year.
Ian Paterson, the jailed breast cancer surgeon. Spire has set aside £27m to compensate his victims