Can this A&E strategy reap rewards? Totally...
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BREXIT may be top of the June 8 Election agenda, but health and social care are not far behind. The NHS is one of this country’s bestloved institutions, but it is under pressure like never before.
At the end of last month, Simon Stevens, head of NHS England, set out a plan to improve services, ease the burden on accident and emergency departments and make the entire system smoother and more effective for hospitals and patients.
Stevens’ plans do not just make sense – they also play neatly into the strategy advanced by fastgr o wing heal t hcare busi nes s Totally. Its shares are 55½p and should increase substantially in price over the next few years.
Totally provides a range of services that aim to improve health, keep patients out of hospital and reduce the demand for emergency services. The market for outsourced services to the NHS is worth about £20 billion and the sector is expanding rapidly as hospitals look for innovative ways to reduce waiting lists and improve patient care.
Totally was set up to provide NHS-sponsored telephone coaching for people with long-term health conditions, such as diabetes, heart disease and emphysema.
That business exists to this day and has provided more than 35,000 coaching sessions, significantly cutting GP visits and emergency hospital visits among the patients involved.
Recently, however, Totally’s ambitions have taken a step-change, following the appointment of veteran turnaround specialist Bob Holt as chairman. Holt is best known as the man behind Mears, which maintains, repairs and upgrades social housing and provides home care for elderly and disabled people.
Holt floated Mears on AIM in 1996 when the company was just a tiddler. Today it is valued on the stock market at more than £500 million and Holt remains at the helm.
Holt became chairman of Totally in August 2015, took a 10 per cent stake, beefed up the board and brought in several well-regarded institutional investors.
His strategy centres on buying up firms that are contracted to provide specialised outsourced services to the NHS and last year Totally acquired three such companies. The first was Premier Physical Healthcare, which provides physiotherapy treatment within the NHS as well as in prisons, for the police and for athletes. Customers also include the Oxford University rugby club.
Totally bought another physiotherapy specialist too, Optimum Sports Performance, and dermatology group About Health, which treats conditions such as eczema, psoriasis and acne.
Since coming under Totally’s umbrella, the trio have won contracts and expanded into new parts of the country. Totally has also extended its coaching offer, so consumers can access advice directly from the group via fee-based subscriptions.
The business was launched only a few months ago, but take-up has been encouraging, particularly from expat Britons with health problems.
Totally had a busy 2016 but Holt and chief executive Wendy Lawrence are just getting into their stride. Having spent more than two decades with the NHS, including time as boss of three large primary care t r usts, Lawrence knows exactly where the health service needs help. Over the next few years, Holt and Lawrence are keen to move into areas such as urgent care and minor operations.
Unbeknown to t he public, a number of hospitals already outsource certain A&E services to private firms, which work within the hospitals themselves.
Visitors to A&E are screened on arrival and those with non-acute problems are seen by trained healthcare staff working for these firms so that acute cases – such as heart failure or critical knife wounds – can be seen by top NHS consultants. The system means that patients are seen more quickly and senior doctors can devote their time to people who really need them.
Totally aims to seek out businesses that perform these A& E services, as well as private firms that hospitals use to perform routine operations.
Talks are already under way with several companies and the group is expected to make a couple of acquisitions this year.
In February, Totally raised almost £18 million by issuing new shares at 55p apiece. The placing was oversubscribed, suggesting that large shareholders believe in Holt and Lawrence’s strategy and are optimistic that the duo will deliver results.
Totally was loss-making last year, as it invested heavily in future growth. But t he c o mpany is expected to make a profit of about £25,000 this year, while revenues are expected to soar from £3.2 million to £10.6 million. Next year, revenues of almost £ 14 million are pencilled in, alongside profits of around £1.5 million.
Midas verdict: Private sector involvement in the NHS is not without its critics, but hospitals are increasingly keen to use outside help and, when it is done properly, patients, doctors and nurses all benefit.
Provided Totally buys conscientious businesses and manages them well, shareholders should prosper alongside the NHS. At 55½p, these shares are a buy.