I am delighted that in my second report as Chairman of Spire I can report a year of excellent progress. We continue to deliver high standards of care to our patients across the country and at every stage in their pathway.
"Our strong performance would not be possible without the tremendous input of all the people that work for Spire."
Spire Healthcare Chairman
2012 was a year of contrasts, it started with a drought and ended with a deluge, while a nation, dipping in and out of recession, staged two spectacular and uplifting events, the Queen’s Diamond Jubilee and the London Olympics and Paralympics. The economy remained difficult to read, disappointing economic statistics contrasted with stronger labour market figures and a resurgent stock market. Through it all our staff, and the consultants who work with us, continued to deliver treatment and high quality care to our patients.
Our already excellent clinical metrics showed further improvement, as did the results of our regular satisfaction surveys of patients, consultants and staff. Our financial performance was strong. In the last year revenues grew by 9.6% to £739.0 million, generating £204.4 million of EBITDAR (pre-exceptional items), 8.6% ahead of the previous year. This is an industry leading outcome in difficult economic circumstances.
Two highlights of our year were the openings of St George’s Park and the Montefiore Hospital. St George’s Park is the new home of England football’s training facilities (and of many other sports besides). This state-of-the-art facility is the perfect showcase for our Perform sports medicine, physiotherapy and rehabilitation brand. The Montefiore is a very impressive new hospital, benefiting Brighton and Hove and the surrounding area, and is a credit to our team and the many others involved in its creation. Both developments are outstanding examples of the private healthcare sector’s ability to deploy capital to develop facilities of the highest quality.
Just after the end of the year we completed the partial refinancing of our loan facilities through the sale, subject to leases, of 12 of our 38 hospitals. Following the transaction, 18 of our 38 hospital sites are now held on long leases and 20 are freehold. The proceeds of the transaction, net of costs, have been reinvested in the company, reducing net bank debt from approximately £1.4 billion to £700 million. This transaction was very significant for the group, giving us a firm financial footing for future development.
During 2012, Rob Roger and his team have been leading a review of our strategy and refining the vision, mission, values and behaviours that drive the organisation. Rob covers these in detail in his statement, but they are fundamental to our business, lying at the heart of what Spire is and wants to be.
We are now more clearly focused on the significant opportunity that exists for private healthcare in the UK. The increasing proportion of work that we undertake for the NHS is cementing our role as part of healthcare provision for the UK as a whole. The private healthcare sector is increasingly working with the NHS to deploy its resources for the improvement of public health. Going forward, we will sharpen our focus on working constructively with the NHS as the Health and Social Care Act’s new commissioning arrangements start to take effect.
Our care culture
The refinement of our strategy is supported by the behaviours that deliver outstanding care and outcomes for patients. Issues around care culture are currently at the forefront of all our minds as a result of some appalling lapses in other sections of the healthcare market. To quote an old management adage, “culture eats strategy for breakfast”, so our top to bottom review and the reaffirmation of our vision, mission and values is both timely and fundamental.
At the core of our business and our behaviour should be one question – are we doing the right thing for our patients? Looking at things through the patient’s eyes and challenging ourselves to do the right thing for them, is the approach that is embedded throughout Spire and which we continue to emphasise.
Dr Jean-Jacques de Gorter, our Group Medical Director, reviews our clinical performance in detail on pages 14 to 18, but I am pleased to record that our outcomes continue to be excellent. We focus on clinical governance in everything we do, and when problems arise, we endeavour to lead our industry in responding. Our response to the PIP breast implants problem was to ensure that all patients were seen and offered, at no cost to them, counselling, treatment or replacement of their breast implants. Putting patients first and maintaining the highest clinical governance standards are crucial factors for the health and development of our industry.
The Competition Commission’s review into the private healthcare industry continues. We support the review and are playing our part in providing information and suggestions. We look forward to helping to formulate recommendations and conclusions for the long-term future health of our industry. We do not expect wholesale restructuring of the industry as a result of the review, but we do believe that one of the outcomes will be the requirement for provision of more and better information to patients and GPs. This can only be for the benefit of all. The Keogh review of cosmetics healthcare in the wake of the PIP issue is also on-going. A summary of evidence has been published and recommendations are expected in spring 2013. We have contributed fully to the review and will welcome recommendations that are aimed at improving standards in certain parts of cosmetic treatment in the UK.
Our strong performance would not be possible without the tremendous input of all the people that work for Spire. Rob Roger restructured his senior team this year and I believe we have a high performing top team, fully focused on working together, sharing best practices, problem solving and mutual support. In a year that was not without challenges, the level of motivation that I have seen throughout our hospitals and in all Spire’s staff, has been incredible. There were also two changes to our Board in 2012 and I would like to thank Rebecca Gibson and Pascal Heberling at Cinven for their dedication and hard work since Spire Healthcare was formed. I wish them well with their future endeavours.
Spire is one of the leading private hospital operators in the UK. Our commitment to the industry and our investment in it is recognised by all that work for, and with, us. We are alive to the UK’s healthcare reforms and understand, at a local level, the difficulties that NHS trust hospitals face. We are determined to work with the NHS, as well as medical insurers and our local communities, to provide the best healthcare services in each individual area.
In my view, there are signs that the worst of the economic downturn may be over although health provision remains a political touchpoint. Cinven has now owned Spire since 2007, their understanding of the sector and the level of investment support they have provided, has been exemplary. We have demonstrated that we can prosper even in tough times and I am confident that we will continue to respond well to a changing environment.
We have an outstanding team, and provided we continue to focus on the key issues – our relationships with consultants, our relationships with each other, the quality of our care and above all, our patients’ experience – then I believe Spire’s future will be both exciting and successful.
Chairman, April 2013