Private profit: taxpayer loss

The use of tax havens by private health operators – including a subsidiary of an Australian health operator – has raised concerns in the UK.

The economic rationale for privatisation of health services has been questioned in Britain where outsourcing of National Health Service (NHS) services has been profitable for major private operators, but with questions about the ultimate financial benefit to taxpayers.

Corporate Watch, a UK based, independent journalism and research group, has questioned the use of tax havens and complex internal borrowings to reduce the tax liabilities of five UK operators. It says Spire, Care UK, General Healthcare Group and Ramsay UK, a subsidiary of Australia’s Ramsay Health Care, are all carrying significant levels of debt, after their owners financed their acquisitions through borrowing.

The interest being paid to banks and bondholders – which is far higher than the government would be paying for equivalent sums – is also serving to reduce taxable profits.

While the companies say they are acting within the law, Corporate Watch points out that “… being legal is not the same thing as being right, and the government’s promises that companies can be regulated into doing a good job for the NHS are further undermined with evidence of how easily they are getting round the tax obligations that should help pay for it.”

Ramsay Health Care in the UK has 22 hospitals with almost 70% of its work coming from the NHS. It is a subsidiary of Ramsay Health Care Group, Australia’s biggest private hospital operator, which in February announced a first half core net profit of $148.2 million, up 12.3% on revenue of $2.1billion.

Ramsay Health Care owns and operates 120 hospitals and day care facilities across Australia, the United Kingdom, France and Indonesia.

Ramsay will open a 200-bed Sunshine Coast University Private Hospital in Queensland in December, adjacent to the Sunshine Coast University Public Hospital. Local medicos believe Ramsay will win the contract to operate clinical services at the public hospital.