Just before NNUH put into special measures, PFI firm which built it reports record profit
PUBLISHED: 11:48 20 June 2018 | UPDATED: 12:01 20 June 2018
A week before the Norfolk and Norwich University Hospital (NNUH) was rated inadequate, a private firm - which continues to get tens of millions of NHS pounds a year for building it - reported record profits.
Octagon Healthcare, which built and maintains the hospital under a controversial deal, made £14m in pre-tax profit in 2017.
Its annual report, which was published last Tuesday, shows the NNUH paid Octagon more than £50m in 2017 under a Private Finance Initiative (PFI) deal.
MPs have previously attacked the PFI, with North Norfolk MP Norman Lamb calling it a “bad deal” and asking Octagon to forego part of its profit.
Norwich South MP Clive Lewis has described it as an “injustice”.
In January, NNUH chief executive Mark Davies said he would ask the body which oversees NHS trusts for help in paying the PFI.
Octagon’s turnover was up to more than £53m in 2017, from £48m the year before, as the more people who use the hospital, the more money Octagon gets.
Octagon’s annual report said the reason for the record profit was the settlement of a dispute with a subcontractor.
The firm also continues to pay out millions of pounds in dividends to its shareholders.
In 2017 it paid £2.9m, compared to £3.5m the year before. It is also holding £26m in cash in its bank account, statements filed at Companies House show.
The money the N&N pays to Octagon goes on paying interest on its debt to them and for Octagon to service and maintain the site.
But Octagon subcontracts this work, leaving it in the bizarre position of making multi-million-pound profits but not having a single employee.
Despite giving tens of millions of pounds to Octagon each year since 2001, the hospital is only paying off a tiny amount of its debt which still stands at £193m.
Octagon will continue to get tens of millions of pounds from the NHS until at least 2037 under the terms of the PFI deal.
Estimates from 2004 predicted taxpayers, through the NNUH, would pay Octagon more than £1bn by the end of the deal – nearly five times the £229m cost of building and opening the hospital in 2001.
Octagon has previously said it was working with the NNUH to find savings in the PFI contract.