The healthcare market has been a solid, bankable industry for years, in part due to the Labour government ploughing a decade’s worth of investment into the NHS during the good days.
That money, plus an increase in overall wealth, has benefited the private sector, none more so than Spire Healthcare, which this year posted turnover of £588m, making it the second most successful mid-market private company, according to the Sunday Times Top Track 250.
Spire was born after 25 hospitals were spun-out of Bupa Hospitals in 2007 in a leveraged buyout by private equity house Cinven. It then added a further 11 hospitals to its portfolio in 2008, as part of £205m worth of capital invested into the business.
Dan Toner, Spire’s general counsel and company secretary, was hired in 2007 to work on the original buyout. The fast-talking and energetic Toner needed all his faculties to take on the guise of a private equity lawyer on the Cinven deal, but has drawn on his previous experience as a lawyer in the Department of Health to defend Spire in a lengthy investigation by the Office of Fair Trading (OFT) into the £143m hospitals purchase.
The OFT had concerns that local markets would be affected in three locations where Spire had bought hospitals. It eventually decided there was no lessoning of competition.
“It was a great thing to have done,” explains Toner. “It’s given us a clear idea of how the competition authorities view the healthcare market. We had to put an innovative case to the OFT and it led to a reinterpretation of how it will look at cases involving private healthcare providers.”
A similar case, which involved Spire rival General Healthcare Group, was referred to the Competition Commission, and made the result all the more pleasing. Toner instructed Freshfields Bruckhaus Deringer, which acts as Spire’s main corporate counsel, to work on the OFT case. The other firms on the roster – Beachcroft (training, healthcare), Travers Smith (acquisitions, tax), Herbert Smith (litigation) and Wragge & Co (commercial competition) – assist the three in-house lawyers Toner hired to build the legal team after his appointment.
An advocate of the NHS, Toner describes his previous role as head of legal in diagnostics procurement as the most challenging period of his career. Although relieved to be free of the institutional bear pit, he speaks passionately of the organisation.
“The quality of the management is fantastic, by and large,” he says. “They want to improve the service, not just build personal glory. It’s a pretty efficient and effective organisation. People have short memories: waiting lists have got a whole lot better than they used to be.”
Toner’s role in the private world sees him and his team come face-to-face with the NHS once again. Around 25 per cent of Spire’s income is from NHS referrals, but that figure is increasing and has lead to Toner actively engaging in the debate over patients’ consultants – another conflict in the “Byzantine” healthcare market, according to Toner.
Consultants are customers of Spire because they can refer patients to a Spire hospital rather than a hospital run by an NHS Trust. It all comes down to giving patients more choice – a buzz word in the corridors of the Department of Health.
The trusts found they were losing money to private hospitals and imposed rules on consultants that prevented them from referring patients to private hospitals. Spire and a number of companies complained to the Competition Commission, which recently ruled that altering the contracts breached employment rules, adding that it takes power away from the patient.
“It’s always controversial, but the system mostly works well,” says Toner. “Is this debate about trusts getting the same grants whether they are good or bad, or is it about giving the patient the best quality of service?”
Toner reiterates that he is a “big believer” in the NHS and is adamant that increased competition from the private sector benefits the patient.
“The private sector is a useful safety valve for the NHS – it drives up standards,” he argues. “The turnover of all private healthcare in the UK is more than £2bn but the NHS is more than £100bn. In a monopoly it’s good to have competition.”
Name: Daniel Toner
Company: Spire Healthcare
Industry: Private healthcare
Job title: General counsel and company secretary
Reporting to: Chief finance officer Rob Roger
Group turnover: £588m in 2008
Number of employees: 8,000
Total legal capability: Four
Annual legal spend: More than £1m
Main law firms: Beachcroft, Freshfields Bruckhaus Deringer, Herbert Smith, Travers Smith, Wragge & Co
Dan Toner’s CV
1987-90: BA Medieval and Modern History, University of Birmingham
1992: CPE, University of Birmingham
1993: Law Society Finals, de Montfort University
1993-97: Trainee, Solicitor Gouldens (now Jones Day)
1997-98: Solicitor, Arnheim & Co (now PwC Legal)
1998-2001: Legal adviser, Laporte
2001-04: Senior associate, Freshfields
2004-06: Head of legal, diagnostics procurement, Commercial Directorate, Department of Health
2006-07: Head of legal, Bupa Hospitals
2007-present: General counsel and company secretary, Spire Healthcare