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Information Centre may sell Dr Foster Intelligence share

The NHS Information Centre is considering selling its £12m share in its controversial joint venture with Dr Foster.

The joint venture - Dr Foster Intelligence - was criticised in 2007 by the National Audit Office, which found the Department of Health had paid up to 53 per cent more for its half share of the venture than it was advised it was worth.

The NAO said the “only measurable benefit” to the NHS of the deal was a 50 per cent share of any future profits

The NAO said the “only measurable benefit” to the NHS of the deal was a 50 per cent share of any future profits. The venture reported losses of £2.8m and £0.5m in its first two years of trading and a profit of £2.6m in its third year (2008), with no dividend paid to shareholders.

Earlier this year HSJ reported that the centre had alerted its board to a potential devaluation of the venture on its own balance sheet “due to the existing economic and financial climate”.

But no devaluation was made. HSJ’s request for the valuation report was turned down by the Information Centre, which said publication “would harm Dr Foster Intelligence’s ability to secure future contracts and thus cause harm to them… as a commercial entity”.

HSJ has learned the prospect of the sale arose at the time of the valuation review earlier this year. Dr Foster Intelligence chief executive officer Tom Moloney told HSJ the prospect of a sale would have been “completely irrelevant” to the auditor’s decision not to devalue the asset, as the valuation was based on the future cash flows of the business, which suggested it was still worth £24m.

He did not rule out the possibility that Doctor Foster Intelligence’s private sector parent company, Dr Foster LLP, or one of its subsidiaries, might have borrowings secured against the value of its share in the joint venture, but he said “any borrowings that exist are nothing compared to the cash that’s in the company” and therefore not vulnerable in the event of a devaluation.

Mr Moloney said he was not aware Dr Foster LLP had expressed any interest in buying out the Information Centre.

Information Centre chief executive Tim Straughan said: “We are considering the options and keep it under constant review. No decision has been made yet.”

Readers' comments (1)

  • What I would like to know is, why was Dr Foster singles out of all the other consultancy firms for such a big deal in the first place. This certainly didn't appear to go to tender. I don't know the real reason for why or how Dr Foster got this huge contract (although I'm sure if you polled 100 people most people would come to similar assumptions), but it certainly does not seem to have benefited the public in any demonstrable way. I think the current Government might have more credibility if it thought about the implications of some of it's decisions, and how these might be perceived by the general public and the people who work so hard in statutory organisations to not only provide a high quality of care for it's users, but are also expected to meet demanding performance and management targets. It seems that it's the Government and higher people in places such as the Information Centre that need their management and decision making skills assessed.

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