Moving in with the competition could have unexpected benefits, writes Stuart Shepherd

Opening a private clinic in the shadow of a larger, world-renowned NHS specialist hospital providing almost identical services might not seem like much of a business plan.

However, the experience of the Oxford Clinic for Specialist Surgery, the new 'tenant' at Nuffield Orthopaedic Centre trust, would suggest otherwise.

Ascent Health and a group of consultant surgeons from Nuffield share the financing and governance of the clinic, a limited liability partnership, using a business model that is relatively new to UK health provision.

'We are a wholly owned subsidiary of Health Inventures,' says Ascent's UK managing director Peter Sharpe. 'The US company works in partnership with clinicians to make joint investments in treatment centres and imaging facilities. We wanted to see if it was possible to replicate that in the UK.'

The partnership was established in 2005 and once a site for the clinic had been found - a vacant building on the Nuffield campus - refurbishment began. Two modular operating theatres with design features to meet the treatment needs of musculoskeletal conditions were commissioned. Built and fitted out off site, the units were connected to the existing structure via an indoor walkway. The first patients started arriving in September 2006.

Strategic relationship

'The incentives for making this work are strong,' says Gavin Bowden, a consultant orthopaedic surgeon at the Nuffield Orthopaedic Centre trust and one of the original clinicians who went into business with Ascent.

'As investors, we take a keen interest in the relationship between strategic direction, cost structures and efficiencies,' he continues.

All of which, as far as Mr Sharpe is concerned, is good news, not only for a venture such as this, but also for public sector providers. With a background in NHS radiography services before becoming a manager in private MRI and imaging facilities, he was struck by the lack of clinical engagement when he returned to the NHS in 2003 as a senior manager.

According to Mr Sharpe, one benefit of having consultants who continue to work in the NHS involved in centres like the Oxford Clinic is that they go back to their trusts with a better understanding of the business.

'Take orthopaedic implants,' he says. 'At a private clinic, it is vital to rationalise the amount of implant stock kept on the shelves at any one time. The NHS has always tended to keep a much wider range in larger numbers, but the surgeons and their colleagues from anaesthesia and other disciplines are in a much better position to question the need for things like that.'

More direct benefits to the host trust include fixed revenue streams from renting out the facility and the purchase of a number of support services - radiology, pathology, laundry and catering. The clinic is also able to respond should the trust ever require short-term additional capacity.

Medical equipment at the private facility was originally to be leased from Nuffield. However, just before the new centre was due to open, it became clear other arrangements would have to be made and an approach was made to medical asset finance providers Siemens.

'What really made the difference was that Siemens did all the chasing for things like documentation, delivery dates, etc, rather than our suppliers having to chase the finance provider for payment. This level of support was incredibly refreshing,' says Mr Sharpe.

With the Oxford Clinic reporting good patient satisfaction and positive clinical outcomes, a number of similarly sited private providers may give NHS managers some interesting food for thought.

'Ultimately,' says Mr Sharpe, 'this is something foundation trusts might want to look at investing in for themselves.'