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An agency which employs NHS doctors and nurses outside contractual hours has been purchased by private equity firm Fremman Capital. This acquisition is a strategic move by Fremman Capital, which anticipates that growing waiting lists will lead to increased demand for specialist staff and services.

Medinet, a UK-based organization that aims to help NHS organizations reduce waiting times, was previously owned by Volpi Capital, who recently sold it to Fremman Capital for an undisclosed sum.

Private equity firms have been expanding their reach in the British health system, branching out into sectors such as private hospitals, recruitment agencies, elderly and child care, foster care, and mental health services. The acquisition of Medinet by Fremman Capital is part of this growing trend. Neither Volpi Capital nor Fremman Capital provided any comments regarding the acquisition.

The Context: Shortage of Staff and Union Actions

This deal comes at a time when the NHS is facing a severe shortage of staff. Moreover, union actions by employees demanding higher pay have been on the rise. Approximately 48,000 young doctors are planning the longest strike ever, with a five-day strike scheduled from July 13.

The Role of ‘Insourced’ Providers

Medinet is one of approximately 20 ‘insourced’ providers. These agencies hire NHS staff members to work outside of their regular hours, providing treatment to patients on NHS premises. One of Medinet’s competitors, 18 Week Support, was acquired last year by US private equity firm Summit Partners.

Candesic, a consultancy firm, has noted that the trend of insourcing and outsourcing by NHS trusts has been on the rise as they search for quick solutions to staff shortages. In 2022, the NHS spent £55 million on employing its staff to carry out additional work through specialist agencies, which was a decrease from the previous year’s expenditure of £62 million. The departments of general surgery, gastroenterology, and endoscopy were the largest users of outsourced services.

The Criticism of Insourcing

NHS England, the governing body for the NHS, has criticized insourcing, discouraging its use because it does not provide additional staffing. Additionally, agency workers have been paid higher rates, which has had a ripple effect, leading to other departments and trusts having to raise their pay scales.

Financial Performance and Market Outlook

Last year, Medinet reported revenues of £58.9 million, which represented an impressive 93% increase from the previous year, according to filings with Companies House. The company’s annual accounts state that waiting times on the NHS continue to grow, implying that the demand for business services is likely to increase as well.

The NHS continues to grapple with a backlog of canceled appointments during the pandemic. In April, approximately 371,000 patients had been waiting for treatment for over a year, according to NHS figures.

About Fremman Capital

Fremman Capital, founded in 2020 by former executives of French private equity firm PAI Partners and a former Merrill Lynch banker, has its presence across Europe. The company owns various businesses, including Kids Planet, one of the largest nursery operators in the UK.

Michelle Tempest, an analyst at the consultancy firm Candesic, concluded that the insourcing and outsourcing trend is likely to continue as NHS trusts pursue quick solutions to address staff shortages.

Additional reporting by Sarah Neville in London

Summary

Private equity firm Fremman Capital has acquired Medinet, an agency that employs NHS doctors and nurses outside contractual hours. This acquisition aims to tap into the demand for specialist staff and services driven by growing waiting lists in the UK’s National Health Service.

Insourcing and outsourcing by NHS trusts have been on the rise as they search for quick fixes to address staff shortages. However, NHS England discourages the use of insourcing as it does not provide additional staffing. The NHS spent £55 million on employing staff through specialist agencies in 2022, with general surgery, gastroenterology, and endoscopy being the largest users of outsourced services.

Medinet, one of the 20 ‘insourced’ providers, reported a significant increase in revenues, reaching £58.9 million last year. The NHS continues to face a backlog of canceled appointments during the pandemic, with around 371,000 patients waiting for treatment for over a year.

Fremman Capital, a private equity firm founded in 2020, owns various businesses across Europe, including Kids Planet, one of the largest nursery operators in the UK.

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An agency which employs NHS doctors and nurses outside contractual hours has been bought by private equity firm Fremman Capital, in a bet that growing waiting lists will fuel demand for specialist staff and services.

UK-based Medinet, which aims to help NHS organizations reduce waiting times, has been sold by Volpi Capital to Fremman Capital for an undisclosed sum.

Private equity has a growing reach in the British health system, having expanded into private hospitals, recruitment agencies, child and elder care, foster care and mental health services. Volpi and Fremman did not respond to requests for comment.

The Medinet deal comes amid a severe shortage of staff in the NHS and a surge in union actions by employees asking for higher pay. Nearly 48,000 young doctors are planning the longest strike ever with a five-day strike since July 13.

Medinet is one of around 20 ‘insourced’ providers, which expect agencies to hire NHS staff and find them working outside normal hours to treat patients on NHS premises. One of Medinet’s competitors, 18 Week Support, was bought last year by US private equity firm Summit Partners.

Michelle Tempest, an analyst at consultancy firm Candesic, said insourcing and outsourcing by NHS trusts “has increased and will continue to grow as NHS trusts look for quick fixes to staff shortages”.

The NHS spent £55m employing its staff to carry out extra work through specialist agencies in 2022, down from £62m the previous year, according to freedom of information requests from Candesic, a consultancy. Last year, the departments of general surgery, gastroenterology and endoscopy were the largest users of outsourced services.

The practice has been criticized by NHS England, which leads the service in the country. He said he “discourages” the use of insourcing because it “doesn’t provide additional staffing.”

Agency workers have also been paid higher rates, which has a ‘ripple effect’, forcing other departments and trusts to raise pay, NHS England said.

Medinet reported revenues of £58.9 million last year, a 93% increase on the previous year, according to Companies House filings.

“Waiting times on the NHS across the UK continue to grow and therefore demand for business services is likely to increase,” the company said in its annual accounts.

He saw record demand for his services last summer as the NHS is still dealing with a backlog of canceled appointments during the pandemic.

In April, around 371,000 patients had been waiting for treatment for more than a year, according to NHS figures.

Fremman Capital was founded in 2020 by former executives of French private equity firm PAI Partners and a former Merrill Lynch banker. The company has offices across Europe and owns companies including Kids Planet, one of the largest nursery operators in the UK.

Additional reporting by Sarah Neville in London