Assessing the finances of NHS subsidiary companies

Trinava Consulting has reviewed the business models and profitability of NHS subsidiary companies and found that:

• Most are not generating any significant level of external income despite running for many years.
• Around 30% of their annual operating profits come from reduced pension contributions.
• Employee pay  has not kept up with either inflation or NHS pay.
• Profit margins excluding pension savings are low, and likely driven by VAT savings.

Report author Vivek Kotecha said: “Despite running for many years, very few subcos have won any significant external customers. Their profits mainly come through skirting around tax and employment rules.

“Likely changes to VAT rules and restrictions on altering workers’ terms and conditions put the future of these profits in doubt and there is no reason to encourage NHS trusts to set new ones up.”