Profile: Paul Humphreys, FD at Care UK

It’s 2002 and prime minister Tony Blair has had a rough week selling his
public sector reforms.

‘We are never going to create the public services we want, which give genuine
equality of opportunity and access to people, unless we change the way they are
run,’ Blair argues to the Guardian newspaper.

Criticism of Labour’s approach has been building throughout the year and in
the last week has converged on a number of fronts.

Newspapers speak of opposition from the public sector, unions, an emboldened
Conservative Party and from within the Labour Party’s own ranks.

‘This is the historic mission of this government,’ Blair argues. ‘It is to
take the welfare state, the public services, the great 1945 settlement, and
completely revolutionise it for today’s world. If we don’t do that we will end
up in a situation where large numbers of people, under the banner of greater
equality, actually just get a poor service.’

As the debate rages in Westminster, Paul Humphreys, newly appointed group
finance director for sheltered housing provider, Care UK, sits in his Colchester
office, taking little more than a passing interest in the debate.

It’s been six months since he took the job and he’s wrestling with Care UK’s
confusing and out-dated IT system, along with trying to turn around an
employment policy he’d later describe as ‘pile ‘em high, sell ‘em cheap’.

In the hazy undefined future, he has plans to take Care UK into the health
care market, but that’s at least two or three years away… surely?

Fast forward to 2009. Humphreys sits behind his desk in Care UK’s central
London offices, a short stroll from the Bank of England and in the heart of the
financial district.

The company he administers is now among the UK’s most diversified and
lucrative healthcare providers in an industry which, on the numbers, is set to
increase as the population ages.

Over the last seven years he believes he has witnessed the realisation of
Blair’s dream: an efficient health system, complemented by private providers
taking the load off the public purse while also offering patients more choice.

‘I think Blair’s vision has come to reality.

If you look at the NHS waiting lists today for elected procedures compared
with six to seven years ago, they are hugely different,’ he says.

‘We earned our very first penny of healthcare revenue five years ago… We have
built a £160m business in five years.’

Today the company’s turnover is expected to reach £403m according to Investec
analysts, who estimate the 2010 normalised profit before tax to hit£22m.

Looking around, it’s certainly doesn’t look like the company Humphreys
described walking into seven years ago, where his top three goals where
demystifying the company’s accounts, tackling the high tax rate and overhauling
the IT system.

He casts his mind back to that first year. Change was sweeping through the
healthcare industry.

The government announced it would offer procurement contracts to private
operators and was on the hunt for firms with experience in healthcare to run
surgeries and treatment centres.

‘It was about six months after I joined that the Department of Health put the
notices out for what became known as the ISTC – independent sector treatment
centres,’ he says. ‘A recently recruited development director suggested we go
for it.’

But Care UK had no experience in healthcare, not to mention the fast track
surgeries the government envisioned. ‘It was completely different to our base
business,’ Humphreys says.

Perfect mix

Eager to get a foothold in what looked like becoming a lucrative industry,
Humphreys made contact with South African healthcare provider Afrox which later
changed its name to Life Healthcare.

Afrox’s background in healthcare delivery combined with Care UK’s experience
in winning public sector contracts would give them a good shot at winning a
contract, he thought.

‘What Care UK had in spades was the experience of bidding for and running
public sector secured contracts,’ he says. ‘We knew about working with the
public sector. If you then marry with that with the expertise in the South
African hospitals you have a perfect mix.’

For the best part of a year Humpreys and the Care UK team worked on a
competitive bid for the contracts.

The company thought it could win two. In the end, it won four.

The decision proved a major turning point for the company. Humphreys
remembers when the announcement was made.

‘I was in our office in Colchester and the situation was just absolute
euphoria… immediately tempered with “bloody hell, the hard work starts here”.’

He likes to think of Care UK as a ‘task orientated’ operation, an approach he
believes is the key ingredient to the company’s success.

‘Give us a problem and we will get our spanners out and try to solve it.
That’s what we do as a business.’

Those spanners have been out again over the past few years as the company
prepares to enter a new phase.

When Care UK partnered with the public sector it was given the security of
five-year contracts. But that security will soon be gone when the contracts
expire over a 21 month period beginning in March. The company will then have to
maintain its high performance standards if it wants to remain the recipient of
government contracts.

Humphreys isn’t too perturbed by the new challenge. Under his guidance, Care
UK has been preparing for the post-contract world since day one. ‘We’ve been
looking forward since we signed the contracts,’ he says.

‘We knew that to compete in the post-contract world we had absolutely to
deliver the same sort of high quality and patient satisfaction.’

Success and quality within the prickly world of healthcare can be measured in
a number of ways.

Patient satisfaction, recovery rates, referrals, waiting lists, waiting
times, turnover figures – the means of measuring success are plentiful and
Humphreys likes to think he has more than a few positive results up his sleeve.

‘If you look at any quality rating and any satisfaction rating that you care
to mention we out perform even the top 20% of NHS hospitals by a distance,’ he
says. He also points to Care UK’s record on hygiene. ‘We have never had an
in-patient case of MRSA,’ he says.

MRSA, or methicillin-resistant Staphylococcus aureus, is the dreaded super
bug, resistant to conventional antibiotics, which lives in hospital wards.

Humphreys also points to the sort of word of mouth recommendations which
bring patients back to his clinics. ‘50% of patients coming to one of our
centers are coming, having been recommended by friends or family,’ he says.

Tory tinkering?

One big question mark hanging over the healthcare industry is how the
political leadership will shape the industry. With the real possibility of a
Conservative win, Humphreys is considering the ‘unlikely’ scenario where the
NHS, under pressure to cut costs, shrinks inside itself and cuts back on its use
of external providers. For Care UK, which receives 96% of its revenue from the
government, this possibility threatens to curb the stellar growth of the past
five years. But the signs are so far encouraging.

Andrew Lansley, shadow health secretary, said a Tory government would
increase spending on the NHS, at the expense of cost cuts in other areas. ‘We
have made it clear where our priorities lie: we are going to increase the
resources for the NHS, we are going to increase resources for international
development aid, we are going to increase resources for schools,’ he told a
newspaper.

Humphreys says he has not lost sleep worrying about healthcare politics.
Since Blair articulated his vision, his reforms have become so deeply entrenched
in the NHS that it drives the reform agenda itself, according to Humphreys.

‘Having had that political infusion six or seven years ago from what Tony
Blair, from a political standpoint, wanted to achieve, the NHS has really picked
the baton up and driven reform themselves, because they know they need to,’ he
says.

The political winds directing his sail may seem predictable, but even
Humphreys acknowledges the risks. ‘You can never say never in this country…
There’s always a risk that the NHS shrinks back inside itself and tries to place
an independent sector operator like us outside the circle,’ he says.

‘The public sector is facing significant funding pressures and, one would
naturally expect that whichever party wins the national election next year there
will be cuts in public funding and public expenditure – that’s a given. It is
both threat and opportunity – and we probably think it’s more opportunity than
threat.’

By public demand

Care UK group finance director Paul Humphreys admits he has a pretty broad
remit.

He has established a finance department designed to place Care UK in good
stead for future challenges. An assistant group finance director is responsible
for the central finance team and accounts payable.

Humphreys has also put in place a tiered management structure which includes,
a group legal director, a group IT director, a group procurement director, a
group tax manager and a group internal audits manager.

‘We’ve been such a fast growing organisation over the past few years, our
structure is one which continues to evolve to meet what ever tomorrow’s
challenges happen to be,’ says Humphreys.

‘The future evolution is going to be less than the past. I built a team that
is pretty much set for the next three years in supporting business growth.’

Humphreys says he is gearing up for a world where he has to compete on an
even playing field with other healthcare providers for government work.

‘Internally the biggest issue for us has been about what the operating cost
base of those businesses needs to look like to deal with a world where you have
variable demand instead of fixed demand and our price per unit is about 20%
lower than it is at the moment,’ he says.