Everyone is leaving the table - who pays the bill?

So the PIP Implant issue truck rolls on. Harley Medical Group claim that they simply cannot afford to conduct reoperations on the patients they implanted with PIP. And in any case, they shouldn't have to because they were duped along with everyone else. Right?


And don't get me started on the regulator - IHAS, what exactly have they been doing since 2007.

Next weeks topic!

Well one thing is clear is Harley Medical Group simply can't afford this, as their published 2010 accounts put NET profit at only £489,000 from a turnover of £29M!

Uh Oh!!! NET Assets are only £3.2M, this isn't a balance sheet I would want to see. Costs too much to run this business, and not enough in the bank to weather any changes in the market.

One asks the question how can it cost £14.7M in cost of sales and another £14.7M operating expenses, as it wouldn't take much to push them out of business, such as a simple run of poor press and the resulting drop in sales revenue...................Ah.

Ok, so it looks to me like HMG are effectively dead, and not much they can do to recover from this unless Director and Investors dig deep and bail it out. This is something I wouldn't do as thanks to some shockingly poor decision making the Harley Medical Group Brand has become the "Villain of the Piece" and it's equity is diminishing by the second, so I wouldn't be putting investment in, I'd try and take it out.

Brand Values?

The other challenge with Harley Medical Group is that their business model uses leasing rather than capital investment, which means that they have little in the way of  fixed assets and unlike Transform and The Hospital Group they don't own a Hospital. The ultimate issue here is that they have an instant overheads of Theatre space, Anaesthetist, Surgeon and Implant cost for every Breast Enhancement performed, which is why they cannot perform 14,000 operations free of charge as it would cost them £39.2 Million. 

Mel Braham is telling the truth; They simply don't have it.

The Doomsday Scenario

The danger I see is that if the Government continue to push the private hospitals hard to fulfil their moral obligation and provide the operations the path of least resistance is simply to cease trading. If this happens patients stand absolutely no chance whatsoever of getting any recourse and will have to pay to have the implants removed, or the NHS will be forced to pick up the tab. 

The Third Way?

There is another way - the NHS becomes Harley Medical Groups banker to the tune of £39M and provides the operations on their behalf at cost, which would be significantly cheaper than using a private hospital. Nagor UK have already offered to provide implants free of charge, so patients get the op, NHS recovers the money and HMG don't turn a profit for 80 years!

Maybe not - but there needs to be some creative thinking because neither the current scenario or the Doomsday are really acceptable.