Record start to the year fails to quell fears over rising costs at Barclays

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The Independent Online

If Nestor Healthcare wanted to evade the wrath of its disgruntled shareholders after a recent profits warning and share price slump, it chose the perfect venue for its annual meeting yesterday.

The out-of-hours doctors and nurses agency business selected one of the two giant call centres which have cost it £25m to set up, positioned at the far-flung corner of a business park near wasteland north-east of Sheffield. Result: no shareholders showed up and the board was able to scrap the meeting ­ an extraordinary occurrance.

Before the meeting, the company confirmed that its chief executive Justin Jewitt is to be replaced by Stephen Booty, the head of the nurses agency side of the business, but the absence of shareholders spared the company a grilling on plans to cut costs and alter its management structure.

Analysts were surprised by the easy ride the company was afforded. "A good bit of planning," Evolution Beeson Gregory's investment manager Hector Forsythe joked. "I don't see anything sinister in it though. The business prognosis is simple ­ they have to get costs down." Schroders, which has a 23 per cent shareholding in Nestor, declined to explain yesterday why it had not appeared on its clients' behalf.

Nestor's immaculate new call centre, complete with self-opening interior doors, separate lockers for smokers and non-smokers and the capacity to handle calls from a sixth of the UK population, attests to its belief that changes in the organisation of GPs' out-of-hour duties would bring primary care trusts (PCTs) flocking to its doors. The process of moving in staff from smaller existing call centres only concluded late last year.

A handful of PCTs have signed up ­ including those from Cleveland, Hereford and Luton. But many are organising cover in-house, a state of affairs which leaves Nestor needing to cut costs quickly and charge PCTs a more competitive rate for its 1,600 on-call doctors and 250 nurses. At least one of the Sheffield and Birmingham call centres may be surplus to requirements. Mr Booty, who has made back-office savings for the company in its nursing division, said his review of the business would look to remove duplication but that it was too early to discuss the future of the call centres. Mr Booty has accepted that Nestor is unlikely to secure GP work from more than 6,000 PCTs.

Stephen Page, the outgoing head of the GP cover division, Primecare, said the future of the call centres depended on the business the division could secure. Part of its service agreement with PCTs, plastered across the call centre walls, is a guarantee that 90 per cent of calls from members of the pubic will be answered within 30 seconds. "That's some proposition but it doesn't seem to be an irresistible proposition at the price we are charging," Mr Page said.

Mr Booty's nursing division has faced similar pressures as the NHS has modernised its system of nursing cover. In the past, hospitals desperate for cover have been forced to hire their own nurses back from private sector agencies who have contracted them to do overtime work. But the NHS and individual hospitals have gradually established their own banks of nurses to provide cover at a far lower cost.

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