2021 Annual Report and 2022 Notice of AGM
Spire Healthcare Group plc
1 April 2022
2021 Annual Report and 2022 Notice of Annual General Meeting
Spire Healthcare Group plc (the "Company") released its preliminary announcement of its annual results for the year ended 31 December 2021 ("Preliminary Announcement") on Thursday, 3 March 2022.
Further to that Preliminary Announcement, the Company confirms that its Annual Report and Accounts for the year ended 31 December 2021 ("2021 Annual Report"), 2022 Notice of Annual General Meeting and Form of Proxy have now been published. Printed copies have been posted to shareholders who have requested hard copies.
The following documents are available on the Company's website:
2021 Annual Report: www.spirehealthcare.com/AR2021
2022 Notice of Meeting: www.spirehealthcare.com/Notice2022
In accordance with Listing Rule 9.6.1, the Company will submit its 2021 Annual Report and other shareholder documents to the National Storage Mechanism. These documents should then be available for inspection within two working days at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
Arrangements for the Annual General Meeting
The Annual General Meeting of the Company will be held at 11.00am on Thursday, 11 May 2022 at 3 Dorset Rise, London EC4Y 8EN (the "2022 AGM").
The Company expects that shareholders will be able to attend the meeting in person but will continue to closely monitor the position in respect of COVID-19 as the health and well-being of our shareholders is vitally important to us. It is intended that the 2022 AGM adheres to the Government's latest legislation and guidance applicable at the time. Shareholders are asked to monitor the Company's website for any changes in requirements on attending the meeting.
The Board always welcomes questions from shareholders and we request that these are submitted by e-mail to companysecretary@spirehealthcare.com . We will ensure that answers to questions are placed on the Company's website ahead of the meeting.
Details of the resolutions to be proposed at the 2022 AGM are set out in the 2022 Notice of Meeting. The voting results of all resolutions put before the 2022 AGM will be announced to the market following the meeting.
Appendix
The Appendix to this announcement contains information required for the purposes of compliance with DTR 6.3.5 (1) of the Disclosure and Transparency Rules, including a Statement of Directors' responsibilities. This information is extracted, in full unedited text, from the 2021 Annual Report and should be read in conjunction with the Preliminary Announcement, which contained other information required by DTR 6.3.5 (1), released to the market on Thursday, 3 March 2022.
Enquiries:
Philip Davies
Company Secretary
Tel: 07803 508348
Appendix
Principal risks
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Principal Risk |
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1. Patient Safety and Clinical Quality |
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Executive Owner(s) |
Group Clinical Director Group Medical Director
Link to Strategy
Uncompromising on patient |
Risk Appetite VL
Risk movement in 2020 -
Risk movement in 2021 - |
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Risk Description |
There is a risk to the provision of high-quality patient care due to: A shortage of skilled workforce; Clinical and non-clinical staff and Consultants failing to follow guidelines, standards and policies resulting in patient harm Failing to learn from incidents, complaints, mortality reviews, patient feedback and Patient Notification Exercises Failure to act on findings from audits, clinical outcome measures (including registry data), peer reviews and external inspections Hospital acquired COVID-19 infection |
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Risk Impact |
Reputational and financial loss could occur if we fail to address adequately issues identified by incidents, audits, complaints, PROMs, National Registries, Raising Concerns, workforce feedback and the internal Patient Safety Quality Reviews and Care Quality Commission. |
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Risk Mitigation |
We maintain the following controls to mitigate against a failure of patient safety and clinical quality: - A reporting culture of openness and shared learning from Ward-to-Board, with a FTSUG at each site. - Incident/red flag staffing reporting via a database with central oversight. - Continually monitoring clinical standards, reporting progress via the Board's Clinical Governance and Safety Committee (CGSC). - Integrated quality reporting based on a Quality Assurance Framework with a standard set of KPIs. - Development of a Board Assurance Framework to assess risks against clinical and medical strategic objectives. - A schedule of robust and regular hospital audits including the Patient Safety and Quality Reviews, with an action plan for improvement that is monitored. - Standard Operating Procedure for Patient Notification Exercises that includes learning and continuous improvement methodologies. - Colleague induction, clinical competencies requirements and mandated training. - Reporting on clinical outcomes with workforce and Consultants including the Chairs of hospital Medical Advisory Committees with a view to driving up safety and performance. |
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Principal Risk |
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2. Workforce |
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Executive Owner(s) |
Human Resources Director
Link to Strategy First choice for private healthcare.
Uncompromising on patient |
Risk Appetite B
Risk movement in 2020 -
Risk movement in 2021 up |
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Risk Description |
There is a global shortage of nursing and allied healthcare practitioners. As the economy opened up in 2021, shortages of staff in new areas, for example hotel services, have arisen. In addition, we have an ageing workforce.
Our ability to attract and retain clinical and non-clinical staff is affected by: - Growth of waiting lists affecting more nurses required in NHS/IS reducing availability of colleagues. - Demand for nursing and healthcare workers increases resulting in higher or more competitive pay rates. - UK Government's pay policy in the NHS. - Government immigration policy and the post Brexit labour market. - Our business strategy of increasing complexity of medical procedures that requires a higher skilled workforce. - The requirement of mandatory vaccination (subject to the outcome of HM Government's consultation) from 1 April 2021 may result in Spire Healthcare having to release some patient-facing staff. - The reduction in elective activity within Trusts reducing the training opportunities for new Consultants. - New expectations for hybrid working. |
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Risk Impact |
In the short term, we are able to provide safe patient care only with delays to treatment because of scarce resources.
Over the medium to long term, wage inflation and resource scarcity could result in a decline in our profits and affect expected revenue growth from more complex surgical procedures and treatment of higher-risk patients. |
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Risk Mitigation |
We seek to retain staff through: - A common purpose and a positive workplace culture. - Maintaining competitive pay and benefits. - Responding to key staff metrics e.g. staff turnover, rookie staff levels, and levels of positive engagement from staff surveys. - Continuous investment in its equipment, facilities and services to retain high-quality clinicians.
We seek to recruit staff through: - A centralised recruitment process. - An overseas recruitment capability to secure skilled healthcare workers from outside the EU where necessary. - Offering apprenticeship programmes. - We manage immediate staff shortages through the use of agency and bank workers. |
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Principal Risk |
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3. Climate Change |
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Executive Owner(s) |
Chief Operating Officer
Link to Strategy - First choice for private healthcare. - Key partner of the NHS. - Uncompromising on patient safety and clinical care. |
Risk Appetite L
Risk movement in 2020 N/A
Risk movement in 2021 up |
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Risk Description |
Climate-related risks have been identified through the emerging risk process. Our climate-related risks include: - Severe Storm Weather events e.g. damage to roofs or flooding. - Prolonged spells of extreme ambient temperatures. - Energy price fluctuation (Decarbonisation requires changing our energy sources: moving to more expensive zero-carbon electricity tariffs and replacing gas-fired heat sources with more expensive electricity). - Changes in laws and regulation, including failure to meet net zero targets and obligations (e.g. in financial covenants). |
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Risk Impact |
Severe storm weather has the potential to cause major damage and disruption to our sites. Storm events raise the risk of floods at our buildings due to rising external water levels, such as from rivers run-off and the sea. Our hospitals would be badly affected by flooding should it occur, as water ingress would affect medical equipment and risk the hygiene of our premises and safety of our patients. Extreme weather events could also disrupt our patients, staff and consulting staffs' ability to attend our facilities, as well as our supply chains.
Prolonged spells of extreme ambient temperatures could lead to an inability of existing critical Heating, Ventilation and Air-Conditioning (HVAC) systems to cope with required cooling and potentially cause cancellation of procedures and operations.
Providing healthcare services is a relatively energy intensive business. We are vulnerable to fluctuations in energy prices. |
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Risk Mitigation |
Flood risk mitigation includes a continued periodic review of our estate in relation to existing and predicted flood risk zones.
Extreme ambient temperature risk mitigation includes an informed investment plan for upgrade of failing and vulnerable plant. Design of the replacement and upgrade would account for the predicted increase in ambient temperature profiles expected within the lifespan of the plant. Further mitigation measures include extreme weather warning protocol and Business Continuity Plans to provide emergency loan HVAC plant.
Energy price risk mitigation includes energy efficiency measures to reduce consumption and the Group's Energy Hedging strategy that has seen all our current energy requirements secured until October 2024.
Net zero targets form part of the remuneration of the Executive Directors. |
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Principal Risk |
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4. PMI Market Dynamics |
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Executive Owner(s) |
Chief Commercial Officer
Link to Strategy - First choice for private healthcare. - Improving revenue, profit and cash. |
Risk Appetite L
Risk movement in 2020 -
Risk movement in 2021 - |
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Risk Description |
The PMI market remains concentrated, with the top four companies (Bupa, AXA, Aviva and VitalityHealth) having a market share estimated at over 85%.
We have individual contractual relationships for the provision of its services with all the major PMI providers. These contracts come up for renewal on a recurring basis. There is a risk that renewal of contract terms cannot be secured on historical terms.
Service line tenders and the introduction of triage services are expected to continue medium term as PMIs look to reduce costs. We also expect an increase in directional networks.
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Risk Impact |
Loss of, or renewal at lower tariffs, of an existing contractual relationship with any of the key insurers could significantly reduce revenue and profit for Spire Healthcare.
A slower recovery of the PMI market could reduce revenues and profits in the short term. |
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Risk Mitigation |
We work hard to maintain good relationships and a joint product/patient health offering with the PMI companies, which, in the opinion of the Board, assists the healthcare sector as a whole in delivering high-quality patient care.
We ensure we have long-term contracts in place with our PMI partners to avoid co-termination of contractual arrangements.
We believe continuing to invest in its well-placed portfolio of hospitals provides a natural fit to the local requirements of all the PMI providers long term.
We continue to invest in efficiency programmes to ensure that it can offer the best combination of high-quality patient care at competitive prices. |
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Principal Risk |
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5. Macroeconomics |
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Executive Owner(s) |
Chief Commercial Officer
Link to Strategy - First choice for private healthcare. - Improving revenue, profit and cash. |
Risk Appetite B
Risk movement in 2020 up
Risk movement in 2021 down |
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Risk Description |
Following the end of the 2020 NHS COVID-19 contract, the business returned to normal trading channels (Private and NHS), albeit that these continue to be impacted by the pandemic (e.g. access to GP, NHS commissioning levels due to funding uncertainty).
The wider economic outlook remains unclear, with the expectation of inflation remaining higher than recent levels throughout 2022, increased tax burden, volatile energy prices, and GDP affected by social restrictions because of the Omicron variant.
Despite these macroeconomic headwinds, the expectation is that the primary growth drivers for healthcare will remain medium term, namely record NHS waiting lists, stable/growing PMI lives covered and a growing self-pay market. |
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Risk Impact |
Reduction of Private patients and associated revenue and profit contributions.
NHS commissioning volumes remain below historical levels. |
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Risk Mitigation |
The evidence available to us indicates that the COVID-19 pandemic has left high levels of pent up demand for our services.
The ability for patients to access private care does not appear to be constrained financially at this time. We understand that private medical insurance policy renewals and sales remain stable, and we have seen strong growth in 2021 that is expected to continue while waiting lists remain at record levels.
In response to macro inflationary pressure we will continue to benefit from the inflation mechanisms built into the PMI contracts and will benefit from our ability to change self-pay pricing quickly via our new pricing engine.
In addition, the Group will continue to respond to changing economic circumstances by optimising our private and NHS funded work ensuring the Group is not over reliant on one income source, supported by an efficient cost base.
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Principal Risk |
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6. Competitor Challenge |
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Executive Owner(s) |
Chief Commercial Officer
Link to Strategy - First choice for private healthcare. - Key partner of the NHS. |
Risk Appetite B
Risk movement in 2020 -
Risk movement in 2021 - |
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Risk Description |
We operate in a highly competitive market. New or existing competitors may enter the market of one or more of our existing hospitals, or offer new services.
In the current economic environment, there is a risk that the pressures on competitors results in irrational market behaviour manifesting itself in low pricing on tenders or self-pay. |
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Risk Impact |
The potential impact would be the loss of market share because of aggressive competitor activity leading to reduced profitability and cash flow. |
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Risk Mitigation |
We maintain a watching brief on new and existing competitor activity and we retain the ability to react quickly to changes in patient and market demand.
We consider that a partial mitigation of the impact of competitor activity is ensured by providing patients with high-quality clinical care and by maintaining good working relationships with GPs and Consultants.
We continue to invest in the brand and deliver an effective acquisition capability both direct and via our partners in order to protect our market position. We have also strengthened our pricing and tendering capabilities.
Despite the COVID-19 pandemic, we have maintained our investment in the estate and clinical equipment to differentiate our proposition, and will continue to do so.
We monitor the market for opportunities, should they arise, to acquire or open facilities in specific geographies creating incremental volume. |
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Principal Risk |
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7. Insurance and Indemnity |
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Executive Owner(s) |
Chief Financial Officer (Interim - Chief Executive Officer)
Link to Strategy - Uncompromising on patient safety and critical care. |
Risk Appetite L
Risk movement in 2020 -
Risk movement in 2021 - |
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Risk Description |
We procure insurance from global insurers and syndicates with a presence in the Lloyds of London insurance market.
We could be subject to litigation for actions by third parties or may be found liable for damages which may not be covered by its insurance policies, if: - the claims are in excess of cover, - are not covered by our insurance due to other policy limitations or exclusions, or - where we have failed to comply with the terms of the policy. |
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Risk Impact |
Our insurance premiums may increase and, if there is a significant deterioration in its claims experience, insurance may not be available on acceptable terms.
There may also be costs relating to damages and defence costs.
As a substantive buyer of corporate insurance, we could be faced with increased premiums, reduced cover or withdrawal of cover because of hardening global insurance markets. |
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Risk Mitigation |
We review and maintain insurance to mitigate the possibility of a major loss. Adequacy of cover is reviewed annually with our brokers with coverage being maintained or increased depending on that advice.
Personal injury claims relating to patients, third parties and employees are covered by insurance once predetermined deductible levels have been reached.
We engage in Consultant information events relating to indemnity, and have developed a bespoke affinity insurance product, MedicaInsure, to provide Consultants with a high-quality, regulated alternative to discretionary cover. We have made robust representations to HM Government and the Paterson Inquiry with regard to the need to end discretionary indemnity and to regulate the medical defence organisations. We are also engaging with medical defence organisations to explore how alternative insurance products could reduce the risk associated with historic models.
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Principal Risk |
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8. Liquidity and Covenants |
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Executive Owner(s) |
Chief Financial Officer (Interim - Group Financial Controller)
Link to Strategy - Improving revenue, profit and cash. |
Risk Appetite VL
Risk movement in 2020 -
Risk movement in 2021 - |
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Risk Description |
We may not have sufficient liquidity to meet our financial liabilities as they fall due, or breach financial covenants linked to its borrowings.
We may not be able to refinance on favourable terms. |
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Risk Impact |
Failure to meet our obligations or covenants would have a substantial adverse effect on our reputation and may lead to borrowings becoming repayable earlier than contracted. |
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Risk Mitigation |
Our management of cash and capital expenditure is focused on maintaining or improving our liquid asset position, meeting our financial liabilities falling due, and maintaining the cover against our loan covenants.
At the onset of the COVID-19 pandemic, we were able to engage positively with our banking group with the result that we benefited from covenant waivers in 2020 and for June 2021. As at December 2021, the banking group enforced the covenant tests under its current loan agreements. We complied with the covenants as described in note 22 of the financial statements (see page 158).
In February 2022, we successfully refinanced our existing Senior Facilities that were scheduled to mature in July 2023, with a new four-year facility (which includes the option to extend by an additional year) that will mature in 2026. We retain access to an unutilised £100m revolving credit facility should our current cash position materially deteriorate.
We have a solid asset base with the ability to leverage promptly in a short timescale, if required. This was demonstrated with the sale and leaseback of the Spire Cheshire Hospital in December 2021 that has allowed us to reduce Net Debt.
The Board has considered the risk in detail as part of its assessment of the viability of the Group. |
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Principal Risk |
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9. Government and NHS Policy |
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Executive Owner(s) |
Chief Commercial Officer
Link to Strategy - Key partner of the NHS. |
Risk Appetite B
Risk movement in 2020 -
Risk movement in 2021 down |
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Risk Description |
We expect NHS England (NHSE) to complete the establishment of regional Integrated Care Systems (ICS) over the coming 18 months. Meanwhile Scotland and Wales will broadly remain unchanged.
It remains unclear what the new NHSE commissioning models and/or changes in the tariff structures will be post pandemic. Our expectation is this will become a combination of direct referrals from GPs, waiting list transfers and an increasing use of block contracts.
There is a risk that wider HM Government policy is unfavourable to the independent healthcare sector as a whole, e.g. future economic or employment policy. |
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Risk Impact |
Changes to NHS commissioning models, if adverse, could lead to reduced access to patients, reduced tariffs, or reduced prices adversely affecting revenues and/or margins.
A reduction in patient volumes could lead to a reduction in the operational efficiency of our existing hospital network.
Changes in HM Government fiscal policy or spending policy towards corporate organisations, or the healthcare sector in particular, could materially affect our profitability. |
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Risk Mitigation |
Historically, we derived 70% of revenues from PMI and self-pay patients that provided a natural hedge against exposure to Government and NHS policy. Post pandemic, the Group is seeing strong private revenues that are expected to continue medium term.
The Group has successfully secured accreditation on the NHS Frameworks in England, Scotland and Wales ensuring access to tender for future contracts.
Through the COVID-19 pandemic, we have deepened our relationships with HM Government via the Department of Health and Social Care and NHS England. Meanwhile hospitals have also strengthened their relationships with the local NHS commissioners. Working effectively with the new ICS in each our markets will be a primary objective for hospital management teams.
HM Government has announced: - £5.4bn for the NHS to tackle waiting lists in the period September 2021-March 2022. - the Health & Social Care levy that will generate c.£12bn/annum. |
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Principal Risk |
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10. Supply Chain Disruption |
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Executive Owner(s) |
Chief Operating Officer
Link to Strategy - First choice for private healthcare. - Key partner of the NHS. - Uncompromising on patient safety and clinical care. - Improving revenue, profit and cash. |
Risk Appetite L
Risk movement in 2020 N/A
Risk movement in 2021 up |
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Risk Description |
The widely reported disruption in the Global and UK supply chains because of a variety of factors, could lead to shortages of critical components or products within: - Medicines - Consumables - Prostheses - Food |
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Risk Impact |
Spire hospitals are reliant on a wide range of products in order to be able to conduct operations and procedures. Shortfalls in order fulfilment of fresh food for example, could result in hospitals having to cancel inpatient operations and procedures.
We are heavily reliant on medical consumables, which in turn are heavily reliant on the availability of plastics, to carry out even the most basic procedures (e.g. taking blood samples). Shortages in raw materials or disruption in the supply chain from the manufacturer could result in hospitals having to cancel operations and procedures. |
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Risk Mitigation |
We maintain a centralised supply chain with a national distribution centre (NDC) and our own vehicle and driver fleet.
Medical consumables, medicines and prostheses are held at the NDC with an average of eight weeks' supply.
In 2021, we had to respond to a number of product shortages and global recalls, and we have seen some minor shortfalls in order fulfilment. In all cases, our centralised procurement function, with the support of the Clinical team, has been able to find alternative supplies to maintain hospitals' activities.
Fresh food is supplied through a national food distributor who has its own delivery fleet and directly employs its HGV drivers. Order fulfilment has remained in the high 90th percentile. Because of our Brexit planning, we have contingency menu plans in case of fresh food shortages.
NHS Supply Chain manages any national shortages in critical medicines. We receive allocations based on our activity. |
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Principal Risk |
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11. Information Governance and Security |
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Executive Owner(s) |
Chief Financial Officer (Interim - Chief Commercial Officer)
Link to Strategy - First choice for private healthcare. - Key partner of the NHS. - Uncompromising on patient safety and clinical care. - Improving revenue, profit and cash. |
Risk Appetite B
Risk movement in 2020 up
Risk movement in 2021 - |
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Risk Description |
We have to maintain and manage a range of physical and digital data assets including patient records, commercial information and staff data.
Personal data has to be managed in compliance with the principles set out in the Data Protection Act 2018 and the General Data Protection Regulations (GDPR).
The level of risk to Spire Healthcare's IT architecture and systems continues to grow as the volume of cyber security threats are increasing and becoming more sophisticated.
Healthcare and pharmaceutical organisations saw increased hostile cyber activity in 2020-21 because of the COVID-19 pandemic. We anticipate that the Healthcare sector will remain a higher risk sector from cyber-attacks. |
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Risk Impact |
Our business could be disrupted if its information systems fail, are breached, destroyed or damaged.
Staff and patient data could be stolen or compromised. We could also be subject to litigation by third-parties and law enforcement agencies.
A successful cyber-attack and a breach of data security could result in: - material costs to recover operations; - material financial penalties for breaches of Data Protection law; - compensation for patients or staff if personal data is compromised; and, - reputational damage. |
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Risk Mitigation |
We have a governance structure, with Board oversight, that monitors the risk and mitigations for information governance. To support the governance structure we have a range of policies and practices covering information governance. The Information Security environment is subject to regular Internal Audit.
All staff have to complete annual mandatory training on information governance and data protection.
Our IT team have a cyber security strategy for continuous improvement based on industry standards. In 2021, as part of that strategy Spire Healthcare undertook significant capital investment to increase cyber security protection.
We work with a number of industry leading technical partners to provide: - multiple layers of business protection through the use of advanced detection and protection systems, - Regular third-party penetration testing on new and existing IT systems. |
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Principal Risk |
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12. COVID-19 Pandemic |
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Executive Owner(s) |
The whole Executive Committee,
Link to Strategy - Uncompromising on patient safety and clinical care. - First choice for private healthcare. - Key partner of the NHS. - Improving revenue, profit and cash. |
Risk Appetite L
Risk movement in 2020 up
Risk movement in 2021 down |
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Risk Description |
Repeated waves of infection occur from current or future variants of COVID-19 that risk overwhelming the NHS and forcing HM Government to re-introduce severe lockdown measures regionally or nationally. |
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Risk Impact |
Further lockdown measures could adversely impact Spire Healthcare's operations and its profitability by: - Reducing the amount of elective procedures the hospitals can carry out because of additional Infection Prevention Control measures or patients reluctance to attend hospital. - Increased costs to support Infection Prevention Control measures and from staff absence and patient cancellations. - A substantive number of staff have to self-isolate because they or household members show symptoms or test positive. - Spire Healthcare hospitals are required to support local NHS trusts that declare Surge, preventing them from treating private patients. - Consultants and anaesthetists are required to support their NHS trusts to treat COVID-19 patients or the backlog in waiting lists, reducing their availability to undertake work in Spire Healthcare facilities. |
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Risk Mitigation |
To maximise the utilisation of the hospitals, we have: - Maintained the Infection Prevention Control measures to reduce the risk of cross contamination amongst staff at Spire Healthcare facilities. - Made the patient pathways as efficient as possible, particularly for pre-operative assessment and testing patients for COVID-19. - Maintained capacity within the contractual arrangements with the NHS for PMI and self-pay patients. - Negotiated national contracts with the NHS to support them to provide capacity for treating the backlog of elective procedures. - Maintained close links with the consultant community and supported them rebuild their private patient activities. - Encouraged all its employees to have both the COVID-19 and flu national vaccination programmes. |
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Principal Risk |
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13. Brand Reputation |
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Executive Owner(s) |
Chief Commercial Officer
Link to Strategy - First choice for private healthcare. - Key partner of the NHS. |
Risk Appetite B
Risk movement in 2020 -
Risk movement in 2021 up |
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Risk Description |
The COVID-19 pandemic has resulted in a substantial amount of positive media coverage for Spire Healthcare.
Our brand presence within the consumer, NHS & HM Government environments is higher than at any point.
Our brand reputation is interconnected with a number of other Principal Risks, e.g. Clinical Quality and Patient Safety, Information Governance and Security.
Our future growth depends upon our ability to maintain, and continue to enhance, our reputation amongst patients, clinicians and other stakeholders.
As our brand presence grows, the risk increases that adverse events such as: - patient notifications and recalls; - mishandling of patient data; or, - a breach of law or regulation will have a more material impact on Spire Healthcare. |
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Risk Impact |
If we fail to protect or grow the brand it may harm our ability: - to maintain or grow income - to attract and retain the best staff and clinicians - to win new contracts - to raise capital at competitive rates - to meet our regulatory obligations. |
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Risk Mitigation |
Our primary mitigations against damage to our brand reputation is through the good management of our principal risks, in particular: - Patient safety and clinical quality; - Cyber security and data protection; and, - Compliance and regulation.
In addition, we continue to invest in the awareness and health of the brand through national advertising, public relations and centrally coordinated social media. We also continue to build our reputation amongst analysts and public commentators. |
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Principal Risk |
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14. Compliance and Regulation |
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Executive Owner(s) |
- Lead: Chief Executive Officer - Chief Commercial Officer - Chief Operating Officer - Group Clinical Director - Group Medical Director
Link to Strategy - First choice for private healthcare. - Key partner of the NHS. - Uncompromising on patient safety and clinical care. |
Risk Appetite VL
Risk movement in 2020 up
Risk movement in 2021 - |
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Risk Description |
The increasing range and complexity of the legislation and regulation which impact on Spire Healthcare, and our expectation that the legal and regulatory landscape in which we operate will change and become more onerous, means that this is an area of potential risk for Spire Healthcare.
In addition, as the UK makes the legal and regulatory transition from being part of the EU, there will be flux in legal and regulatory developments, potentially arising from the interpretation of retained EU law by the UK courts or from the direction taken by the UK following the end of the transition period. It is not possible to determine with any degree of certainty the speed, impact or direction of forthcoming legal or regulatory change. This will therefore require monitoring, compliance and assurance. |
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Risk Impact |
Failure to comply with laws, regulations or regulatory standards may expose us to claims, fines, penalties, and damage to reputation, suspension from the treatment of NHS patients, loss of hospital licence and loss of private patients.
New laws and regulations may require new compliance programmes to provide assurance that we are in compliance increasing overhead costs. |
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Risk Mitigation |
We have a Ward-to-Board system of governance that ensures compliance with law and regulation and provides the pathways to add different elements of compliance, should regulation or laws change and thus the need arise.
Key components that support the ward to board governance structure for compliance and regulation include: - A dedicated legal team that, with external counsel, monitors legal and regulatory developments and advises Spire Healthcare thereon. - Regular, role specific, mandatory training for all staff (both clinical and non-clinical) across a range of the most important legal and regulatory compliance areas, e.g. data protection, health & safety laws and safeguarding. - Centralised clinical and non-clinical internal audit teams that carry out site audits and assists hospitals in establishing and maintaining a high level of internal control. - A range of policies, processes and toolkits guiding our hospitals in how to meet the required clinical regulatory standards which are regularly reviewed and updated. |
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Principal Risk |
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15. Transformation |
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Executive Owner(s) |
Chief Financial Officer (Interim - Group People Director)
Link to Strategy - First choice for private healthcare. - Key partner of the NHS. - Uncompromising on patient safety and clinical care. |
Risk Appetite B
Risk movement in 2020 N/A
Risk movement in 2021 up |
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Risk Description |
There is a risk that transformation programmes to digitalise and standardise processes fail to deliver on budget, on time and to scope because of; - the complex and divergent operating environment across the hospital and central sites; - changes to working practices required by both employees and Consultants (non-employees); - poor execution of change projects. |
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Risk Impact |
Expected efficiency gains and business benefits are not realised leading to lower profitability than is forecast. |
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Risk Mitigation |
All transformation projects have an individual Executive Committee sponsor who is accountable to their colleagues for successful project delivery.
We utilise external project management experts to advise on best-practice change portfolio management and to lead strategic projects when required.
All the major change initiatives have professional programme managers or directors following a standard set of programme management disciplines monitored by a central Business Programme Office. The Executive Committee's sub-committee on Transformation regularly reviews the progress of change programmes.
Change programmes that have a material impact on hospital operations engage with the hospital directors to ensure their input and feedback is incorporated into the planning stage before deployment. |
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Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report and the Group's financial statements in accordance with applicable United Kingdom law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and parent company financial statements in accordance with UK-adopted International Accounting Standards ("UK-adopted IFRS") as issued by the International Accounting Standards Board ("IASB") and in accordance with the Companies Act 2006. Under company law the Directors must not approve the Group's financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and the Company and of the profit or loss of the Group and the Company for that period.
In preparing these financial statements the Directors are required to:
− select suitable accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;
− make judgements and accounting estimates that are reasonable and prudent;
− present information in a manner that provides relevant, reliable, comparable and understandable information;
− provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group and Company financial position and financial performance;
− in respect of the group financial statements, state whether UK adopted International Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
− in respect of the parent company financial statements, state whether UK-adopted International Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements, and
− prepare the financial statements on the going concern basis unless it is appropriate to presume that the Company and/or the Group will not continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's and Group's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the Company and the Group financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and parent company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a strategic report, directors' report, directors' remuneration report and corporate governance statement that comply with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.
Each of the Directors confirms that, to the best of their knowledge:
− that the consolidated financial statements, prepared in accordance with UK-adopted International Accounting Standards give a true and fair view of the assets, liabilities, financial position and profit of the parent company and undertakings included in the consolidation taken as a whole;
− that the annual report, including the strategic report, includes a fair review of the development and performance of the business and the position of the company and undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
− that they consider the annual report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position, performance, business model and strategy.
Related party transactions
31. Related party transactions
Key management personnel
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly. They include the Board and Executive Committee, as identified on pages 120 to 123.
Compensation for key management personnel is set out in the table below:
Key management compensation
|
(£m) |
2021 |
2020 |
|
Salaries and other short term employee benefits |
4.5 |
4.4 |
|
Post-employment benefits |
0.5 |
0.5 |
|
Termination benefits |
- |
0.4 |
|
Share-based payments |
1.0 |
0.8 |
|
|
6.0 |
6.1 |
Further information about the remuneration of individual Directors is provided in the audited part of the Directors' Remuneration Report on pages 146 to 155.
There were no transactions with related parties external to the Group in the year to 31 December 2021 (2020: nil).
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