Affinity Healthcare
Affinity is pursuing a focussed strategy to provide specialist psychiatric care to patients, working closely with the NHS. With a greater number of care places in this sector now being managed by the private sector, we see opportunities to build its reputation as a leading provider and to grow the business organically.
Building on a strong base
Affinity is the seventh largest provider of independent mental health services in the UK. It offers a range of services in settings such as secure psychiatric intensive care units and open rehabilitation units, as well as specialist care to patients such as people with eating disorders and young people.
With a strong base in the North of England there are excellent opportunities to grow the business, both in terms of the services it can offer to the NHS and its geographical presence. We acquired Affinity in December 2004 for £69 million.
Need for specialised services and NHS shortfall fuels growth
We had been looking at the mental health sector for some time, along with Operating Partner John Robinson. We acquired Affinity from two private entrepreneurs and the company’s management.
There are 32,000 psychiatric care beds in the UK, 7,600 of them provided by the independent sector. In 2005 the independent sector market was worth c£800 million. Continued growth is expected, because the need for more specialised services and the NHS’s focus on community services means services are increasingly contracted out to the independent sector.
The need to develop specialised services to compensate for limited provision from the NHS means the independent sector has a higher market share of the more specialist end of the market, than across the market as a whole.
We aim to achieve growth organically, although we also believe there is the potential to build the business through acquisition.
A tough sector to break into
Affinity currently operates 248 beds in two hospitals: Cheadle Royal Hospital in Cheadle, Cheshire, and Middleton St George Hospital in Darlington, County Durham. Affinity also operates a community home based in Darlington.
With 3% of the independent psychiatric care beds in the market, the company is particularly strong in the North of England. This is a highly local market, with most patients being referred from within 50 miles.
Due to the type of services provided and the clinical expertise, reputation, regulatory compliance and capital required to operate successfully this is a tough sector to break into. Affinity marks itself out from its competitors by working in close collaboration with the NHS and makes sure it remains competitive by keeping a close eye on fee levels.