NAO report on Government funding of Dr Foster

National Audit Office report (36 pages, PDF v1.6) on the commercial partnership between the UK Government and the medical data management company Dr Foster, involving an investment of about £12 million of public money paid to Dr Foster LLP and invested in the joint venture company Dr Foster Intelligence Ltd. The NAO criticises the Government for not opening up the opportunity of forming the joint venture to competition from other companies, and identifies risks of infringement of the EU State aid rules.

According to the NAO:

24. Although the Government believes that it acted as a market investor in negotiating a realistic price, we calculate that [the Government's] Information Centre paid between 33 and 53 per cent more than the [Government's] advisor's highest indicative valuation... As the joint venture does not deliver any direct or measurable services to [the Government's] Information Centre, it is an investment in a private company for which the [Government's] Information Centre paid a strategic premium without gaining a controlling interest.

The Government does not answer this claim, focusing its response (shown in the NAO report where it does not agree with the NAO's findings) on the fact that procurement regulations did not apply to the formation of the joint venture, and on claimed benefits of the arrangement for the Information Centre.

A (barely readable) letter from the NAO to the Information Centre and the Department of Health dated November 2005 is appended to show that the State aid concerns had been raised by NAO prior to the Government's final approval of the transaction.

For further information or advice please contact Franck Latrémolière.

Filed under Healthcare, NAO, State aid.

Reckon LLP is an economics consultancy with expertise in data analysis, economic regulation and competition law.

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