On 7 August 2001, the NHS bought a private hospital in central London in a highly unusual deal designed to expand heart treatment and cut waiting times.
University College London Hospitals NHS Trust acquired the 95-bed Heart Hospital from Singapore-based Parkway Healthcare for £27.5 million.
The purchase returned the specialist hospital to the NHS after a period in private ownership. Contemporary reports described it as the first acquisition of its kind by the health service and, in the language of the time, an act of “renationalisation”.
A state-of-the-art hospital in financial difficulty
The Heart Hospital stood in Westmoreland Street, close to Harley Street in central London. Its history stretched back to the nineteenth century, although the building and institution had undergone several changes.
After leaving the NHS and becoming privately owned in the 1990s, it was extensively refurbished and reopened as a private cardiac hospital. It offered modern operating theatres, specialist equipment and high-quality accommodation.
Despite those facilities, the private operation struggled financially and was unable to attract enough patients. UCLH initially explored using some of its spare capacity before identifying the opportunity to buy the hospital outright.
The NHS trust knew there were other potential bidders and believed the hospital might enter administration. It therefore pursued the acquisition rapidly, completing a transaction that would ordinarily have required a much longer capital-approval process.
£27.5 million purchase
The £27.5 million price covered the hospital, its equipment and five houses in nearby Wimpole Street. A later parliamentary examination recorded that the district valuer had placed the package’s value at up to £36 million, while building a comparable new facility was estimated to cost approximately £45 million.
The Department of Health funded the purchase using underspending elsewhere in its capital programme. It also met an additional £3.2 million VAT liability arising from the transfer of the hospital from private to public ownership.
Ministers and NHS leaders presented the acquisition as a rare opportunity to obtain an advanced specialist facility quickly and at a price below the estimated cost of constructing an equivalent hospital from scratch.
Plans to expand heart treatment
The Heart Hospital became the new centre for UCLH’s cardiac services, which had previously operated from less suitable facilities at the Middlesex Hospital.
A subsequent House of Commons Public Accounts Committee report said the acquisition was expected almost to double revascularisation capacity across north-central London—from 1,438 procedures in 2000–01 to 2,800 a year by 2003–04.
Revascularisation includes procedures intended to restore blood flow to the heart, such as coronary artery bypass surgery and angioplasty.
The trust’s maximum wait for cardiac treatment fell from 12 months in August 2001 to six months by July 2002. MPs nevertheless said the hospital would need to reach its full capacity and serve patients from outside its immediate area if the wider benefits were to be realised.
Private patients and staff concerns
The purchase was welcomed as an increase in NHS capacity, but it was not free from controversy.
The hospital was expected to continue treating some private patients after entering NHS ownership. Critics questioned how private care fitted with the public acquisition, while ministers argued that the income could support the hospital’s wider work.
There were also concerns about different terms and conditions among employees. The deal transferred 162 existing Heart Hospital staff into the NHS, while 142 members of UCLH staff were expected to move from the Middlesex Hospital’s cardiac unit.
Because negotiations had been conducted in commercial confidence, many employees learned about the implications only after the acquisition. Some NHS staff worried that colleagues arriving from the private sector enjoyed better pay or working conditions, while existing Heart Hospital workers feared public ownership might reduce staffing and service standards.
The Public Accounts Committee later reported that standards had been maintained, staffing had risen and the differences in overall employment conditions were limited. It nevertheless criticised the absence of a comprehensive communications strategy.
An unprecedented NHS transaction
The deal stood out because NHS capital projects usually involved building or improving publicly owned facilities, rather than buying an operational private hospital.
UCLH had no established NHS process to follow and carried out several stages simultaneously. The Public Accounts Committee found that the accelerated approach helped secure the hospital, but meant some normal consultation and business-case stages were shortened or omitted.
The committee concluded that the Department of Health should learn from the transaction while recognising that similar fast-track arrangements would not be suitable for every NHS project.
What happened to the Heart Hospital?
The Westmoreland Street hospital remained the home of UCLH’s cardiac services until 2015. Those services were then transferred to the new Barts Heart Centre at St Bartholomew’s Hospital as specialist cardiovascular treatment was consolidated.
The building continued in NHS use and became known as University College Hospital at Westmoreland Street, providing other specialist services.
The purchase remains a striking episode in the relationship between public and private healthcare. At a time when the Labour government was expanding NHS cooperation with private providers and using the Private Finance Initiative for new hospitals, the health service took an indebted private institution back into public ownership.
For the NHS, the central argument was practical rather than ideological: a fully equipped specialist hospital was available, London needed more cardiac capacity and buying it appeared cheaper and faster than building an equivalent centre.