Beacon Hospital loses €10m in 10 months

THE BEACON Hospital in Sandyford, Dublin, lost €10.1 million in the 10 months ended June 30th, 2010, according to accounts filed recently by the hospital-operating company.

UPMC Beacon Hospital Sandyford Ltd lost €20.6 million in the year to the end of August 2009.

At the end of June 2010, shareholders’ funds were in deficit, at -€37.62 million. The company is “not generating sufficient profit to finance its ongoing trading activities”, according to the accounts.

“The company is therefore wholly reliant on continued financial support from its parent company to allow it continue to trade and meet its liabilities as they fall due.”

The University of Pittsburgh Medical Centre (UPMC) became a majority owner of the hospital-operating company in August 2009 when it invested €25 million.

The hospital, which opened in 2006, opened 31 new beds and an orthopaedic centre and took on an extra 46 staff since the summer of 2010, according to a spokesman.

UPMC owns 66.67 per cent of the company, with the remainder being owned by the Beacon Medical Group, which is in turn owned by Michael Cullen, Patrick Shovlin, Prof Mark Redmond and others. The hospital itself is owned by a number of tax investors.

The US company by way of its Irish subsidiary, UPMC Ireland Ltd, bought into the hospital-operating company by acquiring shares in UPMC Beacon Sandyford Ltd.

While doing so, it increased its original investment of €15 million in the hospital, to more than €40 million. As part of a group restructuring, however, €7.7 million of the investment has been treated as impaired.

During the year to June 2010 the company advanced €19.4 million to the hospital operator. At the end of the period UPMC Ireland Ltd had shareholders’ funds of €45.9 million.

The accounts for the hospital-operating company show that turnover over the 10 months to June 30th, 2010, was €47.7 million, up from €42.8 million in the year to August 31st, 2009. It employed 108 management and administration staff and 378 nursing and operative staff. The hospital operator was charged rent of €6.6 million by a fellow group company.

The hospital is leased from a group of tax investors by UPMC Beacon Sandyford Ltd, which in turn leases it to the hospital-operating company.

The €25 million investment in August 2009 was part of a deal that involved bank restructuring, settlements with creditors and a restructuring of the group’s activities, according to the accounts.

The company’s interests in its dialysis, dermatology, car park and co-location hospital businesses were transferred to a new group headed by the shareholders of Beacon Medical Holdings Ltd.

UPMC Beacon Sandyford Ltd recorded a loss of €5 million in the 10 months to the end of June 2010, according to its latest accounts.

This followed a loss of €3 million in the eight months to the end of August, 2009. The €25 million invested in the Beacon project was used to discharge certain bank debts and other funds due to creditors, and on restructuring costs, according to the accounts.

The accounts state the company must in 2016 acquire the hospital from the tax investors, who have drawn down a loan of €107 million. “The agreement stipulates that the company must facilitate the payment of interest accruing on the tax investor group loan,” the accounts state. The liability under the agreement equates to the size of the loan.