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The availability of accessible, well presented data and information on NHS performance is central to the NHS reform agenda, particularly if the NHS is to achieve effective and efficient commissioning of patient services and deliver on its quality and choice agendas. In April 2005 the Department set up a new arm's length body, the Health and Social Care Information Centre (now renamed as the Information Centre), comprising the Department's Health Statistics Unit and the NHS Information Authority. The aim was to improve the collection, analysis and use of health and social care information, but it recognised that the Information Centre lacked some of the necessary skills and expertise.
The Department believed that the quickest way of acquiring these skills was a partnership with the private sector, and entered into exclusive discussions with Dr Foster Ltd, a private company with a high public profile in NHS data dissemination. There were no calls for expressions of interest to identify other possible partners. Having initiated exclusive negotiations, in July 2005 the Department passed responsibility for finalising the deal to the Information Centre.
The Department's advisors, KPMG, gave Dr Foster Ltd an indicative valuation of between £10 and 15 million. In February 2006, the Information Centre paid £12 million for a 50% share of the joint venture company, Dr Foster Intelligence. This was 33-53% higher than its financial advisors' indicative valuation of a half share, and included an acknowledged strategic premium of between £2.5 million and £4 million. The other half of the joint venture is owned by Dr Foster LLP, a holding company set up by the shareholders of Dr Foster Ltd. Neither shareholder can sell their share within the first three years without mutual consent.
On the basis of a report by the Comptroller and Auditor General,[1] we considered the reasons for establishing a joint venture without a competitive tender process; the cost of the joint venture; and the management of the joint venture's risks and benefits. We took evidence from the Department of Health and the Information Centre.
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