by EWAN LAMB
An over-reliance on EU based contracts and restrictions on NHS budgets means a 'world class' addiction hospital in the Scottish Borders is stepping up its efforts to attract more private patients willing to pay from £5,300 a week for treatment.
Less than a year ago the Scottish Government was urged by then Tory leader Ruth Davidson to make much more use of Castle Craig Hospital in the Peeblesshire countryside by having a far greater number of drug addicts referred to the treatment facility.
At First Ministers' Questions in the Scottish Parliament in December 2020 Ms Davidson asked First Minister Nicola Sturgeon about the number of 1,264 drug deaths in Scotland in a single year, a record toll for the sixth year running.
Ms Davidson, now a member of the House of Lords, said: "Just an hour from here there are world class rehab facilities at Castle Craig. In 2002 these facilities admitted 257 NHS patients. By 2008 the number had dropped to 145. First Minister, what was the number in 2019".
She then told Parliament the total in 2019 had been just five referrals, adding: "Castle Craig could be saving more than 250 Scots a year...it has done it before. Why did the Government stop funding those beds?
"Today, to get rehab people need to be really lucky and get charity help, or they need to be wealthy enough to afford it, because the Government provides only 13% of rehab beds in Scotland".
But the latest annual report and financial statements from Castle Craig Hospital Ltd. explains how the company will be turning increasingly to the private sector for its business.
The alcohol and drug treatment centre was founded in 1988 by Peter McCann. The McCann family continue to run the hospital and a number of subsidiary companies including a similar treatment centre at Smarmore Castle in the Republic of Ireland.
The Group's 2020 accounts show turnover fell from £9.010 million in 2019 to £6.842 million last year. The operating profit in 2020 of £686,000 was only slightly less than the £706,700 recorded for the previous twelve months.
"Occupancy levels during the period [2020] were similar to the previous year. In a difficult market this is testament to the reputation and standing of the Group", says the report.
The Castle Craig treatment model, according to the hospital website, follows the Minnesota model or "12 step treatment". Addiction is viewed as a disease and complete abstinence from all mind-bending drugs is necessary for long lasting recovery.
The report explains that challenges and risks facing the company include "an over reliance on Euro-based contracts with EU zone insurance companies which form approximately 36% of total sales.
"We are striving to increase revenue from other sources, in particular the private market. Private sales increased by 22%. Marketing emphasis has been and will continue to be placed on this sector".
Castle Craig has been 'significantly impacted' by the Covid-19 pandemic during 2020.
"The various lockdowns effectively closed the hospital to admissions for long periods and this reflected in the reduction in turnover and profit. The company took advantage of the furlough scheme to maintain its workforce and also drew down a loan to ensure funding was available to cover the loss of income".
Furlough payments of £368,937 were received to help secure the posts of the 134 employees including 74 medical staff.
A qualified opinion from the company's auditors Whitelaw Wells states: "Included in debtors shown on the balance sheet are total balances of £1,007,576 for which recoverability of the debts concerned cannot be concerned certain.
"These relate to balances owed by four related companies which recorded losses during the year and had net liabilities as at DEcember 31st 2020. The companies continue to trade and the directors expect they will be able to generate future profits. The financial statements do not include the adjustments that may result if the debts were deemed to be irrecoverable".
Smarmore Castle Private Clinic Ltd. was established in Eire in 2015 to take advantage of an EU directive which entitles an EU citizen in one country to claim the costs of healthcare treatment provided in any other EU state.
The Irish company has been funded by inter-company loans, and the report shows its rent was waived in 2018 and 2019 before a reduced rent of E50,000 was fixed for 2020. Nevertheless the Smarmore facility is to be extended at a cost of £816,667 to provide further patient capacity.
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