A new private hospital in Kent made losses of more than £15.2 million last year and was forced to seek a £20 million handout from investors as revenues failed to materialise.
KIMS Hospital in Maidstone said the number of treatments it carried out were “lower than originally planned” after it opened in April 2014, mainly because it missed the deadline to tender for NHS e-Referral work, where patients book their own treatments.
Its latest accounts filed to Companies House show turnover reached £8.8m in the 12 months to April 2015 but bosses raised concerns about its financial state well before it had completed its first year of trading.
Less than eight months after it welcomed its first patients, it was forced to go cap in hand to its financial backers asking for more money to keep the business afloat.
It underwent a restructure in November 2014, which converted £33.7m of loans into shares, primarily for its two main institutional investors Realta Investments Ireland Limited and Regional Healthcare Limited.
The company was given a £7.8m cash injection in return for more shares and was given a rent holiday on its premises until April 2019.
It was also loaned a further £4.5m in instalments until April 2017.
Chief executive Simon James said the commitment, including the rent holiday, was worth “in excess of £20m”.
Mr James, who joined in June last year, said: “We were overly optimistic in how quickly we could deliver our vision.
“The focus, from a business perspective, is to avoid doing work which doesn’t generate a profit.
“There was work going on here which was not financially viable. We need to remain financially solvent to be able to care for people.
“The best care possible doesn’t have to cost the most. Sometimes people forget that.
“Our vision is good but the journey to delivering that vision could be longer than people envisaged at the beginning.”
The refinancing also meant a new management team has been phased in at the hospital.
Founders Steven Bernstein, Franz Dickmann and his son James have all left the business, while former chief executive Jayne Cassidy left in March last year.
Executive chairman Peter Goddard was appointed in February last year, while Simon Rust joined as finance director in November.
Mr James, who has worked in healthcare for 15 years, in particular on turnaround projects for failing institutions, said the hospital’s relationship with its investors remains “very sound”.
This year, it expects to report turnover of £15m, which it aims to increase to between £24-26m in the year to April 2017.
“On the back of that we would hope to break even,” said Mr James.
“That would be extremely good because the commonly accepted wisdom is it takes between five and seven years for a new independent hospital to reach profitability.
“We are going to do it quicker but not as quickly as our original plans envisaged.”
KIMS Hospital, which employs about 185 people, with a wage bill of £5.3m, is treating about 500 patients a month.
It is running four operating theatres and is about to open a fifth.
It has invested hundreds of thousands of pounds already in improving equipment in its theatres.
NHS patients make up 30-40% of those treated at the site, with the majority of work coming from private patients insured with the likes of Bupa and AXA.
Mr James said the business has halved its losses over the last six months and was confident its new financial plan could be delivered.
He said: “It is a challenge but I’m really excited by it and I’m heartened by the reception of people here at KIMS.
“They are really engaged and want to make this work.
“It is going to stretch people and take them out of their comfort zone but I think people are up for that.”