Bain Capital: the vampire firm that’s just bought our blood supply

Tom Walker looks at the frightening history of the private equity firm
21 July 2013


Mitt Romney and the Bain Capital partners pose with dollar bills

The Tory government has just sold off state-owned NHS blood supplier Plasma Resources UK to US private equity company Bain Capital for £230 million. Hang on – Bain, that name rings a bell…

Bain Capital is perhaps best known for having been set up by former US presidential candidate Mitt Romney in 1984, as a spin off from management consultants Bain & Company. It became infamous for taking over companies, saddling them with large amounts of ‘leveraged’ debt and forcing them to make big payments back to Bain. When Romney ran for president last year, horror stories came spilling out about the firm’s practices.

One such story was the fate of American Pad & Paper—known as ‘Ampad’—which Bain bought in 1992, planning to make it ‘leaner’ to extract profits. When the Bain-run firm bought up an Indiana paper plant in 1994, within hours it laid off 250 workers and cut wages and pensions, sparking a bitter strike. As Randy Johnson, a former worker at the plant, remembered last year, ‘They came in and said, “You’re all fired. If you want to work for us, here’s an application.”’

Another former employee, Mike Earnest, said that out of the blue one day the workers there were told to construct a 30 foot stage, not knowing what it was for. ‘Just days later, all three shifts were told to assemble in the warehouse,’ he said. ‘A group of people walked out on that stage, and told us that the plant is now closed, and all of you are fired. Turns out that when we built that stage, it was like building my own coffin.’

Profiting from sackings

Romney and partners squeezed out more than £60 million from the firm, much of it in hefty ‘management fees’. It was unable to keep up interest payments on its debts, started sacking workers and eventually collapsed in 2000. 1,500 jobs were lost in all. In 2007, when he was asked about the layoffs, Romney replied, ‘Sometimes the medicine is a little bitter but it is necessary.’ As he later slipped up and said during the presidential campaign, ‘I like being able to fire people.’

This was a consistent pattern. At GST Steel, Bain made £5 million and 750 jobs were lost. At medical equipment company Dade Behring it was £150 million and almost 3,000 jobs. And at clothing firm Stage Stores they pocketed £100 million at the cost of nearly 6,000 jobs.

Marc Wolpow, a former managing director at Bain, thinks Romney tried to ‘whitewash’ his career to run for president. ‘We had a scheme where the rich got richer,’ says Wolpow. ‘I did it, and I feel good about it. But I’m not planning to run for office.’

Though Romney left Bain in 1999, he has continued to receive big payments from it, including £1.25 million last year. He paid just 15 percent tax on that cash. Today it is unclear just how much money Bain has made for Romney and co, but his fortune is widely thought to top £150 million. According to Nicholas Shaxson, the author of tax havens book Treasure Islands, Romney has up to £18 million stashed in the Cayman Islands alone.

What might Bain have in store for our plasma? If its track record is anything to go by, there’s going to be blood on the carpet.


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Gary B. 22 July 2013, 12.14

This one has sort of ‘slipped under the radar’, but should be made as big a story as possible. Surely, this is the ‘benchmark’ story about the morality-free nature of this government beside which all their protestations of ‘doing it for the benefit of the nation’ should be measured. Flogging off the organisation that supplies blood to the NHS to asset-stripping Bain Capital so that it can make profits from blood, presumably supplied for free by volunteers, is so wrong ANY expression of outrage is not outrageous enough.

Stephen J Jones 23 July 2013, 20.44

If the facts in Gary Bs comments were true it would be a fair comment. Unfortunately the facts are not true.

100% of the plasma used by Bio Products Laboratory which is part of the Plasma Resources UK Group bought by Bain Capital come from the USA from donors who are paid. No UK blood is used.

Sorry to scupper your story.

Stephen J Jones

Robert 29 July 2013, 19.56

But sadly of course I’m one of the people who had contaminated blood sent to the UK from this group.

In the end I would like to think the Tory Lite Party would have something to say on it, sadly Miliband is not saying much

William Bowles 29 July 2013, 19.56

This from Private Eye back in late April:

Silent witless

NEW evidence of the effects of cost-cutting by GSTS Pathology, a joint venture between Serco and three London hospitals, will further alarm doctors and patients fighting plans to send blood and tissue tests from Essex and Hertfordshire GPs to the GSTS-run labs in Bedford instead of local hospitals.

Eye readers may recall that more than 100 hospital consultants, experts across all medical fields, have written to health secretary Jeremy Hunt warning of the threat to patient safety caused by delay in having to transport blood and other tissue samples up to 88 miles for testing. Now minutes of Bedford’s clinical governance committee meetings, obtained through freedom of information requests, show that senior scientists have repeatedly raised concerns about the impact staff shortages are having on the quality of the pathology service since it was privatised two years ago.

In 2011 the lead consultant for clinical biochemistry complained that GSTS was “cutting comers” and warned that “with the decrease in the number of qualified senior staff there is a limit to the safe provision of a quality service”. Echoing reports from St Thomas’ hospital of “clinical incidents” increasing after GSTS took over (see Eye 1329), the consultant said there had been an unacceptable increase in the number of errors and incidents.

Three months after GSTS bosses demanded a further 10 percent saving, minutes showed that the department was “struggling” to maintain its on-call service. Another clinical director “expressed concerns” that there was “little cross cover” for infection control after GSTS managers rejected requests to hire a suitably qualified consultant microbiologist.

By mid-2012 there was “no on-call cover for blood films” in the haematology department, while the lack of training for staffin how to read the films was causing “huge time constraints”.

The resignation of a senior consultant in July was described as a “major concern”. Elsewhere, the head of cellular pathology was expressing her “concerns for the quality issues” in the histology lab, which had to cope with an increased workload and old equipment not being replaced.

All this will be depressingly familiar to anyone who has followed the (lack of) progress in the London hospital pathology labs that GSTS took over in 2010 (Eye 1273). Just as in St Thomas’ and King’s – where further “consolidation” continues to be delayed by computer problems – the IT system is causing problems in Bedford. Chlamydia data has not been submitted accurately, TB results have been “overwritten” and faulty data has plagued clinical biochemistry.

As the already overstretched Bedford departments are set to take on more responsibility, the cost-cutting looks set to continue. An internal report from GSTS management in January said it will be looking to make another £3.9m of “efficiency savings” across its services in 2013, as it aims for a £3m “surplus”.

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