[2025] EWHC 2684 (KB)

The PwC report is lengthy and technical. The following extracts are of some significance:

“Strong growth in EBITDA from FY04 to Q1 05 has mainly been as a result of improved occupancy at Cawston Park as well as higher levels of Extra Care.

…….

The number of patients on Extra Care increased by an average of 3.6. Being charged at £312 ppd, the revenue impact is £410k. Based on management's assertion that the marginal cost is negligible, this also represents the EBITDA impact.”

And

“…The increased occupancy and Extra Care levels had only a limited cost impact.”

And

“Extra Care levels are projected to be 10.3 patients compared to the 3MO05 average of 13.6, the difference arising in the Manor, which is a relatively conservative assumption by Management. The EBITDA impact assumes no staff savings based on management’s indication that above five Extra Care patients at any particular time, the marginal cost is negligible.”

And

“Extra Care: Where it is deemed that a patient requires additional support due to their condition at the time, Extra Care is provided and charged at a fixed rate of £2,184 ppw irrespective of the unit. PCTs and Social Services are informed in advance. Extra Care consists of providing more frequent counselling therapy sessions than under the standard fee. It does not comprise a 1-to-1 with support workers as often provided in other facilities. Extra Care is typically provided:

— for new patients arriving from a previous facility where they previously received 1 to1 are placed on Extra Care; or

— if required immediately after an incident PCTs and Social Services are informed.

There are two components to the cost of Extra Care:

— experienced clinicians, psychiatrists and the head of care providing more attention to the patient. These staff are required to provide the standard care and as such does not represent an incremental cost; and

— consultation with outside psychiatrists, staff to monitor the patient more closely and costs of any breakages. These items represents additional costs.

The marginal cost of additional patients on Extra Care is limited to breakages and some outside consultants resulting in a relatively high margin. Extra Care numbers have fluctuated during FY04 and 3M05. This is detailed later in the section.”

I have already dealt with the issue of the PwC report and the statement of Mr Benka when considering the evidence of DS Brownsell.

It was argued on behalf of the Claimants, and suggested to a number of witnesses that the content of the report, if properly considered, should have indicated that there was no issue with the charging of extra care i.e. it was a proper and justifiable charge. In my judgment the content of the report required careful consideration and whilst it identified only limited marginal costs and raised no concerns about the system of charging it was not unequivocally supportive of the Claimants’ case. Whilst some costs are stated to not represent an incremental cost e.g. more frequent counselling therapy sessions any “extra” time of experienced clinicians, psychiatrists and the head of care the cost of “staff to monitor the patient more closely” was stated to represent an additional cost.

The report was not seen by either any PCT or hospital staff. Its perceived significance with Chancellor Care is illustrated by the reference to it within the police statement of Mr McKenzie who started as the Chief Operating Officer in July 2006;

“They also sent me copies of their policies and procedures which I reviewed and decided were rather thin and out of date. I also received a due diligence report which had been prepared by a company called PwC. I only read the summary and saw the term “extra care” but didn't bat an eyelid as I assumed that it was their term for specialling and that it had made a contribution to the finances within the running of the company.”