BUPA has put all its UK hospitals up for sale in a move that insiders say will herald a major shake-up of the British healthcare industry.

The company is Britain’s largest private healthcare group. It runs 26 hospitals in the UK which last year looked after 800,000 patients, 5% of which were NHS cases.

Industry experts say the hospitals could fetch £1.2 billion or more, with a long list of potential buyers. Bupa has appointed the investment bank Citigroup to handle the sale.

Private-equity groups such as Blackstone and Cinven are likely to show an interest, as well as Australia’s Macquarie bank and the French private health group, Générale de Santé. Several big Middle East and Asian investors are also expected to be in the hunt.

Bupa yesterday declined to comment on the sale and it is not known whether a buyer would be able to continue to use the Bupa brand, or whether Bupa would sever its links entirely.

It is thought Val Gooding, chief executive, and Lord Leitch, chairman, plan to use the proceeds from the hospital sale for a big expansion into care homes — Bupa has 298 in the UK, with 18,500 residents — or for a push overseas.

Gooding has already overseen a steady international expansion since being appointed to the top executive post in 1998. Bupa now has operations in Australia, America, Scandinavia and the Far East, and has 8.1m customers worldwide, half of whom are in the UK.

Bupa has also been on the acquisition trail to expand outside its traditional business areas. It recently paid £88m for Clinovia, a home healthcare specialist.

But health-industry analysts believe the sale may also lead to pressure for the Bupa board to sell other assets, or even the entire company.

It is understood private-equity buyers have recently made approaches that would value the entire group at more than £5 billion. The offers were rejected.

Would-be bidders face some difficult hurdles. Bupa has an unusual corporate structure. It was set up in 1947 as the British United Provident Association to provide private health insurance and treatment centres alongside the then fledgling National Health Service.

It is a company limited by guarantee, with no shareholders. Instead, oversight is provided by the board of directors and 100 “members” who have no direct economic interest in the company.

Any surpluses generated are reinvested in the business, although the group also supports the Bupa Foundation, a charity that invests in medical research and new treatments.

To secure a deal, a bidder would have to convince not only the directors, but also the members.

Health-industry executives have speculated that if Bupa were to accept a takeover bid, the board and members could use the proceeds to create a new medical-research charity along the lines of the Wellcome Trust.

Leitch’s role will be crucial in the sale and any wider discussion of Bupa’s future. A former chief executive of Zurich Financial Services, he joined the Bupa board in 2005, taking over as chairman in November. He replaced Bryan Sanderson, who had led the board since 2001.

Despite its nonplc status, Bupa is large enough to rank as a member of the FTSE 100, and prides itself on having similar corporate governance and accounting standards as a listed group.

Last year it had revenues of £4.2 billion, up from £2.7 billion four years ago. Its pretax profits have more than tripled over the same period, rising from £100m in 2002 to £331m last year.

Hospitals account for just 11% of Bupa’s sales, and 12% of profits, with the division posting a surplus of £43m last year. Bupa’s largest business is health insurance, which accounts for 43% of sales.

“I think the biggest question now is what Bupa will do with the money,” said Paul Saper, managing director of the European healthcare consultancy LCS International.

Experts say the Bupa sale could trigger a wider restructuring of the UK health scene, with several private care providers likely to change hands. There are also big changes under way at the NHS, with foundation hospitals able to operate outside traditional public-sector financial restrictions.

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