Circle in deal to run Hinchingbrooke NHS hospital


CEO of Circle Ali Parsa said the company has always reinvested profits back into services.

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A groundbreaking £1bn, 10-year deal for a private firm to run a struggling NHS hospital has been confirmed.

Circle is to take over Cambridgeshire's Hinchingbrooke Hospital in February - although it will stay in the NHS.

The deal will see Circle assume the financial risks of making the hospital more efficient and paying off its £40m of debts.

But fears have been raised it could pave the way for "wholesale transfers" of hospitals to the private sector.

There are a group of about 20 hospitals which have run into financial difficulties and Labour accused the government of wanting to see more of these deals under its shake-up of the health service.

The accusation was denied by ministers.

Nonetheless, the Circle deal is being seen as a significant step in the evolution of the health service.

Although private sector firms already operate units that treat NHS patients - such as hip replacement centres - the firm will become the first non-state provider to manage a full range of NHS district general hospital services.

The franchise deal with Circle was developed after concerns that the hospital had become unviable, and a local campaign to maintain services.

The company has to maintain services, including A&E and maternity, if they are wanted, although it is free to reduce staff numbers.

But any significant changes in services at the hospital will have to be agreed with the local NHS and the public will have to be consulted.

John Lewis model

Dr Stephen Dunn, from the NHS in the East of England, said the hospital will continue to be paid at NHS rates for its work while it is being run by Circle.

"It's a hugely original deal - we've managed to avoid the possibility of closing the hospital. We've got a solution to the debt - and have plans that allow us to meet the efficiency challenges the NHS faces."


For the moment this deal is a one-off, but other hospitals are struggling financially. About 20 in England have been named by ministers as being unviable in their current form.

It follows a review which all NHS organisations in England have had to undertake of whether they can meet the financial standards required to be given the status of a foundation trust.

Some may try to merge with more successful nearby NHS hospital trusts. Others will watch what happens in Hinchingbrooke with interest.

If Circle manages to maintain the range and standards of care at Hinchingbrooke, but cut costs, that in itself could put pressure on NHS managers at other hospitals to do the same.

And, as this deal has been subjected to very detailed scrutiny by the Treasury, it could also mean that other similar contracts could be agreed more quickly.

Circle chief executive Ali Parsa accepted the company was taking on a challenge. He said the strength of its approach was in increasing the involvement of doctors and nurses.

"We want to create a John Lewis-style model with everyone who works there in charge of the hospital, letting them own the problems and solve them. We will try everything we can to make this small hospital viable - if we can how fantastic would that be?"

The deal has taken almost a year from the plans being sent to the government for approval, to the contract being given the go ahead. The approval for the tendering process began under the last Labour government.

Circle, like other independent health providers, has experience of providing planned care but not of running a full range of services including emergency and maternity care.

The deal is controversial and not all are convinced this is the only solution to keeping Hinchingbrooke open.

Public sector union Unison's head of health, Christina McAnea, said a new management team could have been found without putting a contract out to tender.

Phil Green from Unison: "We do not welcome the taking over of an NHS hospital by a private company"

"We just don't accept there is no expertise within an organisation the size of the NHS, and to turn to the private sector which has a very patchy record in delivering these kind of services is an accident waiting to happen."

Shadow health minister Liz Kendall added: "Patients and the public will be deeply worried that they have seen this government's true vision for the future of our NHS with the wholesale transfer of entire hospitals to the private sector."

She added that the government's health bill "actively encourages" such moves.

But health minister Simon Burns said the move did not provide a "blueprint" and denied it represented a privatisation, pointing out that the staff would remain in the NHS as would the buildings.


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  • rate this

    Comment number 35.

    #27 Glad you can afford it.Most cant.
    #24 New Labour was simply a variation on a Tory theme and this policy is just a Tory variation on a New Labour theme,theyre both wrong.
    #8 No mate Id rather we stopped bean counting in the NHS and got with curing the sick.If a hospital is 'failing' its because it doesnt have enough money in the first place.

  • rate this

    Comment number 34.

    Some one has already mentioned the Jersey element re tax - lets monitor everything about this one VERY carefully and see what the outcome is - for better or worse. Then we can have a more meaningful debate

  • rate this

    Comment number 33.

    A few thoughts
    Will they try to advertise private facilities
    Will a private company get rid of unnecessary management
    Will they have a cap on profits
    Who will audit them
    Will they deliver on their promise to allow all staff a proper say.

    If all of this stacks up and there is no agenda to privatise the NHS, then maybe it can work

  • rate this

    Comment number 32.

    This is not privatisation - despite the rhetoric of many comments. The care will remain, as always, "free at the point of delivery"for the patient. If an independent operator is able to make a "profit" out of delivering healthcare at the prices the NHS sets for itself then this indcates that the NHS has inefficiencies.

  • rate this

    Comment number 31.

    Former Tory health team member Mark Simmonds MP is also a paid strategic advisor with Circle ..... coincidence?

    This current government is simply corrupt.

  • rate this

    Comment number 30.

    Nick Clegg:
    "The government has made the privatisation of the NHS impossible by changing the role of the health watchdog"

    Mark Britnell (Camerons senior health adviser):
    “In future, the NHS will be a state insurance provider not a state deliverer.”

    We have been betrayed again.

  • rate this

    Comment number 29.

    So ... after privatisation went so wrong for our trains and utility services, we're now doing the same for our most important service ... the NHS.

  • rate this

    Comment number 28.

    Great if it works but what happens when it fails(which it will). Hopefully the people who run Circle will be held to account and will have to make up any shortfall of funds from there own pockets and not just walk away free, then this government can blame the NHS and its staff again.

  • rate this

    Comment number 27.

    I have all but given up on the NHS and have gone private save for pre condition ailments that health insurance won't cover.

    Fed up of the long waiting lists, dirty, badly managed, understaffed hospitals, not being able to see a GP when I am unwel but having to wait 2+ days and no NHS dentist in my area.

  • rate this

    Comment number 26.

    This company Circle Partnership (one of the bosses is a former aide to Lansley & was created by Tory donors) has been snapping up NHS work all over the place & announced massive expansion plans when the Tories got into power (not because of an increase in self paying patients but they are expecting lots of NHS work) If they can't run the NHS, the solution isn’t to pay Toy donors to do it.

  • rate this

    Comment number 25.

    And so it begins...

  • rate this

    Comment number 24.

    9 Minutes ago

    Remember, Britain, you didn't vote for this.

    Well actually we did, as if you had read the article you'd have noticed that process started under the last Labour government, a MAJORITY government.

    So it would have happened if Labour had got in.

    First lefty whiner of the day battered.

  • rate this

    Comment number 23.

    So who gets any profits, the patients or the shareholders?

  • rate this

    Comment number 22.

    Circle Holdings plc is a Jersey incorporated company - more people who don't pay tax. So money that should go to patient care is yet again syphoned off by the fat cats. Which Tory said "the NHS is safe in our hands"?

  • rate this

    Comment number 21.

    God preserve us. Is there anything,anything at all the Tories do not see as an chance to make a few quid? If hospitals are in danger of closing then tax the utility companies and Tescos and Asda a one off windfall and keep it open.

  • rate this

    Comment number 20.

    As soon as a private companies become involved, the only motive is profit. Welcome to Cameron's NHS, where your health is second only to the profit margins and the shareholders demands.

  • rate this

    Comment number 19.

    Let's give it a chance. Frankly it can't be any worse or more expensive than the current situation. Just because the subject is health, doesn't mean we should not demand well run, efficient hospitals with hard-working, caring staff. It's certainly not the case elsewhere.

  • rate this

    Comment number 18.

    So the profit motive, based on an existing fixed budget, is going to provide an effective solution in this hospital. Somebody explain the figures to me please. Look outside the front door Britain, there's a long line of American health providers forming an orderly queue to help themselves to your taxes.

  • rate this

    Comment number 17.

    We the taxpayer pay more and more, and yet 'own' less and less

    I don't want out of Europe, I want out from under our own inept politicians

  • rate this

    Comment number 16.

    Deal saves a hospital that would otherwise close.

    Rather than doom and gloom shouldn't there be more interest in whether it can deliver good care & greater staff involvement combined with better value for money?

    It seems the starting position for many is an ill-informed "no".


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