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 475.

    .... So John Lewis provide a terrible service do they ?

    No, they actually provide a good service, but only to those who can afford it! The NHS will go the same way under the Tories.

  • rate this

    Comment number 474.

    corncobuj 460

    'That`s because people have experienced privatisation and historically it has failed the public which is why you see the negative reaction.'

    Pretty remarkable then that every country that has tried to have the state run everything has ended up destitute with their populace desparate to leave.

  • rate this

    Comment number 473.

    The Gmnt and my MP declared "We will never privitaize the NHS; It's about patient choice; consortiums of GPs will handle finances"

    So this hospital is now run by a private Co which could employ nurses or carers from agencies - no choice. Like water - it's essential so take it or die.

  • rate this

    Comment number 472.

    The principle that the NHS provides equal access regardless of financial means should remain sacrosanct but why get so up tight about the mode of delivery? Other countries such as France and Germany have much better health care systems than ours and they make much more extensive use of the private sector. If the private sector can provide a good service at the right price what's the problem?

  • rate this

    Comment number 471.

    How much will these private-sector managers be paid? When we see the Liberal Democrats recruiting support from big businesses in the shadows, hiding from the media, driving cameras away, the People should have nought but distrust for British politics. It is simply not good enough! Such sponsors and their 'arrangements' should be transparent and illuminated in the public arena for all to see.

  • rate this

    Comment number 470.

    Re Adrian (401) - Privatising the NHS and adopting a US model might save us loads of cash as taxpayers but I suspect that this would be more than offset by the enormous increase facing us as healthcare 'consumers'. If not, can anyone explain why healthcare in the US costs substantially more than in the UK (measured in terms of GDP share) when health outcomes are not notably better there?

  • rate this

    Comment number 469.

    "462 jobsagoodi
    Are you sure you were ever a Tory voter ? I've heard some drivel in my time but that takes the biscuit. So John Lewis provide a terrible service do they ?"

    Yes, I am pretty sure who I used to vote for, you tend to remember that sort of thing.

    Look up service, as in 'service provider' - available in a dictionary near you.

  • rate this

    Comment number 468.

    even if 49% is owned by the employees that means 49% of the company's employees will be earning huge amounts of cash from their investment. No matter how it is presented to us the fact still remains. The Company will want to see a HUGE return for its investment and no one can argue against that. So A Money Making Exercise is what this really is. Nothing else.

  • rate this

    Comment number 467.

    Third point - the article states "the hospital will continue to be paid at NHS rates for its work while it is being run by Circle." - all very well - but what will Circle be paying it's Directors to manage it? I bet that won't be at the same NHS rates as the NHS managers - and considering how expensive some of those were, it makes you wonder. Perhaps the BBC could find this out and report back?

  • rate this

    Comment number 466.

    How many hospitals have the Tories ever built? I'll give you a clue, it's less than one.
    Why would they care, they get private healthcare.

    So, we run the council, the NHS becomes like the US, the rich get taxed less, the green-belt gets sold, illegal immigrants get an open door, disabled and generally those who are not rich are left to rot.

    Why do people still vote Tory!!??

  • rate this

    Comment number 465.

    How long before we start hearing:

    Sorry we at SinisterTech can't treat your cancer, using a scalpel to cut it out is currently considered an"experimental" procedure, sorry for any inconvenience your preventable death may cause you or your family.

    Have a nice day!

  • rate this

    Comment number 464.

    Profit is good, there should be more of it.

  • rate this

    Comment number 463.

    Unpicking Circle Part 4: "cannot think of a better way to run a hospital than as a mutual run by medical staff" - previous poster. Spot on. Except that is what the Circle model APPEARS to be - not what it actually is. Clinicians are naturally and quite correctly too trusting to see that they are being used. BBC should not remove my posts - please.

  • rate this

    Comment number 462.

    Ex Tory Voter 439

    'That's because business is excellent at providing goods, but terrible at providing services, particularly where there is a high social content.'

    Are you sure you were ever a Tory voter ? I've heard some drivel in my time but that takes the biscuit. So John Lewis provide a terrible service do they ?

  • rate this

    Comment number 461.

    Mr IndianSummer will doubtless be pleased that one or two of my comments have been removed along with several of his.

    I consider it my patriotic duty and for the good of our country to confront Tory privatisation plans for health and education whenever they pop up.

    The only way to stop the Tory profiteering at public expense is to tackle the Tories head on and by speaking the blunt truth.

  • rate this

    Comment number 460.

    15 Minutes ago

    Reading HYS has lead to me discovering that unless you make a post advocating a system whereby there is no private sector involvement in the NHS at all, your comment will get rated negitivly.


    That`s because people have experienced privatisation and historically it has failed the public which is why you see the negative reaction.

  • rate this

    Comment number 459.

    Interesting that the government "Flag Ship" community NHS CIC has just lost the community NHS contract to a company owned by Virgin Health Care .. government ministers can flower it up but the reality is healthcare by private companies will become the norm. CIC's are not for profit and cannot compete with the big private healthcare companies as the will not have the financial ability

  • rate this

    Comment number 458.

    Before people are so quick to judge, if you realised how a publicly-funded institution is budgeted, you would be fully aware of the benefits of privately owned and budgeted ventured, which run much better when someone has an actual financial interest in the successful management of the institution. Government provides a bugdet which is unquestioned and reduced annually if not met.

  • rate this

    Comment number 457.

    The (Mis)Government seems hell-bent on replacing public services with overpaid fat-cats. Fat-cats sponsor parties, but MPs should recall that they are employed and funded by the public. Such a high population paying very high taxes and the Misgovernment claims to have no money! They must be brought to account to their employers, the People, as to how they managed to squander so much public money!!

  • rate this

    Comment number 456.

    This deal has appeared within a month of the HoLords passing the Bill re. the NHS. Obviously arranged well in advance.

    50.1% shareholders, on Stock Ex, so the policies will be decided on how cheaply to do it, no Hypocratic Oath for them. Put a girl in blue - Care Assistants need no training, it's watch and do for the Nat. Min Wage.

    The QCC hasn't made private care homes provide good care


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