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 495.

    Adrian M Lee

    The money can be better spent. Spent on what. The private sector would love to get its tentacles on the NHS and then bleed it dry only to blame the patient. Whilst the profit zombies get fatter on the carcase. The American model is a failure . 40 million Americans cannot afford decent healthcare. As for Bevens Dinosaur. Dinosaurs were successful and around for a very long time

  • rate this

    Comment number 494.

    The first steps on the road to total privatisation have just been taken.

  • rate this

    Comment number 493.

    461.Rebecca Riot - The only way to stop the Tory profiteering at public expense is to tackle the Tories head on and by speaking the blunt truth.
    Whilst conveniently ignoring the fact that the Labour government spent 13 years privatising the NHS (GP Surgeries, walk in clinics, PFI) and education. You don't have the first clue what the 'truth' really is.

  • rate this

    Comment number 492.

    read the article in full and properly then review your statement.
    To all the other doom merchants please understand that this something started under the last government it IS NOT a tory production!

  • rate this

    Comment number 491.


    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'."

    It's not just cost - got a cholesterol lever of 6? You won't even be offered cover, even if you can afford it (source: American friend, who has slightly elevated cholesterol).

  • rate this

    Comment number 490.

    private secter has sneaked in now see how many other hospitals fallow how can you earn from nhs????I wouldnt want to be going in that hospital.

  • rate this

    Comment number 489.


  • rate this

    Comment number 488.

    "The only motive is profit" i'm hearing many say and although this may be true profit is usually driven by the quality of services provided.

    The problem we have here is that there is no competition to force companies to improve services. If this is the way to go then have competing hostpitals providing the same services in the same areas.

  • rate this

    Comment number 487.

    A step in the right direction but it will not solve the fundamental problem with the NHS.

    The whole system must be privatised now. The whole system is corrupt, unable to provide the most basic level of healthcare and is totally unaffordable.

    Only the private sector can provide comprehensive, efficient and cost effective healthcare.

  • rate this

    Comment number 486.

    Those intent on protecting the NHS should rather concentrate on preserving the principle of "Free at the point of delivery" and worry less about the sector providing it.
    At present treatment is denied when all hope is lost so we do not live in utopia as it is.
    Maybe a private provider can refuse cosmetic surgery, IVF and other expensive "rights" that the NHS is duty bound to provide (immigrants?).

  • rate this

    Comment number 485.

    Profit in this case is any money this company doesn't spend on caring for the sick. Why would we allocate treasury money (our money) over and above what a hospital needs - why is that good business? Any monies not spent from their budget is still ours and I will begrudge it somehow becoming someone elses 'profits'

  • Comment number 484.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 483.

    The audacity of Andrew Lansley and his carefully crafty legion of chums across the Atlantic, during opposition, is outrageous!

    Hinchingbrooke has been poorly run for years. Yet no attempt by any government - including Labour - to turn it around. The same could be said of Ely hospital, yet no privitisation there. Make Hinchingbrooke a military hospital too, as close to bases. No privitisation.

  • rate this

    Comment number 482.

    Did you read the full article!, this process was started by the last LABOUR Government the local NHS Trust followed it through.

  • rate this

    Comment number 481.

    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 ?

    Bet you wouldn't be saying that if they had proposed a Comet Electricals model?

  • rate this

    Comment number 480.

    It makes me laugh when Etonians spout on about Quango's. Their private replacements will be on at least 10 times that of so called qango's

    I used to think public meant bad, lazy, waste of money. Over the last few years having travelled and lived abroad, I see what a saving grace our public services are

    The Tories want to ruin our country, it's the beginning of the end if we let them do this

  • rate this

    Comment number 479.

    The arguments about 'profit' being funding taken away from the Health Service and "free at the point of delivery" both miss the point. We the tax paying public pay the state via our taxes to deliver services to us. How the state chooses to manage its service delivery is completely irrelevant. We have paid for a service and frankly its not currently good enough.

    Its time the state delivered.

  • rate this

    Comment number 478.

    I'm practicing my scottish accent already, i'm not very good at the moment but it will come in handy at the newly re-built Hadrian's wall in ten years time, to speak with the Scottish guards and beg them to let me in for some basic health-care.

  • rate this

    Comment number 477.

    The way to deal with this is for people in the area to refuse to be treated there. They have betrayed us yet again. They will have their way because we have been to complacent for too long. They sold everything we owned in the 80's. Water, power, communications and now our health service. They are a bunch of parasites, bleeding us dry and forcing us into poverty. It's not just the tory's either.

  • rate this

    Comment number 476.

    The NHS have proved themselves to be useless at running hospitals so why not give a private firm the chance to run them efficiently?


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