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 535.

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

    I think the last part of the comment says it all. You can bet the first thing this Company will do will be to reduce front line staff to save money. Then they will say we can't afford A&E so patients will be sent to another local NHS hospital. Then it will be ....

  • rate this

    Comment number 534.

    Hence, continuing from my previous post, this Parliament-driven assault on the public sector has ruined lives and wasted much of our most valuable resource - human talent. The private sector is failing to fill the void and the human cost is mounting, and all the time, this Misgovernment of ours is never brought to account IN DETAIL et in totum for its actions. This is simply not acceptable!

  • rate this

    Comment number 533.

    The only people who still wish to retain the out dated socialist monolith that is the NHS are the workshy malingerers bleeding this country dry.

    Decent hard working people who far rather have the ability to spend their hard earned cash on private healthcare than wasting trillions on a system that would shame a 3rd world country.

  • rate this

    Comment number 532.

    As others have said the immediate concern is not that patients will be expected to pay directly for their care (though this will follow in due course) but that cash which could be spent on care will instead be diverted to line the pockets of shareholders. This piecemeal privatisation, where the 'profits' come mainly from public subsidy, has already been demonstrated a failure in rail & utilities.

  • rate this

    Comment number 531.

    A corporation has one intention - to make profit. It has no soul, no morality, no humanity and no sense of consequence. This is a dangerous step to take, and in the years to come we will see exactly why. Have our elected already forgotten the disaster of private care homes before the criminal investigations have even ended? This will be truly regrettable!

  • rate this

    Comment number 530.

    It's simple, init: governments need to find a way to reduce the world's population quick, so just take healthcare away from them. Simples.

  • rate this

    Comment number 529.

    522. AqualungCumbria
    "511.nieuw divil
    The private sector works so let's use it! ??

    please give me an example of a once nationalised asset that is now in private hands and works ? as you put it."

    BT is quite good these days and relatively cheap.

  • rate this

    Comment number 528.

    The cleaning & catering in our hospitals has already been privatised. Since then, the rise in MRSA type infections & starving patients has gone through the roof because the contractors are BY LAW forced to maximise ‘share-holder value’ above anything elseThe idea that this will improve patient care would be laughable if it wasn’t such a life-threaten decision.

  • rate this

    Comment number 527.

    @1 Vladimir, 5 Scottish bloke

    Would you prefer the hospital to close?

    @2 JDavis

    What a profoundly crass comment

    That's what is going to happen if something isn't done. Seems like a good solution to the problem to me if it's run as intended as a 'mutual'.

  • rate this

    Comment number 526.

    3 Hours ago
    How much money is going to be pumped into this by the goverment to make it work.
    An extra £37 million pounds a year for 10 years which the current NHS management were not offerred to sort things out.
    The £37mill will be offshored as profit no tax will be paid on any profit & we will be picking up the tab in 10yrs time..

    In short we are being shafted again!!

  • rate this

    Comment number 525.

    nieuw divil
    1 Minute Ago

    Free healthcare is unaffordable and immoral. It is for the individual to take responsiblity for his life and health and provide for him or herself.

    How is free healthcare immoral. The private sector are parasites on the NHS they are the ones who are driving it to the wall. Is it as expensive as the American model. Its not the best but it is better than most 18th

  • rate this

    Comment number 524.

    487.nieuw divil
    "The [NHS] is corrupt........Only the private sector can provide comprehensive, efficient and cost effective healthcare."

    Jim Chanos, the hedge fund manager, said in an episode of Radio 4's "Robert Peston and the Money Men" that there is a company which charges European health providers $5000 for it's pacemakers but $35,000 in the USA. No corruption there, thank goodness.

  • rate this

    Comment number 523.

    i can see some logic of John Lewis Style partnership or a non for profit organisation where all profits are required to be reinvested back into improving the hospitall but not engaing a profits driven company . t. Some people need to read the full article rather than just the strapline.This was a labour decision - they put it out to tender and they awarded the contract.

  • rate this

    Comment number 522.

    511.nieuw divil
    The private sector works so let's use it! ??

    please give me an example of a once nationalised asset that is now in private hands and works ? as you put it.
    All that happens is we as the end user get less for more.....

  • rate this

    Comment number 521.

    The prices the NHS sets for itself need to be heavily reviewed by the people who actually work at the sharp end, not by grey-suited managers who don't know one end of a patient from the other. Have you seen the cost of bringing in carpentry or plumbing services, for instance, and the standard at which these works are done, not to mention the bills put in by these sub-contractors.

  • rate this

    Comment number 520.

    Just a thought, if the entire NHS were sold how much of the national debt could be paid off?

  • rate this

    Comment number 519.

    "487 nieuw divil
    Only the private sector can provide comprehensive, efficient and cost effective healthcare."

    Oh yes, works fantastically well in the US. Only 40 million or so without any healthy cover. Yep, private is best.

  • rate this

    Comment number 518.

    Absolutley disgraceful.

    This is the first step to privatisation of the NHS.

    How long is it going be where people are refused life saving treatment because they do not have health insurance.

  • rate this

    Comment number 517.

    Perhaps 'John Lewis partnerships' are the best way to deliver public services, including healthcare. But recent experience shows that any fledgling organisation truly financed, owned and operated by the local clinical staff always loses out to the massive corporation in the 'open tendering' process. Such is the fear and loathing of clinicians having any joy at all.

  • rate this

    Comment number 516.

    How can the li-dems sleep at night? What are their policies?


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