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 555.

    Free Care At The Point Of Delivery. Does that mean that everyone will receive huge bills a week or so after they receive treatment? It is clear that the NHS is being turned into the nightmare American Healthcare System! Do people in the UK really understand what the cost of getting ill in the US is!

  • rate this

    Comment number 554.

    The funding system is set up so that certain hospitals will fail and be in debt. But it is not debt in any real sense. It is a debt produced by the nature of the funding mechanism itself, so it is debt under false pretences. On the basis of this so called debt Tories and bankers can make an argument that the public sector is failing. But when banks fail there is no structural reform. Funny that!

  • Comment number 553.

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

  • rate this

    Comment number 552.

    Private interests out of our health service, GET OUT! get back to your failed banks and extortionate energy companies and don't come back, we aren't here as cattle for your benefit, we demand that the government back and supply the NHS, god knows they have money for everything else except for our health.

  • rate this

    Comment number 551.

    Divots@227 "In the 'good old days' ...we weren't all obese"

    We're not 'all' obese, even under the over-cautious BMI; besides, a recent Canadian study found that fat people don't cost anywhere near as much as claimed. Constantly blaming the NHS crisis on its 'irresponsible' patients plays into the hands of those determined to cripple it through market-driven bureaucracy and the profit motive.

  • rate this

    Comment number 550.

    I wouldn't mind privatisation per se if customer service wasn't as bad as it is. Whatever transaction or service you require, mobile phones, utilities, repair services, you get ripped off and there is nothing you can do about it. It's Wild West (cowboys). I find NHS workers very committed to their job and efficient. I have huge respect for them.

  • Comment number 549.

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

  • rate this

    Comment number 548.

    Apparently any hospital that falls into the red by £40 million as this one has is now at risk of being taken over by private firms. Our National Insurance contributions should be adequate to pay for our Health Service. If they are not something is very wrong. A huge majority of NHS Trusts record ANNUAL SURPLUSSES. Revenue should be shared between Trusts to ensure the weaker ones stay afloat.

  • rate this

    Comment number 547.

    The NHS has always spent a significant proportion of its annual budget on services provided by the private sector eg Drugs, Medical Supplies, Construction and Consultants. Even the NHS Consultants earn profits from the NHS. Please can the public be made aware of this and stop this prejudiced hue and cry.

  • rate this

    Comment number 546.

    No blame on the dedicated front line services everywhere who work hard and are overstretched, but the people above them wouldn't last 5 minutes in the private sector and the top Public Sector bosses get 22% of gross salary paid into their pension schemes every year. (See Monmouthshire CC annual accounts 2010-11 as an example). We need PS family trees published so we can see the inefficiencies.

  • rate this

    Comment number 545.

    Maybe this is the start of reducing the huge amount of waste generated bu the out moded system that is killing off the NHS as it stands.

  • rate this

    Comment number 544.

    #lack of humanity to put profits before people is beyond my understanding#
    Yes how can those people in healthcare take money for doing it putting their personal greed before 'humanity' Surely decent people would not expect Pay which is all personal profit, for doing things for humanity Now do you get it? If people want pay, money needs strong control or will you give them the £40m?

  • rate this

    Comment number 543.

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

    No only that, but they spend 16% of GDP (twice as must as the western industrial average) and 50% of all health care is funded by the government. Add that to my previous post and you've got a model of efficiency..........for the US health corporations!

  • rate this

    Comment number 542.


    how about the nhs profiteering? - £1 million + for the costa coffee franchise at Kings Mill?"

    That and car parking charges etc. are all good socialist profits my friend and don't count. Any fule kno that.

  • rate this

    Comment number 541.

    a) Buy shares in the company - bound to make a profit!

    b) Move house if it's your local hospital.

    The NHS isn't known for its business acumen in running hospitals, but at least it's priority is healthcare. No private company can compare as it's set up for profit.

  • rate this

    Comment number 540.

    522.AqualungCumbria - please give me an example of a once nationalised asset that is now in private hands and works ?
    BA, BT, BR. Significantly better levels of service than when they were under public ownership. And I'm actually old enough to remember what dreadful levels of service these companies used to provide compared to the service they provide now.

  • rate this

    Comment number 539.

    "527 mobass

    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'."

    But it isn't a mutual, neither is it the John Lewis model. One share holder, who doesn't work there, owns 51% - so not mutual, and there is no fixed ratio between lowest and highest paid, so it isn't John Lewis either.

  • Comment number 538.

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

  • rate this

    Comment number 537.

    GP's consortia selects cheapest provider, if private sector selected, they get money, if not not, they can reinvest elsewhere. If the NHS equivalents cease to get contracts, they have no funding to continue service, so service discontinues. When this occurs across board will private sector drive costs down without NHS to compete against? Look to the US for the answer. Inevitable Privatisation!

  • rate this

    Comment number 536.

    Miss management, no accountability, big perks, and tax payers, = the short fall of our public sector.
    The few select, do not care for the masses, their friends will put spin on the situation to ensure their own position. Try and apply for one of these posts.


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