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Private firm takes charge of NHS trust

New model promises to clear trust’s £40m debts

Adrian O'Dowd

Thursday, 10 November 2011

A private company has been appointed to run Hinchingbrooke Health Care NHS Trust in Huntingdonshire, promising to help clear the trust’s existing £40million debt.

Under the groundbreaking deal, Circle Health Limited, the social enterprise co-owned by employees, clinicians and Circle Holdings Plc (listed on the stock market), has signed a definitive contract to run the trust and manage an estimated £1 billion of revenue over a 10-year contract period, which will begin next February.

Unions have expressed concern at the development, which they fear may lead to staff cuts.

Circle was chosen by the strategic health authority NHS Midlands and East as the preferred bidder to run the trust in November of last year, following a 13-month procurement process and 12 month period of scrutiny by the Department of Health.

Circle will be the first ever non-state provider to deliver a full range of NHS district general hospital services when the contract begins and the company has promised to transform Hinchingbrooke by pushing boundaries on clinical excellence, hospitality and patient experience.

If the hospital falls into deficit as part of the transformation, Circle has agreed to make working capital contributions of up to £5m.

The agreed contract allows either party to terminate if the trust incurs more than this £5m in aggregate deficits, at which point Circle will have to pay a further £2m termination fee to Hinchingbrooke. Circle's liability under the Contract is capped at £7m.

Circle said it intended to run the trust using a John Lewis store type model in which clinicians and managers would be in charge of the hospital as a partnership and as co-owners.

It said that in recent months, senior clinicians, including GP commissioning leaders, hospital consultants and union representatives, had written to the Prime Minister on repeated occasions expressing their support for the franchise to be awarded to Circle.

Circle's chief executive, Ali Parsa, said: “At a time when some healthcare commentators say the solution for small district general hospitals is simply to merge or be shut down, we believe NHS Midlands and East's courage and zeal for innovation will enable us to show how clinician and staff control can provide a more sustainable alternative.

“Our partners have now met hundreds of Hinchingbrooke staff, and we know that we share a core value of prioritising patients above all else, and a passion for reengineering healthcare delivery to make it simpler, better and smarter value for the patients.”

Dr Stephen Dunn, the health authority's director of policy and strategy, said: “Circle secured this operating franchise following an open competition. They outshone the best of the best from the NHS and independent sectors.”

Nigel Beverley, interim trust chief executive for Hinchingbrooke Health Care NHS Trust, said: "We have been bowled over by Circle's enthusiasm and the efforts they have taken to engage with staff, patients and our other partners.”

Unison’s head of health Christina McAnea, said the deal was an “accident waiting to happen”. 

Ms McAnea said: “We have huge concerns that jobs will be affected by the move, as staffing is the biggest cost area for trusts. The company is pushing the line that staff are getting involved, while avoiding the fact that merchant bankers are the one calling the shots. The hospital could have been kept running for the benefit of patients, rather than profiteers.”

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