By Richard Johnstone | 9 January 2015
Private healthcare operator Circle has said it will pull out of its flagship contract running Hinchingbrooke NHS hospital, citing funding cuts and increased demand on accident and emergency services.
Circle, which took over management of the hospital in early 2012 – the first ever private provider to manage an NHS hospital – said the contract was no longer sustainable.
Chief executive Steve Melton said that changes since the contract was put out to tender in 2009 meant ‘the playing field has changed’.
He stated: ‘First, like most hospitals, over the past year we have seen unprecedented A&E attendances – at times up to 30% higher, year-on-year – and not enough care places for healthy patients who await discharge.
‘Second, at the same time, our funding has been cut by approximately 10.1% this year.’
Under the terms of its 10-year deal, Circle was able to withdraw from the contract in the event of financial losses over £5m. The trust is currently forecasting a deficit in 2014/15 of approximately £10m.
Melton said pressures across the system meant further investment was needed at Hinchingbrooke as part of joined-up programme across Cambridgeshire hospitals, GPs and community services.
‘With these pressures on the system, to maintain the standards our patients deserve requires significant further investment, on top of the £4.84m and considerable resources Circle have invested in the hospital to date,’ he added.
Circle was now in talks with the NHS Trust Development Authority to agree its exit from the management contract.
Hinchingbrooke was also one of the first hospitals to be inspected under the Care Quality Commission’s new inspection regime for hospitals, implemented following the care failings at the Mid Staffordshire foundation trust.
Melton said that he expected the CQC’s report, which will be published soon, to be ‘unbalanced’ and Circle would likely disagree with the regulator’s conclusions.
‘We recognise the importance of a regulator focused on quality, but we are not the only hospital to find their process problematic. We believe that inconsistent and conflicting regulatory regimes compound the challenges for acute hospitals in the current environment.
‘The combination of these factors means we have now reluctantly concluded that in its existing form, Circle’s involvement in Hinchingbrooke is unsustainable.’
The Department of Health said it was disappointed that Circle has made this decision.
‘There will now be a managed transfer of the running of the trust and patient care will not be affected,’ a spokesman added.
Chris Hopson, chief executive of NHS Providers, which represents foundation and hospital trusts, said Circle’s decision showed the pressures under which the NHS is delivering patient care and services.
‘Circle is in no doubt that the situation has changed significantly since it became involved in 2009 with key factors making it impossible for them to continue,’ he said.
‘The Hinchingbrooke situation demonstrates the unsustainable pressures the NHS is facing today and proves the need for urgent change. We have an agreed vision for the future in theFive Year Forward Viewwhich can only be achieved if properly funded.’
There was an urgent need for political agreement on how to reduce the current pressures on the health service while also allowing for implementation of the forward view plan outlined by NHS England chief executive Simon Stevens last year, he added.
Circle’s announcement comes as the Public Accounts Committee warned that variations in health funding across the country needed to be tackled to ensure the financial sustainability of the health service.
