NHS hospital’s 'unsustainable' privatisation deal collapses amid concerns over poor care

The company that runs the first ever privatised NHS hospital has said it wants to pull out of its contract after describing the arrangement as “unsustainable”.

Hinchingbrooke Hospital in Cambridgeshire has been run by Circle Health, a private provider, since 2012.

The contract to run the hospital was supposed to be 10 years long and was worth £1bn; Circle announced its intention to quit after less than three years.

In September last year the Care Quality Commission found that patients were being neglected at the hospital, that hygiene was inadequate, and that staffing problems were affecting care.

The hospital is awaiting a report by the healthcare regulator into the quality of its care, which the company's chief executive has predicted will be "unbalanced".

In October the hospital failed to publish its financial position; its finance director stepped down from her position in November, the Health Service Journal reports.

The Circle chief executive who steered through the deal, Ali Parsa, also stepped down at the end of 2012 to devote more time to other projects.

The company’s current chief executive, Steve Melton, said in a statement this morning that Circle had entered in to discussions to quit the contract because it was unsustainable.

“After considerable thought and with great regret we have concluded that Circle’s involvement in Hinchingbrooke does not have a sustainable future in its existing form, and have entered into discussions with the Trust Development Authority with a view to withdrawing from the current contract,” he said.

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Mr Melton added that the hospital had been “transformed” during its time being run by the private business. He blamed the regulatory environment and A&E funding shortfalls for the hospital's problems.

On the CQC's report into care at the hospital, he said: "We understand their report will be published soon, and fully expect it to be unbalanced and to disagree with many of its conclusions."

The hospital’s contract was originally put up to tender by the last Labour government in 2009. The decision to award the contract to Circle was made by the Coalition government in 2011; it came into effect in 2012.

Andy Burnham, Labour’s shadow health secretary, said the Government had been warned about the risks posed by the privatisation.

“It was the decision of the Coalition in November 2011 to appoint Circle and they must take responsibility for this mess,” he said.

“The Government were explicitly warned two years ago about the risky business model Circle were operating, but failed to take any action. Given that these risks were known at the outset, Ministers must explain why they judged Circle a safe choice to run this hospital. They must also set out today how long they have known about the problems at Hinchingbrooke.”

Trade unions have long warned that the decision to award the contract to a private company would cause difficulties.

In 2012, Tracey Lambert, Unison head of health for the eastern region, said: “Bringing in a private company like Circle to run the hospital has always been a dangerous experiment.

“There is still a very big question mark over the long-term financial viability of Circle and whoever is in charge of the hospital bringing in a private company to run an NHS hospital is not right for the health service.”

The Guardian newspaper reported in November that Circle healthcare was the biggest winner of NHS contracts awarded to private providers across the UK, beating Bupa, Virgin Care, and Care UK.

It is currently the only private firm to run an entire NHS hospital.