Shock as Circle Holdings pulls out of running Hinchingbrooke Hospital

Decision to pull out of 10-year deal after just three years announced just hours before Care Quality Commission rates hospital as 'inadequate'

Circle Holdings, the company behind Britain’s first privately-run NHS hospital, has announced it is to pull out of its contract just three years into the 10-year deal.

When Circle Holdings first took over Hinchingbrooke Hospital, which had debts of £40m, in 2012 the company said it would make surpluses of at least £70m in the next decade.

But a statement to the London Stock Exchange last week announced the u-turn, blaming the decision to cease its operation of the facility on ‘a number of factors’ including an unprecedented increase in A&E patients, a lack of care places for patients awaiting discharge, and that funding had been cut by 10.1% this financial year.

There’s no easy way round the fact that running a hospital is difficult. The private sector here found that out the hard way

It also blamed an ‘unbalanced’ report by the Care Quality Commission, which revealed a catalogue of serious failings at the hospital, including children being put in danger and delays in patients being given pain relief.

The regulator rated Hinchingbrooke as ‘inadequate’ overall, and specifically for patient safety, showing care towards patients, and leadership.

It is the first hospital trust the watchdog has ever found to be ‘inadequate’ in how it cares for patients.

Commenting on its findings, Professor Sir Mike Richards, the commission's chief inspector of hospitals, said: “[The findings] are not a judgment on the role of the private sector in the NHS, or on franchise arrangements. Where hospitals are failing to promote good care, we will say so regardless of who owns and runs them."

Under the terms of Circle’s contract, it has the right to end the franchise if the amount of money it has to put in to the trust exceeds £5m. Circle has already made payments to the trust totalling about £4.84m and could be required to make a final support payment of approximately £160,000.

Circle chairman, Michael Kirkwood, said the decision had been made ‘with regret and after considerable thought’.

The announcement has triggered a high degree of criticism and has prompted political debate, with political leaders claiming the NHS is on the brink of collapse.

Experts have also predicted that the failure will put paid to any attempts to privatise large parts of the NHS in the future.

Where hospitals are failing to promote good care, we will say so regardless of who owns and runs them

Kieran Walshe, professor of health policy and management at Manchester Business School, said: “Companies like Virgin who have taken over large contracts to do community care will be worried. There’s no easy way round the fact that running a hospital is difficult. The private sector here found that out the hard way. Unless there are new models of NHS care I cannot see another hospital being franchised anytime soon.”

A spokesman for the Department of Health added that there would now be ‘a managed transfer of the running of the trust’ adding that ‘patient care will not be affected’.

Circle will continue to operate its private hospitals in Bath and Reading, which both accept NHS patients, and it also operates NHS treatment centres in Bedfordshire and Nottingham.

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