NHS hospital shows improvement three months after private firm takes over

By Dr. Ananya Mandal, MDMay 4 2012

A private firm that is the first to run an NHS hospital is set to make millions of pounds while the centre is still in debt.

The private sector company Circle holds on to the first £2m of any annual surplus it achieves at Hinchingbrooke hospital in Cambridgeshire. They will also get a proportion of any income surplus above that level with the rest going towards paying off the hospital's £40m debt. This means that Circle would need to generate a £70m surplus from the hospital - which has a £100m turnover - over a decade to bring it out of the red. Over the past 10 years, the failing hospital - which was facing closure before the deal was made - has never recorded a surplus above £600,000.

The Circle Partnership, which is co-owned like John Lewis, signed the NHS deal in November 2011 after beating off competition from 19 initial bidders. It began running the Hinchingbrooke hospital on February 1 this year. However, until now the details of the deal were kept secret.

These details emerged in the Health Service Journal has provoked outrage from the public sector trade union Unison, who branded it a 'disgrace.' Christina McAnea, head of health at Unison, said, “Circle and the government promised that a profit would not be made until Hinchingbrooke’s debts had been paid off. Circle clearly had no intention of keeping this promise, having laid down plans to cream off nearly 50 per cent of the hospital’s surpluses – making it virtually impossible to balance the books. This is a disgrace. Any surpluses should be going directly into improving patient care or paying off the hospital’s debt, securing its future for local people - not ploughed into making company profits.”

Andy Burnham, the Shadow Health Secretary, said, “The Prime Minister has put profit-making before patients; it's a bad deal for the NHS and people will struggle to understand it.”

But Dr Stephen Dunn from NHS Midlands and East told the BBC, “Circle will only take out a fee if the trust is in surplus. That is a major protection for the taxpayer, and we are confident there will be no compromise on quality and safety. We have mechanisms in place to ensure that Circle deliver on their plans and they will have to cover any deficits.” Circle will keep a quarter of any profits between £2m and £6m and a third of those between £6m and £10m. If Hinchingbrooke makes a financial loss, Circle must pick up the tab for the first £5 million, according to the Department of Health.

Chief Executive, Ali Parsa, said the company aimed to turn the hospital once labelled as ‘a basket case’, into one of the top ten in the country. He said the hospital was already improving and now had the shorted accident and emergency waiting times in Cambrdigeshire when before it had the longest. He told the BBC, “We have been tasked to stop taxpayers losing this money. Our plan is not only to do this and make the hospital sustainable, but to turn it into one of the best district general hospitals in the country.”

The hospital's medical director, Hisham Abdel-Rahman, admits he has “been on marches in the town. I have been at the front of those. I have signed and organised petitions, ever since I got a letter in 2006 threatening redundancy. It's fair to say I was very suspicious of the whole process.” Since Circle took over, Rahman says, “We have been going in the right direction. The best thing is there's not one mention of private patients.”