Private firm in NHS hospital takeover
pharmafile | November 10, 2011 | News story | Sales and Marketing | Circle Healthcare, Hinchingbrooke, NHS
Circle Healthcare has sealed a deal to take over the running of a debt-ridden NHS hospital in Cambridgeshire.
Private firms are already running specialist NHS surgical centres, but this is the first time a private company has taken control of an entire hospital.
Hinchingbrooke hospital and its staff will remain within the NHS, but employees will also be given shares in the company according to performance and seniority.
Circle was the eventual winner of a two-year tendering process to take over the Hinchingbrooke hospital in Huntingdon, Cambridgeshire.
The firm, which is part listed on the London Stock Exchange and was established by Ali Parsa, a former Goldman Sachs executive, will take over the hospital in February in a 10-year deal worth around £1 billion.
Circle says its ambition is to run up to 30 independent hospitals that provide NHS and private treatments.
The deal will reignite the debate over private firms winning NHS contracts, with opponents of the government’s reforms particularly fearful of creeping privatisation of the health service.
Debt crisis
Hinchingbrooke has been struggling with £40 million of debt and the Department of Health has given its financial status a high-risk ‘red’ rating.
The East of England strategic health authority held a two-year tendering process involving 19 bidders – which included other private firms – with Circle declared the eventual winner.
The government is refusing to bail out struggling hospitals, opening the door to private firms willing to take on trusts which are in debt.
‘John-Lewis style’ structure
Dr Stephen Dunn, from the East of England SHA, says Hinchingbrooke staff will continue to be paid at NHS rates, and welcomed the new management.
“It’s a hugely original deal – we’ve managed to avoid the possibility of closing the hospital. We’ve got a solution to the debt – and have plans that allow us to meet the efficiency challenges the NHS faces,” he told the BBC.
Ali Parsa said he wanted a John Lewis-style model “with everyone who works there in charge of the hospital, letting them own the problems and solve them.”
Parsa added that his firm would try everything it can to make the relatively small hospital viable.
“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,” he said.
He added: “Circle arrives not with a top-down plan to impose change, but with a proven methodology of unleashing NHS professionals’ talent through clinical leadership and devolved decision-making”.
Dr Malav Bhimpuria of behalf of local Clinical Commmissioning Consortia, Hunts Care Partners and Hunts Health, said: “As local GPs, we are pleased that the hospital can now look forward to a more certain future. We support a hospital in Huntingdon that can serve local patients and deliver the quality of care that they should expect. We will continue to work closely with the hospital so that the right level of services is delivered locally.”
Circle also recently bid to take control of Epsom hospital in Surrey, but withdrew after the tender contract did not allow it sufficient freedom to change the hospital.
The Department of Health has identified 20 NHS trusts that are underperforming – suggesting that more takeovers by private firms could be on the cards.
Ben Adams
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