Cambridgeshire NHS Hospital finally Circled

By Angus Bromhead

There are few emotive issues likely to rile Britons as much as privatisation of the NHS. Thursday’s announcementthat Hinchingbrooke Hospital in Cambridgeshire is being taken over by Circle Healthcare comes as no great surprise but raises some key questions on the future of British healthcare.

Are private firms best placed to invest in the NHS and can hospitals be run as profit making businesses whilst maintaining their integrity and duty to care? Is Circle perhaps different in its business approach and therefore able to deliver a higher level of service than the NHS?

Having identified Hinchingbrooke as an “underperforming” hospital, the Department of Health signed a £1bn 10 year deal with Circle assuring local residents that ‘’this is a change in management- not a change in service’’.

Circle will have the power to change operating procedures and staff providing they meet NHS standards. With debts of £40m on a turnover of £100m most firms walked away from the deal. Given the scale of problems and nature of the business Circle faces a massive challenge in restoring the hospital’s financial health within the set timescale.

Circle’s approach to management may set it apart from conventional investors. Nearly 50% of the shares are owned by employees and given on a reward basis in a John Lewis style partnership. By giving out financial stakes in the business employees are more likely to feel integral to its success or failure; staff at Hinchingbrooke would have this option also. Circle has had success with a number of clinics and a private hospital in Bath. By rewarding staff with more autonomy it has succeeded in improving the service offered, and returning results whilst not compromising on care.

Whilst Circle may well have a proven track record in healthcare in the UK many private firms do not. Poor management of Southern Cross’s assets, for example, left the company in financial ruin and threatened the care of many elderly residents.

Unions worry that private interests conflict with a duty to care, and that private firms are not qualified to run maternity, intensive care and emergency services. Owing to population shift, people are less inclined to refer to their GPs and are using hospitals as their first stop for healthcare. A sharp rise in A&E attendance of 1.5% year on year means that departments are under more pressure.

Circle will find that dealing with such emergencies will be far more difficult to manage than its current healthcare operations which are run primarily on an appointment basis. Assuming financial risk in such a potentially unpredictable industry will have its dangers. Circle maintain that they will meet this challenge by drawing on the expertise of Hinchingbrooke’s NHS staff.

Although it may be the first takeover of a complete district hospital it does not amount to a full privatisation as the hospital’s staff and assets remain with the trust. The NHS will continue to own the buildings and staff will have the added bonus of maintaining their NHS terms and conditions whilst also taking part in Circle’s partnership scheme. In addition any changes to the services will require authorization by government health commissioners. With such limits, opponents argue that significant change and a return to profit is impossible. Circle is certainly a market leader in this and other such firms will be watching closely.

Whatever your view on private healthcare, it is without doubt that many NHS trusts, despite significant investment, are still falling short and failing their patients; with poor and short-sighted management being a key component as opposed to the medical staff. Management needs to be more accountable and approachable to succeed; perhaps the partnership scheme will encourage this.

If the Circle experiment proves a success in the coming years, it may be a model adopted by more failing hospitals, meaning that business will become a more integral part of the NHS. While the deal might be the only viable solution for Hichingbrooke, I remain a little sceptical about Circle’s bold claims that they can reform the hospital’s management and return a profit within the 10 year period. Compared with private clinics, the unpredictable business of running a hospital will be challenging.