Largest NHS privatisation comes to an end
Sarah Spickernell asks why the NHS’ deal with Circle Healthcare flatlined
Yesterday, the NHS’ biggest privatisation experiment came to an expensive end. Circle Healthcare, which was chosen by the government three years ago to turn around the troubled Hinchingbrooke Hospital in Cambridgeshire, is abandoning the project seven years early, leaving behind a deficit of between £7.7m and £12m. What’s more, the taxpayer will have to make up the difference.
Nick Boyle, the business development manager at Circle, told City PM: “One of the key problems with the management and improvement of the health service is that it is so politicised. Politics just always gets in the way of everything, and especially near election time – politicians are scared of telling the truth.”
He added that on top of extremely high efficiency gains targets, which exceeded those of any other nearby hospital, Circle faced more spending cuts than anyone else during its tenure.
Circle’s withdrawal comes at a critical time for the NHS, with the debate over private sector involvement intensifying ahead of the General Election.
If the figures are scrutinised, Circle made a considerable saving for Hinchingbrooke, and the taxpayer, over the three years it was in control. If the hospital had remained on its downward trajectory in the public sector, taxpayers would now be footing a bill of around £30m, rather than £10m.
However, although the hospital was benefiting financially, Circle was not. After just seven months in charge it had a deficit of £4m, and in January this year it was faced with a choice of either injecting £5m of its own money or walking away. This was the tipping point, and the moment at which Circle could legally exit the deal.
With its track record for transforming NHS services – it had already worked intensively at NHS Trusts in Burton and Nottingham – it is surprising difficulties escalated so quickly in the case of Hinchingbrooke.
So how did it go so wrong? Boyle believes Circle’s “co-operative model”, which gives doctors and nurses more autonomy over the running of the hospital, was something unusual for the NHS and incompatible with its deeply ingrained working style.
“The NHS has been increasingly burdened with bureaucracy, and that filters down to every part of the system,” he said.
The fight against privatisation at the political level is stronger than any evidence supporting a case against it, according to Boyle.
What this comes down to, according to Matthew Custance, healthcare partner at KPMG, is an intense bond with the NHS brand: “I think people feel very protective over the NHS because it’s a fantastic service and its very close to people, so they don’t like the idea of it changing from what it is – partly fear of change,” he said.
The official handover will be overseen by the NHS Trust Development Authority. Stephen Webb, a member of the Hinchingbrooke team, says the fundamental ethos of the hospital hasn’t, and won’t change: “The vision for the hospital is still very much what it has always been – it is a very well regarded hospital with a drive to improve.”
However, despite its failure with Hinchingbrooke, the government has not been put off bringing private companies on board – only last month, NHS England listed a plan to outsource £5bn of work, which would involve advising new doctor-led clinical commissioning groups that spend more than two-thirds of the NHS budget buying care for patients. Companies in the running include Capita Business Services, Mouchel and Optum.