Operator of Labour Privatised NHS Hospital Pulls Out of Contract

Andy Parrett / Geograph.org.uk

A hospital which was privatised by Labour is facing unsustainable financial problems, the management company have said.

Circle, the private healthcare provider which manages Hinchingbrooke Hospital in Cambridgeshire, will pull out of its service contract having told investors it was “no longer sustainable under current terms” due to cuts in spending and an increase in demand for services, the Telegraph reports.

The news comes amid A&E departments across the UK failing to meet their four hour waiting time targets, with new statistics from NHS England today showing the crisis deepening.

The company took over the running of the Cambridgeshire hospital in 2012 making it the first private operator of an NHS hospital.

But the management contract was first put out to tender to private companies in 2009 when Labour MP Andy Burnham was Health Secretary.

The news will be used by unions and other left wing organisations to say that private involvement in the NHS can never work. But in reality, the company took on a hospital which faced closure and was described as a ‘basket case’ after years of public ownership and management.

On their website they write:

“Since Circle took on Hinchingbrooke in early 2012, the hospital has been transformed. Hinchingbrooke faced closure. It was described as a ‘basket case’. We invested in the quality of care, in staff and in facilities. Now, it has won a number of awards. It consistently hits the most important outcome measures, including low mortality rates, excellent patient feedback and meeting all major waiting time targets. In the first two years of the franchise, Circle made financial savings significantly above the NHS average. We have saves the taxpayer approximately £23 million.”

Hinchingbrooke’s funding has been cut by 10.1 per cent this financial year, they said, adding that funding levels had “not kept pace with demand”.

Furthermore, the company say that the recent problems have been caused by heavy demand for Accident and Emergency services and a lack of care places for patients who are fit to be medically discharged with sufficient community care for when they return home. This situation is one which is common to all hospitals across the country, and both issues are mentioned by hospitals who have been facing the most significant problems in recent weeks.

In short: the company would be letting down its investors by continuing to take on a hospital which had massive structural problems they themselves would not be able to control due to the majority of health and community care services being in public ownership

In a statement to investors, the chief executive of the company said,

“Like most hospitals, over the past year Hinchingbrooke saw unprecedented A&E attendances and not enough care places for healthy patients awaiting discharge.

“At the same time, our funding has been cut. We also believe that inconsistent and conflicting regulatory regimes compound the challenge for acute hospitals in this environment.”

Under the terms of its contract, the company has the right to pull out of the deal if it finds itself forced to make payments of more than £5m to support the hospital. It has already provided £4.84 million, it said, with more required.

However the hospital did face criticism from a forthcoming report. by the Care Quality Commission. A letter from inspectors leaked in September wrote that “staff treat patients in an undignified and emotionally abusive manner at the hospital.”

Private Finance Initiatives, which were brought onto the statute books by the Labour Party, allow private investment into public services, such as the building of a hospital, with the instigators? then being awarded a long term management contract. The controversy with the law is that should anything go wrong with the project, it is the tax payer who are left to pick up the bill.