Private firm Circle has announced its intention to pull out of its 10-year franchise to run Hinchingbrooke Health Care Trust in Cambridgeshire.
The company announced in a statement today that it had entered into discussions with the NHS Trust Development Authority “with a view to withdrawing from the current contract”.
It cited increasing pressures on the healthcare system and an upcoming report from regulators, which is expected to be unfavourable, as reasons for the decision.
“We have now reluctantly concluded that in its existing form, Circle’s involvement in Hinchingbrooke is unsustainable”
Circle took over the struggling hospital in early 2012, after winning the first franchise involving a private company running an NHS acute provider. It has become a totem for private sector involvement in the health service.
But today Circle chief executive Steve Melton said that “after considerable thought and with great regret” the company had concluded that its involvement in Hinchingbrooke “does not have a sustainable future in its existing form”.
He said that since 2012 the trust has been “transformed” from an organisation described as a “basket case” and facing closure into one that had won a number of awards and was consistently hitting the “most important” outcome measures.
“In the first two years of the franchise, we made financial savings significantly above the NHS average. We have saved the taxpayer around £23m in total,” he said. “However, since the contract was put out to procurement in 2009, the playing field has changed.”
Mr Melton blamed unprecedented A&E attendances – at times up to 30% higher than last year – combined with not enough care places for patients awaiting discharge and a funding cut of around 10% this year.
“With these pressures on the system, to maintain the standards our patients deserve requires significant further investment, on top of the £4.84m and considerable resources Circle have invested in the hospital to date,” he said.
Mr Melton also suggested that a soon-to-be-published Care Quality Commission report would be critical of the trust’s performance.
“We were one of the first hospitals to be inspected under the CQC’s new process. We understand their report will be published soon, and fully expect it to be unbalanced and to disagree with many of its conclusions,” he said.
“We recognise the importance of a regulator focussed on quality, but we are not the only hospital to find their process problematic,” he said. “We believe that inconsistent and conflicting regulatory regimes compound the challenges for acute hospitals in the current environment.”
Mr Melton stated: “The combination of these factors means we have now reluctantly concluded that in its existing form, Circle’s involvement in Hinchingbrooke is unsustainable.”
“This is deeply worrying news for staff and patients and further highlights the major financial crisis facing the NHS, and the daily pressure facing staff”
But he added: “If reform in the region develops fast and a new role for us becomes clear, we are happy to play our full part.”
Mr Melton also thanked staff at the trust for their “professionalism and dedication”.
“I would like to pay tribute to the amazing work of our staff,” he said. I will be speaking personally to them over coming days and weeks.
“I’ve been humbled by the compassion, dedication and professionalism of doctors, nurses and managers. The hospital’s remarkable improvement over the past two years is a credit to them,” he said.
In response, Peter Carter, chief executive and general secretary of the Royal College of Nursing, said: “This is deeply worrying news for staff and patients and further highlights the major financial crisis facing the NHS, and the daily pressure facing staff.
“Hinchingbrooke was one of the first NHS hospitals to be taken over by a private provider and at the time many considered this kind of arrangement to be the way forward for the health service. This announcement shows that private sector involvement is not always the answer.
“This news also highlights just how much pressure is being managed by NHS trusts around the country who are struggling to keep up with patient demand while remaining financially secure,” he added.
Unison general secretary Dave Prentis said: “The NHS is simply not shaped for competition. Setting up the model was an unnecessary expense which could have been used to recruit more staff and deal with the growing demand on services.”
Andy Burnham, Labour’s shadow health secretary, said: “Ministers must provide urgent reassurance and set out a plan to ensure the continuity of services at the hospital in this uncertain time.
“It was the decision of the coalition [government] in November 2011 to appoint Circle and they must take responsibility for this mess,” he said.