Circle looks to pull out of Hinchingbrooke Hospital - Canary in the mine?

by Craig Dearden-Phillips 12/01/2015


While 90% of the coverage on Circle's giving notice on its NHS contract in Peterborough will be 'Private Sector Fails in NHS', this is actually the wrong headline.   The Dinosaur-tendency in public life will view Hinchingbrooke as evidence that alternative approaches to deliver don't work,  that private operators should be kept out. 


However, this overlooks  the improvements overseen by Circle since 2009 and ignores the wider pressures overtaking all NHS hospitals, including the Long Term Review which, essentially sounds a death-knell for those smaller hospitals (like Hinchingbrooke) which can't also run primary and community services on their patch. Then there is the current A&E crisis which punishes all hospitals by paying less than the costs of treatment for many of those entering A&E.  Investors in Circle, quite understandably, could not see themselves carrying these kinds of risks so they have decided, with regret, that they couldn't carry on.


What is to be learned from Circle's withdrawal?  Three issues jump out. One is that it is going to be difficult to find anyone other than public sector providers to run parts of the NHS whose risks are unquantifiable.  While Hinchingbrooke was 'a basket case' under the NHS, the financial consequences could be absorbed by the Department of Health, probably on a long-term basis if politically necessary. No independent provider can do this, or not for long.   


The second thing to jump out is that we mustn't rush to condemn Circle. A sincere and successful effort was made to improve Hinchingbrooke which up to 2015 was attested to be true. While a forthcoming, disputed CQC report will undermine these claims somewhat, the attempt by Circle to empower staff and move things on, both financially and operationally, from a terrible position in 2009 should not be forgotten. There is nothing particularly different about Circle and Hinchingbrooke to most other NHS Trusts in terms of performance or delivery (indeed Hinchingbrooke may in many areas have been better than normal)  


The third bit of learning is the need for a level playing field for all providers, NHS, private, mutuals etc.  The truth is that nobody except Government could, by late 2014, wear the perfect storm of risk that Hinchingbrooke represented.  But this doesn't mean that independent providers – whether corporates, mutuals or charities – shouldn't bid for and run NHS services. Where there is a high level of risk to private operators, this needs to be shared on a reasonable basis with Government (as is the case with every single Foundation Trust that is running a deficit). The only difference between the failure of Circle and any other NHS organisation is that everyone else is bailed out while, by its nature, Circle cannot be, or at least, not to anything like the degree in the NHS system.   If we're going to get other sectors involved in the NHS, a level playing field is needed for all operators of NHS services – though probably one which doesn't fully compensate losses in the way that the current system does for NHS Trusts.


Overall, I am sad to see Circle pull out of Hinchingbrooke because it starts all the wrong stories about the perils of the private sector. Little is said or commonly understood about the perils of the system we have got which freezes out other kinds of providers from the NHS and leaves us with the problems we have now in A&E which, in my view, are just a foretaste of what is to come, the canary in the mine. To avoid this fate, we need a far more diverse array of providers not less.


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