Hospital Dr News

Circle to withdraw from Hinchingbrooke contract

The first private firm to manage an NHS hospital – Hinchingbrooke Hospital – intends to withdraw from its contract.

Circle Holdings said its franchise is “no longer viable under current terms”. The move comes amid funding cuts and rising A&E attendances at the hospital.

The Department of Health said it was “disappointed” in the decision.

Circle took on Hinchingbrooke in early 2012, as it faced closure over mounting debts.

Circle has the right to terminate the franchise in the event that it is required under the contract to make aggregate support payments to Hinchingbrooke in excess of £5 million.

To date, Circle has made payments totalling approximately £4.84 million.

It said there have been significant changes in the operational landscape for NHS hospitals since the contract was originally procured in 2009, including unprecedented increases in accident and emergency attendances, insufficient care places for patients awaiting discharge, and funding levels that have not kept pace with demand.

Circle has entered into discussions with the NHS Trust Development Authority with the view to ensuring an orderly withdrawal from the current contract.

It claimed that despite its desire to withdraw from the franchise, the hospital had been significantly improved.

“The hospital 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 saved the taxpayer approximately £23 million,” Circle said.

Funding for Hinchingbrooke has been cut by approximately 10.1% this financial year.

“We believe that solving the problems facing Hinchingbrooke can only be achieved through joined-up reform in Cambridgeshire across hospitals, GPs, and community services. We fully support the vision of NHS England Chief Executive Simon Stevens’ 5-year Forward View, but these proposed reforms are too far into the future. If reform in the region develops fast and a new role for us does become clear, we are happy to play our full part.”

The move comes ahead of a Care Quality Commission report, which is likely to be critical.

“We understand the CQC report will be published soon, and expect it to be both unbalanced and to disagree with many of its conclusions. We are not the only hospital to find their process problematic, and believe that inconsistent and conflicting regulatory regimes compound the challenges for acute hospitals in the current environment,” it added.

Under the contract, Circle could be required to make a final support payment of approximately £160,000 to Hinchingbrooke, bringing its maximum total support to the capped £5 million level.

Circle is also obliged to cover termination and re-procurement costs incurred by Hinchingbrooke, capped at £2 million under the contract.

Steve Melton, Chief Executive of Circle, 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.

“This combination of factors means we have now reluctantly concluded that, in its existing form, Circle’s involvement in Hinchingbrooke is unsustainable.”

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