All Eyes on Hinchingbrooke

Elliot Bidgood, 25 February 2013

Last week saw the one year anniversary of the takeover of Hinchingbrooke Health Care Trust in Huntingdon, Cambridgeshire, by the Circle Health Partnership, which represented the first takeover of an NHS hospital by a private provider. It’s a unique and controversial experiment to rescue a hospital that was in dire straits, but it hasn’t been an easy year and BBC health correspondent Nick Triggle has even gone as far as to characterise the task faced by Circle as “mission impossible”.

This process started in 2009. At that time, Hinchingbrooke was failing financially and was the most indebted trust in the NHS, having built up debts of £40 million (almost half of the hospital’s £100 million turnover). This led to a decision by the East of England Strategic Health Authority (SHA) and then Health Secretary Andy Burnham to put the hospital out to tender and allow another organisation to take it over, a decision enabled by legislation passed in 2001 and 2006. After several NHS trusts dropped their bids during the process, by February 2010 only two private providers remained in the running – the Circle Health Partnership and Serco Health. Circle’s bid beat Serco’s in the final stages of the process and the contract was handed to Circle in November 2011, with some citing what they see as Circle’s innovative ‘John Lewis’ part-partnership structure as a potential reason for the preference over Serco. This in theory gives staff on the ground and clinicians some say over the operations of the firm and the hospital and means they share more directly in its profits (however, others have criticised this characterisation, noting that while the employees hold a 49% stake, the controlling 51% is held by high-profile hedge fund investors and managers, who are likely to retain a decisive say). Circle also already runs the NHS’s largest ISTC, in Nottingham. The decision has however been controversial – Unite the Union, the Labour frontbench and others have warned that it is another sign of what they see as creeping privatisation. At the time, however, Norman Lamb MP, current Minister for Care and Support at the Health Department, mounted a persuasive defence of the deal:

“So let’s look at the details of the deal. The transfer is for ten years. After those ten years, the deal lapses and the hospital’s management transfers back to the NHS. During that period, Circle will be paid from the Trust’s surpluses. If there are no surpluses, Circle doesn’t receive a fee. So, they will only be paid if they reduce the huge debt Hinchingbrooke has accrued over the years. The hospital has not been sold. NHS assets will remain fully-owned by the taxpayer. Its staff remain NHS staff, on NHS terms and conditions. And it will continue to treat NHS patients free of charge. Given all of these factors, surely we must be open-minded about who runs things. The critical thing with the NHS is to support the central principle that patients get care when they need it regardless of their ability to pay. The deal with Circle Health guarantees that will continue. Much better, surely, than potential closure” – November 2011, Norman Lamb MP, then PPS to Deputy Prime Minister Nick Clegg

Since then, the experiment at Hinchingbrooke appears to have had some ups, but also some downs. Initially, it was reported that Circle had pulled off the remarkable feat of getting Hinchingbrooke to the very top of both the East of England SHA’s ‘friends and family test’ patient satisfaction ranking and it’s A&E ranking, out of 46 hospitals in the region. Circle attributed this to innovative measures they had introduced in the hospital, such as a change in procedure in A&E so that patients would more see more senior doctors as their first point of contact, rather than being made to see more junior staff first. Circle have also claimed improvements have been made in relation to cancer targets, patient safety, contact time, patient feedback collection, catering, length of stay, procurement savings, recruitment and clinical board representation. However, since the initial surveys the trust has fallen back again in patient satisfaction rankings and staff satisfaction is also a problem, although in January Hinchingbrooke was still able to report having the best A&E waiting times in the nation.

While the clinical record at Hinchingbrooke has perhaps therefore been relatively good since the takeover, the fiscal situation in the trust has remained difficult and the new managers have had trouble making headway. Circle’s failures to make expected savings and to keep to its targets on this led to the resignation of chief executive Ali Parsa last year. Circle will not profit if they do not manage to get Hinchingbrooke into surplus during the ten-year life of the contract, but as Nick Triggle and others have observed there seem to be few viable options for how to meet the trust’s budget woes without seriously damaging patient care – a reported 20% staff cut was at one point mooted by Circle, and while this appears to have been rejected (likely on grounds of the severely negative clinical effects it would have had), money must still be found elsewhere.

Where this leaves the experiment with private management of failing NHS hospitals (of which there are currently thought to be around 20) is questionable. In 2011 Circle had made clear its ambitions to bid for more takeover contracts, but difficulties at Hinchingbrooke could be a brake on these plans. Professor Paul Corrigan, former special advisor to Tony Blair and reformist Labour Health Secretaries Alan Milburn and John Reid and  former director of strategy and commissioning for NHS London, wrote a pamphlet for Reform entitled Takeover: Tackling failing NHS hospitals last September, in which he called for further failing hospitals to go out to tender on the basis that previous attempts at mergers between existing trusts have failed, meaning that rescues by the private sector or semi-independent Foundation Trusts may be the only way forward for some. Conservative Under-Secretary for Health Lord Howe was largely receptive but somewhat cautious in his response to that report, warning against seeing private management takeovers as a “one-size-fits-all answer” and stressing that in some, but not all, cases takeovers by other NHS trusts would be preferable. I would imagine that the relative receptiveness of the coalition to further private takeovers could depend to some extent on the outcome at Hinchingbrooke, though it should be said that judging the suitability of a private provider to run an NHS hospital in terms of whether they can haul said hospital out of a £40 million financial mire isn’t the fairest of tests. Health spokespeople from Labour remain far more critical, but a contradiction remains between this current stance and the previous decisions to enable takeovers in the 2001 legislation and to include private providers in the tendering process for Hinchingbrooke in 2009-2010, and Labour would be well-served to return to a more flexible position.