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No-one held accountable for Hinchingbrooke failure – PAC

Oversight of the first privately-run NHS hospital was “poor” and “inadequate” and no-one has been held accountable for the consequences, the Commons Public Accounts Committee (PAC) says. 

In February 2012, Circle took operational control of Hinchingbrooke Health Care NHS Trust, becoming the first private company to run an NHS hospital. 

However, in January 2015, Circle withdrew from the contract, just three years into the 10-year franchise, and expects to hand back responsibility for running the trust to the NHS by the end of this month. 

Launching the ‘An update on Hinchingbrooke Health Care NHS Trust’ report, PAC chairman Margaret Hodge MP said: “It was clear at the time the franchise was let that the trust would only survive if it secured substantial savings, but the savings projected in Circle’s bid were overly optimistic and unachievable. 

“The Department later told us that it was confident of success and played down the high degree of risk involved in this novel contract. However, the total deficit incurred during the franchise will be well above the level that Circle is contractually committed to cover, leaving the taxpayer to pick up the rest of the bill.” 

The Committee added that accountability “ultimately failed” and the contract has been poor. 

The MPs noted that while the DH’s finance director accepted that he was ultimately accountable for approving the contract, officials in the then Strategic Health Authority who developed the franchise arrangement have not been held to account; the chief executive received a generous redundancy package and has since taken up another role in the health service. 

Also, the NHS Trust Development Authority (TDA), which was tasked with monitoring progress, did not oversee the high risk venture effectively. 

Responding to this claim, a NHS TDA spokesman said: “We will consider the Public Accounts Committee’s report and recommendations to take forward the learning from the Hinchingbrooke management franchise to improve our oversight and intervention mechanisms. 

“The Trust is currently receiving intensive support for quality improvements through our special measures intervention package.” 

The MPs added that the continuing dispute about the findings of the Care Quality Commission’s recent inspection, which rated the trust’s services as ‘inadequate’, coupled with the ongoing discussions about ending the franchise, risk distracting the trust from continuing to improve the care it provides. 

They said it is important that the trust does not lose focus on continuing to improve the quality of its care, and they look to the NHS TDA to take an active role in ensuring that this does not happen, particularly during the expected transition from Circle to the NHS. 

“We are also concerned that lessons on awarding and managing major contracts will not be learnt from this venture. The Department told us that no trusts are currently considering an operating franchise model, but the NHS continues to award major, high value contracts,” Hodge added. 

“Public bodies will not achieve value for money from their contracts until they become more commercially skilled – both in letting contracts in the first place, but also in ongoing contract management.” 

But a DH spokesman said that Hinchingbrooke Hospital had severe problems for over a decade which needed sorting. 

“After rigorous competition in a process that began in 2009, Circle had the most comprehensive turnaround plans, which included taking on £5m of risk to the taxpayer,” he said. 

“Under close scrutiny, the trust since made some improvements, but patients rightly expect high standards and we make no apology for our rigorous new inspection regime identifying underperformance wherever it is found.” 

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