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Circle pulls out of first privately run NHS hospital as A&E crisis bites

Circle is in talks to pull out of its contract to manage the first privately run NHS hospital, blaming falling funding and the surge in A&E attendances making it “no longer sustainable under current terms”.

The company took over Hinchingbrooke Health Care NHS Trust in 2012 but on Friday it said it could no longer afford to stay involved.

The company said in a statement: “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.”

The statement also said that the decision had been made as “conditions have significantly worsened in recent weeks”. Many other hospitals have faced similar problems, with A&E waiting times targets over the Christmas period falling to the worst level since records began and over 15 hospitals having to declare major incidents to deal with the surge of A&E attendances. However while the other publicly run trusts battle on, Circle has made the decision to pull out of its contract.

Under the terms of the contract, the company had the right to terminate its franchise in the event that support payments it has to make to run the hospital exceed £5m. To date, Circle said it had made payments totalling about £4.84m, and in the current financial year, funding for Hinchingbrooke had been cut by 10.1%. It is currently in discussions with the NHS Trust Development Authority to ensure an orderly handover of the hospital.

Circle will be required to make a final support payment of £160,000 to the hospital, and is liable for costs resulting from the termination of the contract, though these are capped at £2m.

Steve Melton, the 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."

The hospital was one of the first to be inspected under the health watchdog’s new process, and a critical preliminary report was published in the autumn. A further report is imminent but Circle said it expected the report to be “unbalanced” adding that it had found the inspection process “problematic”.

“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,” the company said.

Chris Hopson, chief executive of NHS providers, said: “Circle’s announcement confirms the massive competing pressures under which the NHS is delivering patient care and services. Circle is in no doubt that the situation has changed significantly since it became involved in 2009 with key factors making it impossible for them to continue. Circle is clear about the factors that have created an unsustainable situation for them and are handing the management of the trust back to the NHS – an option not available to or sought by NHS leadership teams.

“The Hinchingbrooke situation demonstrates the unsustainable pressures the NHS is facing today and proves the need for urgent change. We have an agreed vision for the future in the Five Year Forward View which can only be achieved if properly funded.  But it is clear that the pressures of underfunding, record uncontrolled demand, increasing strain on out of hospital services and regulatory burdens have reached breaking point with Circle and are unsustainable in the NHS. We urgently need political agreement on how the pressures of today will be reduced to provide the NHS with space to deliver high quality patient services whilst it moves towards the new models of care and fulfilling the promise of the Five Year Forward View.”

NHE asked the Department of Health for comment but they had not responded by the time of publication.

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