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Hinchingbrooke Health Care Trust

Circle faces £10m hole in Hinchingbrooke budget

FINANCE: Circle will have to cut costs at Hinchingbrooke Healthcare Trust by 10 per cent if it is to break even next year, it has emerged.

The private sector company took over the running of the trust in Cambridgeshire last Wednesday – the first such arrangement in the NHS.

A progress report on Circle’s business plan for 2012-13, presented to the trust board last week, predicts income could fall to £98.7m next financial year. Meanwhile, costs will increase marginally, leaving the trust with a £10.1m hole.

“Based on the most likely scenario, the quantum of savings required is circa £10m in 2012-13. This represents circa 10 per cent of total trust revenues,” the report says. It goes on to say that a number of initiatives are being developed to fill the hole.

Circle has said it expects to lose money on the deal in the first few years so may not be looking to make that level of savings in the first year. But it will have to significantly cut costs or increase revenue before it starts to make any profit on the 10-year franchise to run the trust.

HSJ revealed last year that Circle’s potential losses on the deal had effectively been capped at £7m. Surpluses would be shared between the company and the NHS – with the latter’s share likely to be used to run down Hinchingbrooke’s £40m historic debt.

The trust had a £2.2m deficit in the year to date at the end of December. It continues to forecast a break-even position at the end of the financial year but board papers show that it only achieved £1.8m of cost improvement programme savings in nine months against a target of £4.5m in that period.

NHS Midlands and East said the agreement with Circle ensures a full range of high quality services will remain at the hospital as long as commissioners request them. But last week commissioners decided the hospital will no longer be used for initial treatment of stroke patients.

NHS Cambridgeshire said hyperacute stroke care would be concentrated at Addenbrooke’s Hospital in Cambridge and Peterborough Hospital.

Previously, some patients were treated at Hinchingbrooke but in future they will initially spend around three days in another hospital before being transferred for acute care and rehabilitation. Overall emergency admissions are expected to decline by 1 or 2 per cent as a result. 

Readers' comments (8)

  • There is a cynical view circulating that senior figures have set Circle up to fail so spectacularly, such that the next time a private company running an NHS hospital is even suggested will be in the 23rd century.

    Circle have lost two of their three ISTCs, are losing >£5m pa on their flagship Bath hospital, and are likely to lose the Nottingham ISTC on renewal.

    What happens when they hit the £7m capped loss (about November if we believe the article). Do they accept bigger and bigger losses to save face, or do they pull out, showing that the privat sector cant do better than the NHS

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  • We need much more of this and it could be the salvation of the NHS. Simply transfer deficits to the altruistic or barking mad. The rest will then survive longer. Its a really good plan and reverts the NHS back to the charitable approach prior to 1948. I'm all for it.
    If anyone reads this could you please get them to let me out of this padded cell for a bit................

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  • I thought a private company took over the running of Good Hope Hospital in Birmingham a few years ago ...

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  • Anon 3.48pm, pass me the crayons, I've got some colouring in to do.....

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  • You're correct 5:49 and an unmitigated disaster that was too, despite the CEO having the patronage of Sir David. A bail out was necessary then and it will be again with Circle. I'm off to join the Taxpayers Alliance.

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  • If Circle knew what it was doing it wouldn't have signed on the dotted line.

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  • I think Circle (Ali Parsa MD) knew very well what he was signing up to, it was planned I assume, as the first steps in how Circle with its credo can run the NHS better than the NHS as has been preached by AP for some years now. We will sit back and watch the story unfold..... all very predictable

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  • Circle deserve everything they get. They claim to be the future of the NHS, yet have an appalling record of cherry-picking lucrative casework for their ISTCs, under ridiculous contracts guaranteeing them income, regardless of the numbers treated.

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