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Exclusive: NHS trust under private management faces deficit again

Private healthcare provider Circle is expected to have to dip into its own coffers for the second year running to cover a deficit at Hinchingbrooke Health Care Trust, HSJ has learned.

HSJ understands the trust is likely to record a year end deficit in the region of £600,000 to £700,000 for 2013-14.

Such a figure would be a considerable improvement on the £3.5m deficit recorded by the trust in 2012-13, the first full financial year in which Hinchingbrooke was under Circle’s management.

Hinchingbrooke

Source: Alamy

However, it would also mean the company will have injected more than £4m into Hinchingbrooke in two years, having originally pledged to bring the trust into the black in the first year of the management contract.

Under the terms of the landmark 10 year franchise deal, Circle is responsible for balancing the trust’s books. The agreement stipulates that if Circle is forced to put more than £5m into Hinchingbrooke, either the trust or company can terminate the contract early.

A Hinchingbrooke spokesman said the deficit had to be viewed in context of what the company inherited and emphasised the clinical improvements it had made over this period.

He said: “By the end of next month, we will have reduced our £10m annual deficit by more than 90 per cent, successfully delivered efficiency savings of 6 per cent per year, more than twice as large as average for foundation trusts, and we are expecting to break-even during 2014 for the first time in years, safeguarding crucial services for the future.”

“Over the last two years, we’ve made great progress in transforming patient care at Hinchingbrooke Hospital, reducing serious incidents, becoming [Care Quality Commission] compliant for the first time and putting Hinchingbrooke back into financial balance,” he added.

HSJ understands the expected deficit for 2013-14 was driven in part by a need to bring in locum staff to deal with a recent rise in GP referrals to hospitals in the Cambridgeshire region.

Hinchingbrooke is likely to retain its status as the only NHS hospital run by a private provider under a franchise for some time, following news last week that a tender process for the running of George Eliot Hospital Trust was to be abandoned.

Circle had been one of three bidders left in the process alongside South Warwickshire Foundation Trust and Care UK.

HSJ understands the decision does not mean the NHS is abandoning management franchising as an option for NHS trusts altogether. It remains an option for Weston Area Health Trust, in the South West.

 

Readers' comments (19)

  • A pity the headline for this story is negative; the news from the hospital, as reported in the article, is positive. And I hear from a patient that the service is good too.

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  • Dear Anon 7:35. Look at their staff survey results, you will 'hear from the staff' that they think its very bad.
    It may be worth having a look at how much consultancy Hinchingbrooke have bought from Circle partners, that may explain why it isnt such a bad contract after all from their perspective.

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  • Why is there never any HSJ coverage of the hedge funds that control Circle Holdings plc, and the fact that these funds are owned by individuals who have donated six figure sums to the Conservative party in recent years?

    With the huge sums at stake long term, the annual losses mentioned in this article appear chickenfeed.

    For example, Lansdown Partners own 29% of Circle Holdings and whose founder, 'Sir' Paul Ruddock has donated over £690,000 to the Conservatives.

    And we wonder why some people believe there is an agenda to marketise the NHS.

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  • re Anon 9.50

    Of course the staff think its very bad.
    Has there ever been a staff survey from anywhere in the NHS which came to the conclusion that morale was NOT at its lowest ever ?

    Moan moan moan

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  • What has happened to the £40 million legacy debt that was the main reason the Trust was franchised in the first place

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  • Such a small defecit for such a small trust which is very close geographically to both Cambridge and Peterborough is an outstanding result. Well Done Circle!

    10:04 - Have a look at Circle's accounts and you will see that they make enormous losses every year. I don't think their investors are taking anything out - in fact its the exact opposite. The only way they will make any money is to play a very long term game.

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  • Not surprising that staff don't like it as they are now suddenly faced with the realities of working in a commercial environment. Cambridgeshire NHS staff better getused to it as more is coming in terms of the demise of CCS!

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  • Anon 11:16. Our Staff Survey results show further improvement this year (and they were very high to start with). If we were a private operator we might even make the BBC news.

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  • I think the fact Circle has not pursued the George Eliot option puts paid to (whatever that means!) anon 10.04's arguement.

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  • Anon 11:55 Circle was one of three shortlisted contenders for taking over George Eliot Hospital. The tender process was stopped before the final stage got underway by the NHS Development Authority and the GE Board, not Circle.

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  • Such a small defecit for such a small trust which is very close geographically to both Cambridge and Peterborough is an outstanding result. Well Done Circle!

    10:04 - Have a look at Circle's accounts and you will see that they make enormous losses every year. I don't think their investors are taking anything out - in fact its the exact opposite. The only way they will make any money is to play a very long term game.

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  • The services have improved immeasurably from a patient perspective both in terms of quality but as importantly the patient experience is like no other hospital I have experienced in the UK. When you attend for an X Ray or an out patient appointment you are seen on time with no waiting and by the person you expected to see. As an inpatient the care was excellent, we new exactly what was happening when and what was going to happen next and who to speak to if we had a problem. The food was excellent. Having looked at the staff survey results they have improved this year and the morale was very low before Circle took over. Why do people always want to turn good news into bad this is a massive improvement on the past as someone else has commented and compared to the surrounding trusts.

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  • I guess the more negative commentators are pointing out the difference between what Circle promised and what they delivered. It's a reaction to the thought that the private sector has some form of magic pixie dust which solves long-standing NHS problems.

    On staff morale- it's striking the difference between the best trust: The Marsden, and the worst. It's not the same everywhere.

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  • Just tried to read the detail in the Hinchingbrooke Board papers as I had assumed a bigger deficit. Surprised to find that they only meet in public 4 times a year, so we will have to wait until the summer for the final position - is that allowed in the franchise agreement?

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  • If this defecit really is only £600k and its after paying out a pretty hefty Public Dividend (not the same thing as repaying the debt), and assuming this puts Hinchingbrooke on track for a surplus next year then I really do think Circle will have achieved something no NHS management team could achieve.

    As for repaying £40m of legacy debt, only an idiot would have believed that was possible as it would require an average surplus of £9m a year over 10 years (circle keep the first £5m). Wait a minute, the TDA did believe it when they appointed Circle!

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  • anon 1.53pm
    I agree - I doubt there was ever a realistic expectation that the 40m debt would be cleared, however the TDA did not appoint Circle - they were appointed by the SHA!

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  • privatisation is clearly the way forward to a better XHS

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  • Since the staff survey results for Hinchingbrooke have been raised in the debate it might be helpful for readers to be aware that the national results from last October can be found here. They do not support either the super critical comments or the claim that the Trust under Circle is above average compared to other acutes. It appears to be making some progress from a low base. Circle may be referring to their own more recent survey data but this is not really comparable. Ciricle do have some innovative ideas and a mixed employee ownership structure but more time is needed to assess if this has made a significant difference. Re the claim that staff surveys always show declining morale this is not the case. The most recent NHS Staff Survey showed small improvements on most indicators with most staff willing to recommend the NHS and rising levels of staff engagement despite undoubted pressures. But let us not let facts get in the way of a good polarised polemic.

    http://www.nhsstaffsurveys.com/Page/1008/Latest-Results/Acute-Trusts-A-to-I/

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  • But if this were any other Trust they would be deemed too small to survive and forced to merge, as is happening in the rest of the Country, even to those which are in surplus. How are they different?

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