The former strategic health authority director who led the franchising of Hinchingbrooke Health Care Trust has defended the decision.

Stephen Dunn, currently West Suffolk Foundation Trust chief executive, was a director at NHS East of England SHA from 2007-11 then NHS Midlands and the East until 2013. In these roles he led decisions on Hinchingbrooke’s future and the tender process.

Stephen Dunn

The franchising of Hinchingbrooke was ‘the right decision at the time’, Stephen Dunn said

He told HSJ NHS East of England started considering the approach in 2008 when the NHS’s circumstances were very different.

Mr Dunn said: “At the time of working through the solutions to Hinchingbrooke’s problems nearly six years ago, we needed to find a solution for [the trust’s] debt, and to bring in the best placed partner with a plan to secure sustainability for the medium term.

“It was the right decision at the time, and we selected the best provider after a rigorous process.”

This had included working “both with the NHS and independent sector” providers, he said.

Circle had “not been able to make [its plan] work” due to a series of increased pressures, he said.

“The environment has massively changed since 2007-08 – we are now in a very different place.”

Mr Dunn said these changes included a “really tight financial environment for several years”, increased staff costs to improve care quality following the Francis inquiry, and “coping with an increasingly elderly frail population”, he said.

“There are major challenges in the acute sector and that is reflected in the decision Circle has taken.”

Mr Dunn said other potential organisational options for Hinchingbrooke, such as those now outlined in the NHS Five Year Forward View, were not thought plausible at the time.

He pointed out that, financially, the NHS had been “protected” under the deal. Circle will have made at least £5m losses under the contract when it exits and, under the deal, is also subject to a £2m termination fee.

“We transferred risk [from the NHS] for the first time,” he said.

Asked whether independent sector franchise arrangements had a future, Mr Dunn said: “People will be looking closely at this experience and the lessons from it, and what this means for the future of franchising and chains.”

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