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.


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.