An NHS contender to partner with George Eliot Hospital Trust has said it may have to withdraw its bid, following signals that the trust might opt for a Hinchingbrooke-style franchise deal.

In February, George Eliot announced it was holding informal talks with seven suitors from the public and private sectors, after concluding it was unlikely to reach foundation trust status as an independent organisation.

The Warwickshire-based provider has not yet said whether it favours a merger, a takeover or a franchise of the kind which made Hinchingbrooke Health Care Trust the only NHS general hospital under private management.

But one prospective partner, South Warwickshire Foundation Trust, says it has been asked by George Eliot if it would consider a franchise bid in place of its current merger proposal. Such an arrangement would see a contract awarded to manage the operation of the trust for a set number of years.

South Warwickshire’s board last week decided it would pull out of the competition rather than bid for a franchise contract, its chief executive Glen Burley told HSJ last Thursday.

“We’ve been asked whether we’d still be at the table if they did decide that was the only model [on offer],” he said. “The decision we took yesterday was that we would stick to our guns and say no, we ought to create one organisation.”

He said tendering for a franchisee would be “the only way the private sector could make a proposal to run George Eliot Hospital”.

“I imagine they’re trying to get to a situation where they can compare private sector proposals with public sector proposals,” Mr Burley continued. “But I think we have to stick to what we think is the right model, and if that means we’re excluded then so be it.”

Seven organisations have expressed interest in the trust, including Burton Hospitals, South Warwickshire and the Dudley Group foundation trusts, and private providers Care UK, Circle and Serco.

South Warwickshire, which currently runs community services across the county and acute services in the south, had proposed merging with George Eliot to further develop its integrated care organisation model.

A franchise contract posed the risk that “you’re forever managing contractual boundaries, rather than having a free hand to work with local GPs to redesign services,” Mr Burley added. “We appreciate that they’ve got some financial and clinical challenges, and whoever takes those on, I think, needs a reasonably free hand to transform services.”

A George Eliot spokesman said: “A franchise model is not necessarily a private model and we would still expect to receive bids from NHS organisations.

“The one assurance I can give is that any decision will be transparent and made in the best interests of local people.”

He added that the trust’s preferred “organisational model” would be described in an outline business case at the end of the month. It expects to select a preferred partner in the autumn.