Updated: Circle to withdraw from Hinchingbrooke contract

The announcement came ahead of a “quality summit” on the findings of a long awaited Care Quality Commission report on its inspection of Hinchingbrooke Hospital, which the regulator has confirmed was taking place today. These summits bring together regulators, providers and their commissioners to agree improvement plans based on the findings of an inspection.

The contract has been a key symbol of private sector involvement in the NHS in recent years.

In a statement published on the Circle website today, chief executive Steve Melton said: “After considerable thought and with great regret we have concluded that Circle’s involvement in Hinchingbrooke does not have a sustainable future in its existing form, and have entered into discussions with the NHS Trust Development Authority with a view to withdrawing from the current contract.”

Mr Melton cited “unprecedented [accident and emergency] attendances”, insufficient bed spaces for demand and a 10.1 per cent funding cut in the past year as factors in the decision.

He said: “With these pressures on the system, to maintain the standards our patients deserve requires significant further investment on top of the £4.84m and considerable resources Circle have invested in the hospital to date.”

A separate statement issued by Circle said it had the right to terminate the franchise in the event that it is required under the contract to make aggregate support payments to Hinchingbrooke in excess of £5m. 

“These conditions have significantly worsened in recent weeks and, save for the £5m cap on aggregate payments, it is highly likely that Circle would be obliged to make further support payments that would exceed the £5m cap,” the statement added.  

Mr Melton suggested the pressures on the trust could only be resolved through “joined up reform in Cambridgeshire across hospitals, GPs and community services”. 

While he supported the new models of care outlined in the NHS Five Year Forward View, he said: “These potentially exciting reforms are too far into the future.”

HSJ revealed in September that a Care Quality Commission inspection of the trust had raised serious concerns about care quality, management and culture. The final report has not yet been published, but is expected in the near future. Circle today criticised the regulator and its anticipated conclusions.

Mr Melton said: “We understand their report will be published soon, and fully expect it to be unbalanced and to disagree with many of its conclusions.

“We recognise the importance of a regulator focussed on quality, but we are not the only hospital to find their process problematic. We believe that inconsistent and conflicting regulatory regimes compound the challenges for acute hospitals in the current environment.”

In August Circle reported that the financial losses built up by Hinchingbrooke in its first two years under private management were just £150,000 short of the £5m ceiling at which the contract could be terminated. Circle’s half year report in 2014 admitted to “uncertainty over Hinchingbrooke’s profitability over the next year”, raising the possibility that the limit could be broken this year.

Circle chair Michael Kirkwood said: “The board has unanimously concluded that current conditions in the healthcare economy and regulatory environment are unsustainable for a franchise operator.”

He added: “Circle remains a committed partner of the NHS at our elective treatment centres and independent hospitals. Our clinician led and employee co-owned model has a proven track record of efficiency and quality improvement, and we will continue to play a substantial role in the NHS.”