News

Head of private firm who brokered first deal to run NHS hospital steps down

BMJ 2012; 345 doi: http://dx.doi.org/10.1136/bmj.e8321 (Published 06 December 2012) Cite this as: BMJ 2012;345:e8321
  1. Nigel Hawkes
  1. 1London

The founder of Circle Holdings, Ali Parsa, has stepped down from his role as chief executive without a permanent successor in place.

The move came as a surprise, because as recently as last weekend Parsa had been bullish about prospects. In a feature by Dominic Lawson in the Sunday Times strongly supportive of the changes that Circle has made at Hinchingbrooke Hospital, Parsa was quoted as saying, “I honestly cannot see why we should not be running many, many NHS hospitals.”1 In his resignation statement, however, he said that he needed more time for other projects.

The company itself has in the past made it clear that it regarded Parsa as vital to its future. When it listed its shares on the Alternative Investment Market in June 2011, investors were told that Parsa was of particular importance. “In the event that Ali leaves the company or is unable to perform his services to the company it could have an adverse effect on the group’s business, results of operations, financial condition and future prospects,” the document said.

There was no mention of that in yesterday’s announcement that he was to step down. Michael Kirkwood, who joined the board as chairman at the same time as the listing, said, “Ali has been a pioneer, developing a business model which empowers doctors, nurses, and healthcare professionals to redefine UK healthcare delivery for the benefit of their patients. Following on from the successful establishment of its business model, which delivers patient value in both private and NHS healthcare settings, Ali and the board have agreed that now is the appropriate time for him to assume a non-executive role. As many will know, Ali has a number of external interests and now will be able to spend more time fulfilling his passion for social entrepreneurship.”

In an interview with The Times Parsa added, “We wouldn’t be a very robust company if we were hostage to just one person.”2

Circle’s shares, which had already fallen from £1.52 (€1.87; $2.45) at the listing to £0.82 at the time of the announcement, lost a further 7% on 5 December as the market reacted to the news.

Parsa said, “Circle has a very talented executive team supported by a dedicated and focused workforce. The company is exceptionally well positioned strategically, and I expect it to be very successful in the future.”

He is to be succeeded on an interim basis by Steve Melton, who joined Circle in 2008 and is credited by the company for launching its private hospitals in Bath and Reading and for initiating the contract to run the Nottingham Treatment Centre for the NHS.

The company faces a critical year, whoever is in charge. Its efforts to turn round Hinchingbrooke have met with some success and plenty of good publicity, but it has yet to put the hospital’s finances on a sure footing. In October it asked for a £4m payment from commissioners to be brought forward to ease cash flow problems. The National Audit Office expressed concern in October that Circle had won the contract without full consideration of the risks of its proposals.3

Circle’s contract to run the Nottingham Treatment Centre, which is responsible for a major part of its turnover—£51.2m of £74.6m in the year to 31 December 2011—runs out in July next year, and the company will have to compete with others to win a new five year term. Investors who provided an additional £46m of financing earlier this year may be beginning to feel anxious.

Notes

Cite this as: BMJ 2012;345:e8321

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