Privately managed NHS trust will survive despite slow progress in cutting deficit, Circle says

BMJ 2012; 345 doi: (Published 12 December 2012) Cite this as: BMJ 2012;345:e8432
  1. Adrian O’Dowd
  1. 1London

The first ever NHS trust in England to be franchised out to the private sector will succeed in the long term, despite making much slower than expected progress in cutting its large deficit, MPs have been assured.

Witnesses gave several such assurances during an angry evidence session of the parliamentary Public Accounts committee on 10 December as part of its inquiry into franchising of NHS trusts, but the committee said that it was still concerned about wasted public money.

In February this year the management of Hinchingbrooke Health Care NHS Trust in Cambridgeshire was franchised out to the private company Circle for 10 years—a first for the NHS—after the trust had accrued debts of around £40m (€50m; $64m).1

The committee’s inquiry was prompted by recent National Audit Office reports into financial difficulties at Hinchingbrooke and at Peterborough and Stamford NHS Trust, both published in November.2 3

The report on Hinchingbrooke said that although the trust’s performance in meeting targets on cancer and emergency department waiting times had improved since February, it had generated an in-year deficit of £4.1m by September 2012—£2.2m higher than planned.

MPs asked witness Ali Parsa, former chief executive of Circle, who earlier this month announced that he was resigning and becoming a non-executive director,4 why he had left his job so soon.

The committee’s chairwoman, Margaret Hodge, Labour MP for Barking, said, “Why are you going six months into an absolutely groundbreaking exercise into trying to franchise out a hospital?”

Parsa replied, “I was not sacked. When we took over Hinchingbrooke it had clinical and financial issues. Today, clinically it is doing very well. I have a number of other projects that I think are very worthwhile.

“We are nine months into this, and I think we are doing a very good job. It is like judging Mo Farah after 1000 metres in a 10 000 metre race. Judge us as we deliver in the longer term.”

Neil McKay, chief executive of the East of England strategic health authority, also giving evidence, said, “I am pleased that in its first few months Circle has given a lot of priority to quality issues. I don’t believe the Hinchingbrooke franchise will fail.”

MPs said that the decision to allow the franchising of management at Hinchingbrooke to occur at the same time as a private finance initiative scheme was approved to build a new hospital for Peterborough and Stamford (which had a debt of £46m in 2011-12) had led to overprovision of hospitals in the area and compromised the financial viability of both trusts.

David Flory, deputy chief executive of the NHS in England, also giving evidence, denied this, saying, “Although we’ve heard that the numbers aren’t at this stage where we would expect them to be, and that’s of great concern to us, our expectation remains that the financial viability of Hinchingbrooke will be achieved through this franchise arrangement.”

Fellow witness Una O’Brien, permanent secretary at the health department, said, “It is very early days, and to judge this on a micro-basis of month by month is very tough on the team taking over Hinchingbrooke, because if you talk to the clinicians there and the patients what you are actually seeing is significant improvement in the quality of care.”


Cite this as: BMJ 2012;345:e8432