Circle’s NHS failure: where now for the private sector?

Circle’s decision to withdraw from its contract to run Hinchingbrooke Hospital in Cambridgeshire will have an immediate impact, says King’s Fund chief executive, Chris Ham.1 “I think this sounds the death knell for private sector companies to take on management franchises.”

He says part of the lesson is there is “no money to be made out of taking on struggling hospitals, at least for the foreseeable future.”

Such hospitals, especially district general hospitals like Hinchingbrooke that lack the “diversity of income” of bigger hospitals, require time and “herculean effort” to put back on their feet.

Ham tells The BMJ, “If you’re being offered the opportunity to run a challenged hospital with a history that goes back many years, with issues around quality as well as finance and you’re approaching it with a commercial, private sector mindset it’s not a difficult calculation to make.

“I think already we’ve got evidence that Serco and Virgin are having second thoughts about whether they want to be in a market like the NHS, where there is so much evidence of financial distress.”

Stephen Collier, the former boss of private provider BMI Healthcare, chairs the NHS Partners Network, which represents independent sector providers of NHS services. He predicts all parties—private sector and NHS—will steer clear of franchising “this side of a general election.”

But, he suggests the “doability” of franchising in the current environment is “more a political question than a results question,” or at least that these are separate considerations.

He explains, “It’s a setback [for the model], but I don’t think it’s the end of the road. The wider point …