Hinchingbrooke profit-sharing deal ‘good value’ for NHS

WITHOUT the rescue plan that will see Hinchingbrooke’s new owners take the first �2million a year of any operating surplus, the Huntingdon hospital would have been facing closure, service cuts or an �80million subsidy, the NHS said.

Circle, the partnership that took over management of Hinchingbrooke three months ago under a 10-year franchise, compares the objective of clearing Hinchingbrooke’s �39m debt through operating surpluses with the �56m deficit generated by Peterborough’s new City Hospital “for which presumably the NHS has written a cheque,” said chief executive Ali Parsa.

Details of Circle’s profit-sharing arrangement emerged last week in a letter deposited in the House of Commons library by junior health Minister Earl Howe and include the company banking the first �2m of any operating surplus and sharing anything beyond that with the NHS.

The letter says the �100m-a-year hospital would have to make surpluses totalling �70m over the 10-year term of the management franchise to clear the accumulated �39m “debt”.

But Circle pointed out that, not only had it agreed not to take a share of any surplus in the current year, but the hospital was forecast to make �10m annual losses. Only after those losses were avoided would the company start to be rewarded for its success.

Dr Stephen Dunn, from NHS Midlands and East, said: “We examined bids from several NHS organisations and private sector companies. We drove a hard deal. This was the best one on the table.

“Without this deal we would have been facing closure or cuts to services, or a large subsidy. Circle will only take out a fee if the trust is in surplus, and it will be responsible for any deficits should any arise. That is a major benefit for the taxpayer, and we are confident there will be no compromise on quality and safety.”

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His colleague Andrew Macpherson, who negotiated the deal, said the profit-sharing arrangement was good taxpayer value and the contract could provide a template for rescuing other loss-making hospitals. It was also continuing to attract international interest, including a visit last week from Japan’s Health Minister.

“The truth about Hinchingbrooke is clear,” Mr Parsa told The Hunts Post. “It was going to lose �200m over the next 10 years and was completely unviable. They [the strategic health authority] chose our solution.”

Mr Parsa points out that in just 100 days in charge Circle has already started to show significant improvements.

“Already, it has gone from having the worst to the best A&E in the region; patient safety has improved by over 70 per cent, and cancer targets have been met for the first time in months.

“The big news is that Hinchingbrooke is proof that there’s an alternative to cuts and closure for struggling NHS hospitals across the country. Today is a day to celebrate that an NHS hospital has been saved.”

He said consultants were now queuing to apply for jobs in Huntingdon, with more than 100 applications in the pipeline, efficiency in the orthopaedic department had improved markedly, and colorectal surgery – lost to Addenbrooke’s last year after a report by the Royal College of Surgeons – was on its way back to Hinchingbrooke.

He also hopes Huntingdonshire stroke patients will once again be cared for at Hinchingbrooke after initial 24-hour stabilisation at Addenbrooke’s in Cambridge.

“What we have seen in orthopaedics needs to happen across every department in the hospital,” Mr Parsa said

Circle will celebrate its first 100 days in charge tomorrow (Thursday).

“We are getting the very low-handing fruit now, but we shall see a fundamental transformation of the hospital over the next 10 years. Even if there are still some people who are not won over, every day we are seeing more and more people becoming engaged.

“The clinicians have taken on the leadership: they are amazed how much has changed how quickly.”

But Mr Parsa believes Hinchingbrooke’s success is seen as a threat by other parts of the NHS, and he is critical of the additional costs imposed by automatic promotions in the service.

“I think good people should be promoted, and bad people should get demoted or retrained,” he said.

But trade unions remain concerned about Circle’s involvement. Phil Gooden, Unison regional organiser, said: “It was something we had grave concerns about before the contract was awarded that the priority was to recover the debt and the company would not be taking fees until that had happened.

“It now seems the profit motive comes first before the debt starts to be repaid. We are appalled by that.”

The profit/loss-sharing deal

After Year 1, if Hinchingbrooke Hospital makes a surplus:

The first �2m in any year goes to Circle

After that, between �2m and �6m, Circle’s share is 25 percent

Between �6m and �10m, Circle gets 33 per cent

If the hospital has a deficit:

Circle bears the first �5m

If the deficit exceeds �5, the NHS can terminate the contract without penalty