Hospital lifesaver Circle loses extra £2.2m

The first private company to take over the running of a debt-laden NHS hospital was never properly challenged on whether the savings it planned were achievable and increased its losses in the first six months, a report says.

The management of  Hinchingbrooke NHS Hospital in Cambridgeshire was passed to Circle in a franchise deal last February on the basis that it would eliminate its cumulative debt of £39m over ten years.

Today the National Audit Office says the company’s claims may have been over ambitious after results for the first six months  to last September, showed the 223-bed hospital’s losses rose to £4.1m, £2.2 million more than planned.

However, the hospital improved clinical performance with shorter waiting times in A&E and for cancer treatment.

Margaret Hodge, chair of the Commons Public Accounts Committee, said the Department of Health needed to “learn the lessons from the mistakes” involved in the deal with Circle before agreeing to any further franchise arrangements.

“While there have been welcome clinical improvements, it is essential that pressure to make savings does not simply lead to cuts in services in future,” she said.

Ali Parsa, chief executive of Circle, said the hospital had won “unprecedented positive reports” for its clinical performance and there was “little doubt” it would break even next year.  “Not bad for a hospital that was written off as a clinical and financial basket case.”

The NHS Confederation  said it was “unrealistic” to make judgments about Circle’s performance at “such an early stage”.