Circle Holdings pulls out of running Hinchingbrooke Hospital as pressure from A&E demand grows

The decision came after several NHS hospitals across Britain declared major incidents

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Circle Holdings, the company running Britain’s only privatised general hospital, today said it was handing it back to the taxpayer due to government spending cuts and the unprecedented increase of A&E patients.

Circle shares plunged 16.5 per cent to 50.25p on the news, which comes as a savage blow to the reputation of the company led by Steve Melton.

Stock market-quoted Circle Holdings took over the running of the troubled Hinchingbrooke Health Care NHS Trust in early 2012 after a tender process started by the previous Labour government.

But it has since been harshly criticised by the health regulator for serious failings including condemnations of cases where "staff treat patients in an undignified and emotionally abusive manner", failure to follow hand washing guidance and failing to lock away medicines from the reach of patients.

Circle today blamed its decision to hand back the keys on the "significant changes in the operational landscape for NHS hospitals" since the tender process began in 2009.

It said this included "unprecedented increases in accident and emergency attendances, insufficient care places for patients awaiting discharge, and funding levels that have not kept pace with demand".

It added that conditions have "significantly worsened in recent weeks", meaning it faced making increased investment beyond the £4.8 million it had already put in “aggregate support payments”.

Under the drafting of the Circle contract, it is allowed to terminate the franchise if these payments go beyond £5 million. Amid state funding cuts of more than 10 per cent, Circle faced making "substantial" extra investment for the foreseeable future, it said.

Chairman Michael Kirkwood said: "It is with regret and after considerable thought we make this announcement. The board has unanimously concluded that current conditions in the healthcare economy and regulatory environment are unsustainable for a franchise operator."