9 January 2015
Last updated at 10:23
Circle became the first private firm to manage an NHS hospital three years ago
A company which became the first private firm to manage an NHS hospital says it wants to “withdraw from its contract”.
Circle Holdings, which operates Hinchingbrooke Hospital in Cambridgeshire, said its franchise is “no longer viable under current terms”.
The move comes amid funding cuts and pressure on the casualty department, Circle said.
The Department of Health said it was “disappointed” in the decision.
Circle took on Hinchingbrooke in early 2012, as it faced closure.
It said there had been unprecedented increases in accident and emergency attendances, a lack of care places for patients awaiting discharge, and that funding had been cut by 10.1% this financial year.
Circle has made payments to the trust totalling about £4.84m and could be required to make a final support payment of approximately £160,000, the firm said.
Under the terms of its 10-year contract it has the right to end the franchise if the amount of money it has to put in to the trust exceeds £5m.
Chief Executive Steve Melton said: “This combination of factors means we have now reluctantly concluded that, in its existing form, Circle’s involvement in Hinchingbrooke is unsustainable.”
Circle chairman Michael Kirkwood said the decision had been made “with regret and after considerable thought”.
By Nick Triggle, BBC health correspondent
Circle has quickly looked to place the blame on the way things have worked out with Hinchingbrooke Hospital on the current conditions in the NHS, citing rising AE attendances and the squeeze on funding.
Those issues have almost certainly had a role to play in the decision to pull out of the contract.
But there is undoubtedly more to it than that – after all the current pressures have not just appeared from nowhere. They were building when the idea of the contract started being discussed in 2009.
When Circle took over, there were question marks over whether the firm was being too ambitious in claiming it could turn the hospital around.
Hinchingbrooke had been called a “basket case” with historic debts of nearly £40m.
Within six months of Circle taking over, losses were twice what was forecast. However, as time went by improvements to services were made.
But still they could not escape the past. The Care Quality Commission has just carried out an inspection of the hospital.
It is yet to be published, but Circle knows the contents. It is widely expected to be critical.
The GMB Union said the Circle takeover had been the “disaster waiting to happen when you get the private sector involved in running a hospital”.
Spokesman Steve Sweeney said: “It’s not overly surprising to see them try to pack their bags, cut loose and walk away.
“Obviously having the major backers walk away leaves [the hospital] in a very vulnerable position …. we’re hoping that there’s some planning in place to aid and assist that.”
Circle chairman Mr Kirkwood said despite the issues at Hinchingbrooke, the company “remains a committed partner of the NHS at our elective treatment centres and independent hospitals”.
A spokesman for the Department of Health said: “There will now be a “managed transfer of the running of the trust and patient care will not be affected.”
The company said it is in discussion with the NHS Trust Development Authority to ensure an “orderly withdrawal”.
Circle runs private hospitals in Bath and Reading, which both accept NHS patients, and it also has NHS treatment centres in Bedfordshire and Nottingham.