Circle and Hinchingbrooke

The healthcare company Circle is in talks to pull out of its contract to manage Britain’s first privately run NHS hospital, Hinchingbrooke in Cambridgeshire, as it blamed funding cuts and a surge in demand for accident and emergency services.

Circle Holdings said funding for Hinchingbrooke Health Care NHS Trust was cut by about 10% for the current financial year and the company had spent £4.84m to support the trust. Circle is allowed to withdraw from the contract if it spends more than £5m.

The company said conditions had got worse in recent weeks and that its franchise to operate the trust was not sustainable.


Private company fails
.

Great, that’s the point of the market. That failure is possible, that it happens. In fact, it’s the most important part of said market system: that things that don’t work get ditched.

Shrug. This of course means we want to have more such contracts let out to see if anyone can come up with a better way of doing it.

42 thoughts on “Circle and Hinchingbrooke”

  1. Political incompetence by the Tories too – privately run healthcare within the NHS is the way forward, but the amateurs went and put all the eggs in one basket here.

  2. Er, private company hasn’t failed. Private company is going strong, having been released from the contract so the further losses can be socialised, rather than dumped on the company (that presumably put the lowest bid in).

    This is what is wrong with private provision of public services. Not the concept – the concept is fine. But 999 times out of 1000, the people in the companies negotiating the contracts are so much better at it than the chumps on the purchasing side that you get nonsense like this. The people doing the outsourcing don’t know what they are doing.

  3. Looks like I’ve been a little unfair to the Tories above – Hinchingbrooke was ‘privatised’ (actually, sub-contracted out) by Labour.

  4. Government negotiates a contract that allows company to terminate if the Government does certain things (in this case, putting Circle into a position where it has to inject more than a certain amount of cash), Government does exactly that, company terminates. It’s a story of government fucking up a contract rather than evil private sector profit-rape. Thankfully TTIP will ensure that governments can’t weasel out of the consequences of such actions.

  5. @ VC

    Yes, I was going to correct you – but your point does stand. The failure of this franchise is a huge blow to the tories, who’d like to see a lot more of that sort of thing.

    If they wanted to establish a working model then they’d have a whole bunch of contracts on the go, and would be working properly with the contractors to make sure the contracts delivered as desired (or to establish an evidence base to show where certain models don’t work).

  6. I think “shrug” is a bit hasty. Having an organization pull out of running a hospital is more complicated than having an unpopular restaurant go bust. The costs involved could be very high, and it’s not obvious the benefits of private involvement outweigh them.

  7. How strange – especially after all those glowing reports in The Daily Failograph & the endless Circle PR bollox about being “the best hospital in the country”.

  8. It could well have been. You have noticed that they lost £5 million running it? Therefore the hospital had £5 million more spent on it than the NHS would have done?

  9. It could well have been

    Says who? Not what the CQC are saying, is it? People who swallowed & repeated the Circle PR nonsense might like to reflect further on the issue. They could start here: http://tinyurl.com/ogbxn6a

    I don’t have time to argue today, but frankly, LE is right: “shrug” is an inadequate response, especially given current demands on acute care. This was a DoH-enhanced franchise, and Circle bit off more than they could chew – or indeed, more than they could spin.

  10. It’s not a market. There are no consumers imposing market forces with their spending choices. This is just government funding going into private pockets, under a contract system. Which isn’t a market.

  11. Lost_Nurse

    So profit or loss is a true measure if success or failure in medical provision then is it? Because the issue here is purely financial and you seem to think it impacts on private/public debate.

    And please note this privately run hospital hasn’t been accused of the sort of evil neglect and incompetence your public sector colleagues at Mid Staffs caused their patients to endure. Or for that matter the lynch mob attempt to shut the complainants up.

  12. bloke (not) in spain

    “I don’t have time to argue today” – L_N

    That’s always been a puzzle. How in the busy, busy world of the public sector health provision, a public sector health provider never seems to fail to pick up on health related posts on an obscure economics blog.

    ( sorry about the “obscure” tag, Tim. But let’s be honest. You’re not exactly le mot de jour in the carp angling or #Mumsnet worlds, are you?)

  13. The system is corporate socialism and it works about-what- 5% better than state socialism. IanB is correct. Come complaining about market failure when there is a market involved.

  14. I don’t know what Circles profit margin was, but I doubt it was anywhere near 10% of turnover. After all, surely the profits are supposed to come from efficiency savings. To set a bench-mark of 10% before the service see any improvement would seem very high, to my mind. Is the public sector really that obviously, demonstrably inefficient?

    So what is the effect of under-funding? Either deficits in the public sector, or losses in the private sector. This failure tells us precious little about whether such services should be out-sourced to the private sector, but gives much information about changes in usage. That’s a whole lot different.

  15. @ nautical nick
    Circle didn’t have a profit margin: it had a loss margin.
    Loss of £4.84m to date; contract reminable if and when losses exceeded £5m.
    Services improved (yes, the improvement is spun but despite the innuendo by lost_nurse it was substantial since it wasa a basket case before Circle took over), cost to NHS reduced (Guido Fawkes says by £23m, but he’s biased so I shouldn’t rely on him too much).
    So cutting funding by 10% was utterly stupid. It will cost the NHS more to run it than to let Circle do so.
    ” Is the public sector really that obviously, demonstrably inefficient?” – when it comes to choosing where to make cuts, the answerr is “Yes”

  16. nautical nick,

    “Is the public sector really that obviously, demonstrably inefficient?”

    Talk to anyone who works in software about the sort of figures that get thrown around about the cost of government projects. Or software developers who’ve worked in government departments who describe them as “holiday camps”.

  17. Actually (and God forgive me for saying this) I think Ian B and Mr Ecks are essentially correct here.

    In the first instance supply of a service – which healthcare is regardless of the Lost_Nurses of the world – and payment for that service are different things. The provision of the service should never have been nationalised, the massive, unresponsive, producer-cpatured NHS shouldn’t exist. (BTW, I believe in the national, tax-funded, treament based upon need insurance system that we have).

    We are where we are though. There seems little point in tendering the same old service, organised the same old way, unless there is a serious attempt with no genuine attempt to bring real reform and bring in a producer-purchaser transaction. At the moment patient’s journey through the ehalthcare/social care system is a linear stage journey where one producer passes that patient on to the next stage. Health care in this country is something that is done to you, by the NHS. The next stage is the stage you are told is the next stage and you take it when the producer tells you that you are taking it, usually when the capacity is available.

    So inviting private contractors to step into one of those stages changes nothing in practice. The advantage is suposed to be that the private contractor will find efficiencies – how? How exactly? Are inefficiencies so very great that the gov’t can get the same service much cheaper, with room left over for an investor’s return? I’m sorry, but i really don’t think so. Circle finally came a cropper when funding was reduced. Its contract allowed it to pull the plug; lucky lads. Because the people who thought they could bring something new to the party here and square those… circles were not good businessmen. And Andy Burnham’s belief that he had hit on a great new scheme to extract value for the nation is as misguided as his constituents’ that they have a decent MP.

    As i have watched family and friends wind their way through the system I ahve always asked myself the same question: who is acquiring or commissioning these services for them? Where is their GP now? Why is this taking so long? Why have the consultants buggered off for the weekend? Why must they stay up to a week longer in that bed because “we’re waiting for the doctor/demi-god”?

    So, unless there is a better way of paying for healthcare than tax, meaning one that doesn’t ration based upon ability to pay – just because, then all reform must start with “how do we get most value for taxpayers’ money?”, followed by “who gets to spend it, who decides how it is spent?” The later reforms will follow from how those people want the money spent.

    I would suggest, as a starter, creating patients’ boards. If we all get to decide who we insure our car with and if that insurer on our behalf then commissions repair work on our vehicles, then why can’t we do the same with our healthcare?

    My point here is is that surely ‘reform’ starts at the beginning of the process; not the end.

    A couple of other thoughts: –

    1. As my father went through the last 6 months of his futile battle with prostate cancer and my mother and brother struggled to push him through a systme they had never before experienced and which chewed them and spat them out I kept asking myself, “where is his ‘patient manager’?” “Why doesn’t the GP surgery keep him as theirs’?”

    2. What would be wrong with a system based upon reimbursement?

    These are just thoughts; I don’t actually claim to have the answers. But I do know that something is wrong with healthcare in the UK.

  18. @ BiG
    Look at Hinchingbrooke pre-Circle
    Circle was taking a gamble that it could sort it out. I might expect that Circle’s bankers insisted on the stop=loss clause because the bank lending to someone taking on a clinical and financial horror story is on a “heads you win,tails we lose” bet and wanted to limit the downside risk. So, given the alternatives, Burnham accepted the deal.

  19. bloke (not) in spain

    Ironman asks “where is his ‘patient manager’?”

    Maybe I found an answer to that, yesterday, when I rang the old man’s doctors’ to renew his prescription. I queried whether it was usual to just keep renewing prescriptions for 7 different drugs when his doctor doesn’t seem to have seen him for at least 18 months.
    Apparently “If he thinks his condition has changed he should make an appointment to see the doctor”
    “My father’s 89, housebound & his memory’s lousy. he wouldn’t know if had changed.”
    “Then the family should contact the surgery”
    “Up until very recently, his family was a thousand miles away. And, of course Mum died 2 years ago, but she had Alzeimers. But he does have a couple carers pop in”
    “Oh. Well they would know to contact us, if needful.”
    “But the carers are employees. They’re paid to do caring. Not to be responsible for my father’s health needs. Who has the duty of care, here?”

    The answer to your question & mine, Ironman, seems to be, according to the NHS: “Not us guv!”

  20. Bloke (not) in Spain

    I’m glad Lost _Nurse doesn’t have time to argue. I’m glad all of the bastards don’t have the time to argue that our health service is the envy of the world. Because I don’t have time to listen to them anymore.

  21. So Much for Subtlety

    Ironman – “The advantage is suposed to be that the private contractor will find efficiencies – how? How exactly? Are inefficiencies so very great that the gov’t can get the same service much cheaper, with room left over for an investor’s return? I’m sorry, but i really don’t think so.”

    How? Getting rid of the lesbian bereavement officers for one thing. Government services are always captured by their employees. Which means they are overpaid and under-worked. They are also over-administered.

    It is in no one’s interest to fight this within the NHS because everyone benefits from the nudge’n’wink jobs for life. So the bureaucracy grows and the services get worse. It may be possible for the State to be relentlessly focused on both the bottom line and customer service, but I have not seen it.

    So the private sector is the only way to be efficient. Any government service becomes an endless waste of time, filling out forms proving everyone has had the requisite diversity training, while stroppy unionists bring everything to a halt whenever they like – and you can’t even fire the mentally ill.

    “Circle finally came a cropper when funding was reduced. Its contract allowed it to pull the plug; lucky lads. Because the people who thought they could bring something new to the party here and square those… circles were not good businessmen.”

    Actually no. They did the sums and realised they could provide a better and cheaper service. Which they did. But then the government unilaterally changed the rules by reducing their funding. Thus changing those sums. So they exited. They did bring something else to the table. It is just that the government’s bureaucrats did not like it and so got rid of it.

    “As i have watched family and friends wind their way through the system I ahve always asked myself the same question: who is acquiring or commissioning these services for them?”

    Naturally the purpose of the system is not to treat patients but to employ bureaucrats. So there is no need to ask that question.

    “I would suggest, as a starter, creating patients’ boards.”

    Another layer of bureaucracy?

    “If we all get to decide who we insure our car with and if that insurer on our behalf then commissions repair work on our vehicles, then why can’t we do the same with our healthcare?”

    How about a deductible? Patients have to pay the first £100 of any treatment. But the state will provide full insurance for any non-routine treatment beyond that. Payment is made by the state insurer to any provider that the patient chooses? Private, public, doesn’t matter. The patient can go where they like – and pay more if they want.

    Naturally the Unions would hate it and Polly would scream blue murder. But how is this a bad scheme?

  22. So Much for Subtlety

    Ironman – “Two parties to the contract; no coercion involved; ergo acceptable.”

    Three parties to the contract. Don’t forget the taxpayers who pay.

  23. That’s always been a puzzle

    I comment on the small % of posts that interest me, in my own time (i.e. outside of working hours) – no great mystery, really.

    yes, the improvement is spun

    “Spun” is an understatement of some magnitude. Circle made extravagant projections of efficiency gains, and everybody from the Fail to the FT simply repeated their PR statements, more-or-less verbatim, without challenging them. Now, I’m no fan of the CQC – but their report is evidence enough of a significant disconnect between the media bullshit and actual reality.

    As for the wider point: however you organise healthcare – deductible, front-end charging, whatever – the challenge for us remains the same: social care for the elderly is significantly under-resourced, and cuts in that sector are a major component of the current log-jam in acute care. If you regard that as vested interests bleating for more money, fine. You don’t need to take my word for it – just ask Circle.

  24. @ lost_nurse
    I am neither the Fail nor the FT but I am *not* nobody so kindly say the press when you mean the press. I
    The media, particularly the Grauniad is cherrypicking the CQC report which says “care” is inadequate to suggest that everyrhging is awful, whereas the CQC judged three sectors as “good”, two as “Requires improvement” and two, out of seven, as “inadequate. So yes, there *is* ” a significant disconnect between the media bullshit and actual reality.” Circle improved Hinchingbrooke but not by enough.
    As to your second point “social care for the elderly is significantly under-resourced, and cuts in that sector are a major component of the current log-jam in acute care.”
    No, they are a minor component. Misuse of resources is a bigger component – when the NHS and thew local authorities’ social service departments waste millions (yes, I do mean millions) trying to dump the bill on each other; when their “family-friendly” policies mean that two job-sharers only do three-quarters of a job between them; when more time is spent on administration than on doing the job; when the cost of the NHS pension scheme is over half the nominal salary for females; for females in local authority social services it is 40% of salary; when hospitals notify social services at 4 pm on Friday that a patient is “ready for discharge” knowing that there isn’t a cat’s chance that carers can be organised for Friday evening and the weekend in less than an hour just so that they can blame Social Services for “bed-blocking” and don’t have to employ extra staff at the weekend to care for a new, ill, patient.
    The NHS is the only department (apart from the miniscule DFID which hasn’t had to take a real terms funding cut.
    You are *not* under-resourced – you just waste too much of the resources you are given
    You are *not*

  25. No, they are a minor component.

    I work in a major city hospital. A large number of acute beds are being taken up by elderly patients who are medically stable, but we are unable to discharge them to suitable settings. I was specific about cuts in social care budgets, not the NHS. The example given of a hospital “gaming” a friday discharge primarily in order to blame social services is laughable – there is simply isn’t the slack in the system for playing silly buggers (as so ably documented in this recent Telegraph article: http://tinyurl.com/osy4dgg). You are on another planet if you pretend otherwise.

    As for the CQC: I have separate criticisms of the CQC, but regardless of your squeaking, the report gives the lie to the PR bullshit repeated so eagerly by all & sundry. I take no pleasure in this fact (though it’s a welcome corrective to a lazy press) – it’s just another example of the ongoing clusterfcuk that is NHS reform.

  26. “The example given of a hospital “gaming” a friday discharge primarily in order to blame social services is laughable”
    Only to you. It is NOT , repeat not, funny at all.

  27. Only to you. It is NOT , repeat not, funny at all.

    Why would I find it funny? “Laughable” because it’s a ridiculous statement. I’ve seen plenty of discharges delayed because it’s not been possible to organise/re-start suitable packages of care… but the idea that clinical site managers sit around actively gaming the situation in order to pass the blame to Social Services, and thereby – verging on tinfoil hattery, here – avoid having to admit a new patient is just that: laughable. In my Trust, the CSMs breathe fire – gawd help you if you were found to be needlessly keeping a patient in an acute bed.

    Major hospitals across the country are having to play musical trolleys with emergency/critical care patients – that is the reality. And yes, lack of social care capacity is having a knock-on effect upon bed occupancy.

  28. John77

    Give up. When asked to put forward reform Lost_Nurse said simply “more money”. When the producer has his nose in the trough he is loathe to take it out; Lost_Nurse is our very own proof of this.
    It’s funny, sorry laughable, that the same troughers who decry anyone providing healthcare “for profit” are not offering their own services for free. Indeed industrial action for more pay is common in the NHS. Seeking more pay is fair enough, but it’s hypocrisy then to effect to feint at the mention of money.
    And then there is Lost_Nurse the apologist for Mid Staffs; sickening.

  29. @ lost_nurse
    You deem a factual statement ridiculous based on your total ignorance of which hospitals I am describing.
    Once again, I do not find it funny.

  30. And then there is Lost_Nurse the apologist for Mid Staffs; sickening.

    I don’t think so, however much you wish it to be the case. I’ve seen (and reported) neglect – there is no excuse for it.

    It doesn’t change the basic fact: you could execute the individuals involved pour encourager les autres – but unless you have properly-staffed wards, vulnerable patients will be at risk of poor care.

    To put your vitriol to good use, let’s have some numbers: let us take, for example, a 24 bedded general medical ward (think: a large number of elderly & highly-dependent patients, with multiple/complex needs – needless to say, many will be frightened & distressed; a significant proportion will probably be confused and mobile with it).

    Given your firm opinions on how lazy we all are, you must have some pretty specific ideas on staffing levels. It’s not just about numbers, of course: it’s about proper leadership from senior nurses, and a culture of compassion and care. But safe numbers provide the basis.

    So, for above scenario, how many trained nurses and care assistants would you regard as an adequate level of staffing, for the safe provision of care?

    I will be most interested in your reply – numbers, please.

    which hospitals I am describing.

    Name and shame them.

  31. “Name and shame them”
    Insider information so I cannot, but one of them was the one where I arrived with a scalp wound requiring stitches (due to a kerbstone, in a patch of shadow from a badly-sited streetlamp, sticking up a couple of centimetres above its neighbour and a steel fencepost 5 feet away when I was walking fast across the sideroad at 8pm in winter) which directed all arrivals to a car park requiring all arrivals to feed more cash (not notes) than any normal person carries in coins for the average A&E waiting time. I was rescued by a stranger who exited while I was trying to find a solution and passed me his “pay and display” ticket having made a pessimistic estimate of waiting time. If one waits longer than expected at the A&E one can be hit with a massive parking fine; that hospital admitted that it had a bad performance on A&E waiting times and still understaffed its A&E department.
    You are trying to tell me that their hospital accountant was not gaming the system
    [One may only sue a local authority for its failure to maintain pavements if someone else has previously made a formal complaint (that exemption doesnot protecxt any firm in the private sector) ]
    The more decent relatively local A&E department (which still had a “pay and display” car park but not as greedy) has been closed down.

  32. Insider information so I cannot

    A pity – *if a discharge was deliberately obstructed in order to pass the buck & prevent a new admission, then I hope your inside source acted on that information accordingly. Read the above Telegraph article – it’s lengthy, but worth it (even if it concludes with the standard ‘graph editorial line). I don’t work at QEH Brum, but the article captures – exactly – the current working atmosphere in major hospitals. IME, and in these present circumstances, any individual nurse attempting to game “patient flow” (I hate this phrase) in the fashion you describe would swiftly attract the harsh scrutiny of both bed managers (trying to get sick patients in) and the discharge liaison team (trying to get stable patients out).

    You are trying to tell me that their hospital accountant was not gaming the system

    I don’t support hospital car-parking extortion, in any form. But it’s something of a leap to suggest that a hospital is deliberately under-staffing its ED in order to maximise car parking revenue – Kafka-esque though they are, the financial penalties for breaching A&E targets have a habit of concentrating accountancy minds. That’s not to deny the increasing number of dubious surcharges (hospital TVs are a classic example – thankfully a free service here). Incredibly, some hospital car parks are operated as part of locked PFI contracts.

    The more decent relatively local A&E department…has been closed down.

    There will be more of this, with predictable consequences.

  33. @ lost_nurse
    Not much of a leap to someone who can read numbers, which I can do in seven laguages.
    That hospital is levying extortionate car parking fees and pays people to go round looking at windscreens to see whether the outpatient has left within the expected time instead of payingh fewer people to care for patients.
    You just seem not to understand that pushing people who turn up without enough spare change to the next hospital reduces the waiting time statistics.

  34. Not much of a leap to someone who can read numbers, which I can do in seven laguages.

    What is this? A job interview?

    You just seem not to understand that pushing people who turn up without enough spare change to the next hospital reduces the waiting time statistics.

    Yes, we convene a meeting every day for this specific purpose – there being a marked correlation between the amount of spare change carried and clinical acuity. It’s a kind of crude auto-triage: if a person is willing and capable of driving to the next hospital, then they are probably (nay, statistically – albiet via a NCP-sponsored research paper) not exsanguinating or having an acute MI. It’s worked wonders! – and now we are now the best hospital in the country for emergency care (you can read about us via our press releases in the Daily Mail).

    FFS, I hate hospital car-parks as much anybody (obstructive for patients, visitors and staff alike) – but you need to lay off the kool-aid.

  35. I’m not the one drinking kool-aid.
    You’re complaining about lack of resources when the public sector overpays its workers by 20-odd% (after adjusting for the higher qualifications of public sector workers and their higher pensions) relative to private sector pay; the NHS *still* wastes money paying full-time union officials out of its staff budget; it hires people to go round looking at tickets in windscreens a decade after private parking firms introduced pay-on-exit; it agrees a contract change with GPs so that they don’t have to work at weekends and *ten years* later still doesn’t have enough A&E staff rotaed for weekends.
    The excess cost of NHS pay&pensions exceeds the whole elderly social care budget and it on top of that it wastes several £million by employing a mob of accountants to reallocate costs onto the Social Services budget which comes out the same pocket (the taxpayer via Osborne’s HMRC).

  36. You’re complaining about lack of resources when the public sector overpays its workers by 20-odd%

    I wasn’t always NHS – although I didn’t follow the conventional career pathway of my university contemporaries. I can safely say that my boss – senior sister, emergency admissions – is underpaid by a significant margin. I use the simple (admittedly subjective) criteria that those who like to sound off about her T&Cs would probably piss themselves with fear if they had to face her daily responsibilities. By comparison with her private sector managerial equivalents, she gives the taxpayer good value – and being that acute care is the kind of thing where economic platitudes tend to get a bit woozy (collaboration helps to keep costs down, as true of social-insurance systems as it is of the NHS), good luck demonstrating how nurses of her standard and experience are overpaid.

    Historically, the NHS has provided healthcare at less-than continental levels of cost. That system is being screwed, with an attendant rise in bureaucracy & expense. I note that one reason why NuLav launched their disastrous contract with GPs was because they thought OOH cover could be done cheaper & better, via the kind of reform that has landed us with Serco, Harmoni, and the rest. To be blunt, they simply didn’t accept what [decent] General Practices were managing in terms of caseload. My dad was a rural GP – I know exactly what kind of service they were providing. In many respects, it’s exactly the same bullshit reformist tendency exhibited by DoH in their relationship with Circle – you can’t criticise one, and then defend the other.

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