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Circle Holdings pulls out of running Hinchingbrooke Hospital as pressure from A&E demand grows Circle Holdings pulls out of running Hinchingbrooke Hospital as pressure from A&E demand grows
(about 5 hours later)
Circle Holdings, the first private company hired to run a hospital for the NHS, has pulled out of Hinchingbrooke hospital in Cambridgeshire saying that it is unsustainable. 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.
The decision came after several NHS hospitals across Britain declared major incidents due to overwhelming demand for accident and emergency services. 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.
Circle said the combination of that “unprecedented” demand, fewer places for patients, budget cuts and conflicting regulatory regimes meant the deal was no longer viable. 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.
“We have now reluctantly concluded that, in its existing form, Circle's involvement in Hinchingbrooke is unsustainable,” said chief executive Steve Melton in a statement. 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.
The news will be a blow to government plans to increase the role of private companies in British healthcare. 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.
Circle took on Hinchingbrooke in early 2012 when the hospital was facing closure. 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 said it had since transformed the hospital, having invested in the quality of care, staff and facilities, but cannot afford the extra funding needed to cope with the jump in A&E admissions. 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”.
It said funding had been cut by about 10 percent this year and providing the standard of care patients deserved would require it to spend more than the £5 million of additional investment it was contractually required to provide. 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.
Additional reporting by Reuters 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."