Charlie Cooper of The Independent reports that the only NHS hospital run by a private company has asked for a £10m tax-payer funded bailout.
Hinchingbrooke Hospital in Huntingdon, Cambridgeshire, is due to be handed back to the NHS in March after the company outsourced to manage it. Circle, said it could no longer cope with rising demand and funding cuts.
However, the hospital trust’s latest financial statement reveals Circle is expected to leave behind a deficit of between £7.7m and £12m.
Under its contract, the company is only liable to pay £5m to cover deficits incurred at the trust, and has already paid £4.8m.
The hospital has now applied to the NHS Trust Development Authority (TDA), a Government health authority responsible for leadership of 91 NHS bodies, for £9.6m in “public dividend capital” funding, and also expects to borrow extra cash from the TDA.
Circle’s announcement last month that it would be withdrawing from the contract to run Hitchingbrooke – widely seen as a test case for NHS outsourcing – came hours before a highly critical inspection report by the Care Quality commission (CQC).
The company has said the “inadequate” rating it received did not influence the decision to withdraw from the contract, instead blaming a 30 per cent year-on-year increase in the number of patients arriving at A&E, alongside a drop in the hospital’s national and local funding.
CQC inspectors said that standards of care at the hospital were inadequate, highlighting risks to patient safety, poor leadership and understaffing in key areas such as children’s A&E.
Circle has challenged many of the CQC’s findings, but the hospital has since been placed in special measures.
The company took on the contract to run Hinchingbrooke in 2011, inheriting debts of nearly £40m, with the aim of making a profit by taking a slice of any annual surplus the hospital achieved.
However, despite receiving good feedback in some patient surveys, the hospital struggled as demand from a growing and ageing population rose across the NHS, and funding for the health service was squeezed.
Eighty per cent of NHS foundation trusts – those which have a greater degree of financial autonomy – were reporting deficits at the end of the second quarter of this financial year.
Many major hospitals have now refused to accept next year’s NHS spending plan, warning that further cuts to their funding for some services would be unsustainable. The NHS is planning to redirect more of its budget away from hospitals and into underfunded areas such as GP services and mental health.
Circle said despite the bailout plan, it had saved the taxpayer money overall. “[OUR] financial track record at Hinchingbrooke is strong,” a spokesman said. “We’ve saved the taxpayer £23m and kept our word on the original bid by making 5 per cent savings each year. But the landscape changes around us, with high A&E admissions and reduced funding. That’s why the trust now requires further investment.