Norman Lamb MP writes: Why we need to keep an open mind on Hinchingbrooke

Last week’s announcement that the management of Hinchingbrooke Hospital would be transferred to Circle Healthcare was always going to be controversial – a hospital with debts approaching £40million, whose situation had become so perilous that it had to be rescued by an external provider. Both Labour and Unison quickly exclaimed against this as ‘privatisation,’ despite the fact that the Labour Government had initiated the tendering process.

Circle is a 49% employee-owned organisation, different from the traditional private company. It makes them a part-mutual organisation run in the same manner as John Lewis. Put simply, they are part-owned and part-run by doctors, nurses and all other staff. Liberal Democrats – and Liberals beforehand – have long espoused the value of employee ownership. This goes back to the great Jo Grimond. We are not a statist party, which believes that the state always runs things better. Our focus should surely always be on the interests of the patient. Locally at Hinchingbrooke, the RCN supports this, the local GPs support it and there is strong local public support.

By the time Labour left office in 2010, no NHS-only bidders were left in the running to take over the management at Hinchingbrooke. The only choice the Coalition had was between Circle, Ramsay, and Serco. Given those options, it is clear to me that the best result both for Hinchingbrooke Hospital and for the patients it treats would be to transfer its management to the only part-mutual competitor left in the running. And let’s make one thing perfectly clear: for all their rhetoric and bluster, Labour would have made exactly the same choice. After all, it was Labour’s current Shadow Secretary of State for Health, Andy Burnham, who made the decision to ‘franchise’ the hospital – a decision he was able to take under powers created by Labour in 2001. Clearly, as with their handling of the economy, it seems like the current Labour frontbench has developed a worrying case of amnesia when it comes to remembering the details of their thirteen years in Government.

So let’s look at the details of the deal. The transfer is for ten years. After those ten years, the deal lapses and the hospital’s management transfers back to the NHS. During that period, Circle will be paid from the Trust’s surpluses. If there are no surpluses, Circle doesn’t receive a fee. So, they will only be paid if they reduce the huge debt Hinchingbrooke has accrued over the years. The hospital has not been sold. NHS assets will remain fully-owned by the taxpayer. Its staff remain NHS staff, on NHS terms and conditions. And it will continue to treat NHS patients free of charge. Given all of these factors, surely we must be open-minded about who runs things. The critical thing with the NHS is to support the central principle that patients get care when they need it regardless of their ability to pay. The deal with Circle Health guarantees that will continue. Much better, surely, than potential closure.

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13 Comments

  • It may be right that this is an inevitable consequence of Labour’s policy, but that doesn’t seem to be a substantive defence to the criticisms of the move (that haven’t just come from Labour, but interested health professionals too).

    As for Circle, there’s no doubt it is an interesting corporate structure and could be successful in this contract. But I have little doubt that the floated majority share would take precedence over employee views. Being better than Serco isn’t top of my list of things I want the entity running my hospital to be!

    As for the terms, if anything I would say that it would have been better just to pay them flat or pay for performance. They are a company and would not take this on just to provide the service (unless they are taking a massive loss leader risk). So paying it from surplusses creates a massive incentive to produce those surplusses. At a time when NHS funding is being strained, from where will these savings come?

    And of course, immediately it matters not a jot who owns the hospital if it provides a good public service. The point, not addressed, is whether this sort of deal puts that service – that you rightly recognise as paramount – at risk in the long term.

  • Tony Dawson 17th Nov '11 - 1:57pm

    So are you saying that no one working for Circle will be paid a penny or a pound from NHS funds during the next 10 years? How far down the management tree will this self-denying ordinance run?

  • As reported in the Guardian & Observer, Circle admit themselves that their business model means care might suffer because of their drive for profit. Circle has, for the past three years, made losses of £20M or greater. They are not a mutual, really, as they are 51% owned by hedge funds, run by an ex-Goldman banker and considered to have a “risky” and “ruthless” business model. They also have donated at least half a million pounds to the Tories.

    So a company who admit care may suffer, who are making huge losses and are described as “risky” are now going to control an NHS hospital with lives in their hands? Will LibDems be able to guarantee that, if one life is lost due to Circle’s operating practices, their contract will be void?

    The LibDems pre-2010 election, the ones I voted for, would have never stood for this.

  • It is not a valid argument to say that just because the labour Government was going to do it – the decision cant be ciriticised. The Labour Party were wrong to start it and we were wrong to continue it

    In an case we should be looking to get rid of the absurd structure that the Labour party and the Conservatives before them have set up – designed to lead to the privatsation of the NHS – something both Labour and the Conservatives have been aiming at.

    This is a successful hospital – that has excellent patient outcomes. They can only be said to have failed because the system is set up to make them fail – not because they have failed in reality.

  • patricia roche 17th Nov '11 - 3:58pm

    What happens if I need treatment and there is no ‘surplus’. Does it mean that I become too expensive? We are fast approching a fragmented Health Service where no one will know the truth apart from those who will suffer because profits will come before patients. If it does not work, where will Lib Dems be in the Polls.

  • Watching You 17th Nov '11 - 6:14pm

    This is kind of a misleading article, Circle were chosen by a panel of 40, made up mainly of MP’s & Local politicians (32) with 8 others inc Unions and a patients group…..NO ONE of the public was consulted and there was NO strong public support, in fact there is a 10,000 signature ANTI…petition . This was a process and not a consultation and the fake “Dr” Dunn is not as portrayed a medical Dr but one of economics. This “deal” is a fudge and the loss making,hedge fund backed,tory donor, offshoring for profit Circle Health is not the “Social Enterprise” or “john lewis” company it claims to be. This is indeed a bad deal for Hinchingbrooke following on from the betrayal from the 80/90s Tory and the late 90’s to 10 Labour Government’s and again by this rotten coalition. Circle have already announced they will sweat the assets for their own units gain, like x-ray,catering,sterile services & Pathology and A&E/Maternity are on the cards to go as are 200 managers….good deal….. I think not….They will be using the outdated increased activity model and be paid the “bung tariff” Hinchingbrooke NHS were NEVER afforded and always denied from 2006……

  • Simon McGrath 17th Nov '11 - 8:48pm

    You are far too defensive. It should make no differnce who runs hospitals, if they are free and offer good quality service.

  • How much money is Circle worth and how big a loss did they make last year? On that basis if I were a politician I’d keep my head below the parapet on this one. I can buy shares in my employer, many colleagues do, but that doesn’t make it a mutual. Some transparency wouldn’t go amiss, but I suppose the details will come out in the enquiry after it goes pear shaped.

  • It may be true that this was inevitable following Labour’s policies but that doesn’t seem much of a substantive defence to the criticisms (that weren’t just from Labour but interested health professionals too).

    As for Circle, there’s no doubt it is an interesting structure and could be successful. But I have little doubt also that the floated majority share would take precedence over employee views. Being better than Serco isn’t top of my list of things I want the entity running my hospital to be!

    As for the terms, if anything I would say that it would have been better just to pay them flat or pay for performance. They are a company and would not take this on just to provide the service (unless they are taking a massive loss leader risk). So paying it from surplusses creates a massive incentive to produce those surplusses. At a time when NHS funding is being strained, from where will these savings come?

    And of course, immediately it matters not a jot who owns the hospital if it provides a good public service. The point, not addressed here, is whether this sort of deal puts that service – that you rightly recognises as paramount – at risk in the long term.

  • “We need to keep an open mind”

    “It is clear to me that the best result … would be to transfer its management to the only part-mutual competitor left in the running. And let’s make one thing perfectly clear: for all their rhetoric and bluster, Labour would have made exactly the same choice.”

    Politician-speak, dontcha love it?

  • The open mind theory?

    More like a ‘closed book’ theory. Circle will maintain services, employees will keep NHS conditions, the £40M debt will be reduced and ‘Circle’ will pay dividends to shareholders….Wonderful (by that I mean I’m wondering how this ‘perpetual motion machine’ will work).

    Enlighten me, please.

  • Funny how my post which outlines several negative aspects of Circle is still in the moderation queue 24 hours later..

  • jOHN fRASER 18th Nov '11 - 9:58pm

    it is plain daft to call ann organisation that only has a minority workers stake in any way a mutual . This is just more free marketeering dogma from that right wing neo clasical fringe that unfortunately seems to have taken over the liberal deocrats

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