When the going gets tough, the tough get going. But in private sector healthcare they sometimes head for the exit door. It should be no surprise that Circle’s much-trumpeted contract to become the first such firm to manage a troubled NHS district hospital – Hinchingbrooke in Huntingdon – has run into trouble as wider pressures test the system’s resilience.
Ali Parsa, the British-Iranian engineer and entrepreneur who set up Circle Holdings in 2004 with an eye on NHS contracts, talks a good game, but he stepped down as chief executive after the firm was floated in 2012 amid claims that he had been fired. Steve Melton, the current chief at Hinchingbrooke, took the heat on BBC Radio 4’s Today programme on Friday morning.
“A shock and a shame,” said the local Tory MP, Jonathan Djanogly, because the hospital’s service was much improved. He blamed the local debts with which Circle was saddled, excessive expectations and being targeted by health unions for failure – which is obviously nonsense because union jobs as well as patient services are now again at risk.
Certainly Hinchingbrooke won some awards and proudly made a fuss about them with the help of the oligarch media. But as I noted, the financial numbers didn’t quite add up (subscription) and staff were troubled by the new management style. You can find Circle’s own statement here.
On Friday, Melton said the 30% increase in A&E patients this year had overwhelmed the department. (It’s far from the only one, is it?) So has a 10% reduction in funding, a problem which also affects the whole NHS. What may be the key to Circle’s retreat is the fact that the regulator, the Care Quality Commission (CQC), has been inspecting Hinchingbrooke and is clearly unhappy. More bad news may be pending.
It’s tempting to regard the Hinchingbrooke saga as a simple indictment of the former health secretary Andrew Lansley’s belief in the “marketisation” of much of the NHS. But it’s more complicated than that.
As Tory MPs will be quick to point out, it was a Labour health secretary, Andy Burnham, who put the contract out to tender in 2009 when the hospital faced closure, though Lansley was in charge by the time Circle formally won the bidding.
In the post-Christmas A&E row, Labour has been saying “Save our NHS” while the Tories have been responding, “You brought in the private sector first”, and that the sector now has 6% of NHS contracts compared with 5% in 2010. That’s true enough: Alan Milburn and Tony Blair, backed by their special adviser Simon Stevens (brought back from the US to be NHS chief executive last year), wanted to use private contractors to force NHS teams to raise their game.
John Reid, during his time as health secretary, speculated that the private – or voluntary – sectors might eventually have a 15% share of the £100bn-plus NHS budget. In the last few days Burnham has said: “We let the market in too far.” When he was in charge under Gordon Brown, he started to row back: the NHS would always be the “preferred provider”, he told managers.
But Stevens’ new NHS plan, backed by most senior politicians, envisages extra money in return for more efficiency – including greater diversity of providers – as the NHS struggles to close the looming £30bn gap between supply and demand; all those oldies, all those impatient young health “consumers” and self-harming lifestyle victims (drunks are topical at Christmas) who go to A&E because they can’t see the GP or use the new 111 service for help.
Unlike many friends and colleagues, I’ve long been persuaded by more diverse systems in advanced health economies like France, Australia and Canada that the NHS would benefit from a bit more private and voluntary-sector provision. The Americans have too much market, we have too little and it shows in the slow pace of adaptation in the way the NHS works in the 21st century.
In an FT interview this week, Stevens stressed the need for new thinking about IT – not a happy chapter in NHS history – to be brought to the fore. He’s right. The system has to get smarter and we as patients must get smarter too. The private sector has a role to play in this, but Conservative ideologues who cling to a naïve faith in the market need only look to the US to understand its limits in a humane healthcare system.
The private sector can try, and we can all watch out for the good ideas it may bring to the management of healthcare. But it’s also obvious than it will fail more than it succeeds in a 24/7 universal healthcare system, taxpayer-funded and free at the point of use. The NHS can’t walk away as easily as Circle seems to want to do. That’s the lesson from today’s statement.
