Withdrawal of independent provider from Hinchingbrooke Hospital franchise contract

On 9 January 2015, Circle, an independent healthcare company, announced plans to withdraw from its 10-year contract to run Hinchingbrooke Health Care NHS Trust.

Circle had taken on an operating franchise to run the trust in February 2012, the first time that the management of an NHS trust had been given over to a private company.

The chief executive of Circle, Steve Melton, announced that Circle's involvement in Hinchingbrooke did not have a sustainable future and cited unprecedented accident and emergency attendances, alongside funding cuts, as key factors for the withdrawal.

Hours after Circle's announcement, the Care Quality Commission (CQC) published an inspection report, which rated the trust as 'inadequate'. As a result of the report, Hinchingbrooke Health Care NHS Trust was placed in special measures in January, although Circle contested the judgement and claimed that the CQC's report contained a large number of factual inaccuracies.

A month after Circle announced its plans to withdraw from its 10-year contract, Hinchingbrooke Health Care NHS Trust warned that its deficit could exceed £12m in 2015 and that it had applied to the NHS Trust Development Authority for £9.6m of public dividend capital funding.

Inquiry

An inquiry into the Hinchingbrooke contract by the Public Accounts Committee (PAC) was published on 18 March 2015. The PAC suggested that, while the contract had been innovative, it was ultimately an unsuccessful experiment and there had been a lack of accountability for the consequences of its failure. The PAC also suggested that the NHS Trust Development Authority had not taken effective action to protect the taxpayer.

The PAC had previously warned the government that Circle's bid had not been properly risk-assessed and had been based on overly optimistic and unachievable savings.

Another collapse

Later in 2015, another major contract collapsed after being deemed 'financially unsustainable'.

On 3 December an £800 million outcomes-based contract collapsed after the NHS-owned 'leader provider' consortium revealed it would be handing it back to commissioners. The contract – for older people's care in Cambridgeshire and Peterborough – was one of the largest ever tendered by the NHS.

A joint statement by Cambridgeshire and Peterborough Clinical Commissioning Group and UnitingCare stated that, while the innovative model of care for older people and people with long-term conditions was thought to bring benefits for patients and the broader system, the current arrangements were no longer financially sustainable.

Later developments

Hinchingbrooke Health Care NHS Trust was taken out of special measures in 2016 and merged with Peterborough and Stamford Hospitals NHS Foundation Trust to form North West Anglia NHS Foundation Trust in 2017.