Circle's NHS Takeover

Circle’s NHS Takeover

15 November 2011

Circle Healthcare’s 10 year contract to run Hinchingbrooke hospital got plenty of media attention over the weekend, and this is not without reason – it marks the first major move of a private healthcare company in taking over NHS services. It is not the first private sector involvement of course – private companies have been used to provide some services and treatment centres for a while now, and then there are contracted-out services such as cleaning and catering. However, this deal marks a significant departure into a new area, where a private company is actually managing NHS staff and is directly responsible for critical services such as A&E.

So who are Circle Healthcare? John Lister has written an excellent piece on the company in The Guardian which there is little point me repeating here, but it is definitely a worthwhile read. Circle are not the ‘cuddly John Lewis-style partnership’ that they often claim to be, so much as mostly being owned by bankers, hedge funds and private equity, based in offshore tax havens. That’s right – any money that Circle makes from the taxpayer is not going to have any tax paid on it, it will simply flow out of the country.

Circle cannot really hope to run Hinchingbrooke more cheaply than the current management unless they cut staff or services. It is interesting that the contract signed with them has not been published. Ten years is a long time though, and one can imagine that they will not be allowed to fail. Perhaps, as in other privatisations, they will be given public assets for little or no cost? Perhaps existing debts will be covered by the NHS? The future may answer these questions, but by then it will be too late for someone, whether that’s the local population and their health, or the taxpayer.

Where’s there’s money to be made you can bet there are some questionable ethics. Circle’s backers include Paul Ruddock, whose company, Lansdowne UK, owns 18.9% of Circle Holdings. Ruddock is one of the Conservative party’s most generous donors. Other shareholders include Odey Asset Management with a 21.4% share; its founder, Crispin Odey, is also a large Tory donor. Is it possible that these large donors to the Tories gave their money without any understood pay-off? If it is then they must be very happy at this unlikely co-incidence.

Now let’s address some mistruths people will often hear around this story. Some may claim that this isn’t privatisation, but what else would you call it when something that is currently run by the public sector is handed to the private sector? What else could anyone mean by privatisation? An operation that was run for public benefit will now be run for profit.

Also, some may say that the current hospital management have ‘failed’ and ‘deserve’ to be replaced. Why does Hinchingbrooke owe so much? Well, that’s mostly because of a huge PFI deal that they were strong-armed into making by the Department of Health. If services were to be updated it was the only way the government would give them the money. What would you have done? Offer services in unsuitable old buildings, unsuitable for modern equipment and increasing chances of hospital infections, or take the only source of money that the government was willing to give you? Because the NHS is run as a service, and not a business, the managers made the decision that was in the best interests of the patients and made the deal. I don’t think they should be punished for this.

It is interesting to hear of Ali Parsa, founder of Circle, speculating why Hitchingbrooke may be in trouble. He pointed out that there were 5,000 patients living within a “few miles of the hospital that do not use us. That’s £5m in lost patient income every year.” Just listen to his words – it’s all about ‘patient income’. Is that the way we want our hospitals to think? And what is he going to do to convince those people to come to hospital? Make them sick? Spend lots of money on advertising that rubbishes other local NHS hospitals?

For all the talk of ‘failing’ hospitals it is worth considering the fact that good care is now secondary to being forced by government into bad deals with the private sector, as with Hitchingbrooke’s PFI debt. Perhaps if the Department of Health was willing to invest in capital projects like new hospitals and not force providers into expensive PFI deals, everyone would be better off?

David Cameron said something rather telling on Saturday “From the Health Secretary, I don’t just want to know about waiting times. I want to know how we drive the NHS to be a fantastic business”. It’s not a business, Cameron – it’s a service. It’s a service which should be there for our health, not as a ‘business’ to make money. It is easy to dismiss this as the usual Tory obsession with everything having to make a profit for rich investors, but let’s not forget that it was Labour’s Andy Burnham who kicked-off the process of getting private management into Hitchingbrooke in the first place. Labour are almost as bad as the Tories and Liberal Democrats when it comes to a baseless belief in the efficiency of the private sector. It is a source of considerable frustration to me that the actual evidence is that the NHS is the most efficient healthcare system, whereas there is absolutely no evidence that companies such as Circle can even run a general hospital. Indeed, they have yet to even run one of their own fully-private ones at a profit.

We are feeling the effects of a fundamental shift in the way that elected officials operate, started by the last Tory government, continued by Labour, and now accelerating under the coalition. Over these years the role of national and local government has been steadily transformed from providing municipal and sociabilityal services for the people to facilitating further investment opportunities for private capital. This general change goes uncriticised by the media and more or less unnoticed by the electorate, but the results can be seen in the funding of political parties by companies and the advantages handed to them, paid for by the taxpayer.

In the end one must remember a fundamental difference between Circle and the NHS. The overriding priority of Circle is to make a profit. The overriding priority of the NHS is to provide a health service. Circle have no experience of running a general hospital and only employ 568 staff. They have never made a profit, but any that they might make will go to the British Virgin Islands to avoid tax. The NHS, on the other hand, is the most efficient healthcare system in the world, and everyone who works for it pays their full share of tax in the UK. Who would you want running your hospital?