Employee-owned Circle picked to run debt-riddled hospital
1 December 2010 by Gemma Hampson, Social Enterprise Livewire
An employee-owned social enterprise has been picked to run a financially failing hospital, £38.8m in debt. Circle Healthcare, which is more than 50% owned by its employees, has been recommended to take over running Huntingdonshire’s Hinchingbrooke Hospital by NHS East of England and is now awaiting approval from the government’s Department of Health. The approval would mean a 'new future for the hospital', combining health care and business, according to NHS East of England.
It is the first time an operating franchise has been offered for an NHS acute hospital in England, and it was won through an open and competitive tendering process.
Dr Stephen Dunn, director of strategy at NHS East of England, said the hospital could have been forced to close because of major debts or be saved by a large subsidy paid for by the taxpayer. Thanks to this process this is not the case, he said. We have selected a cutting edge partner with an innovative approach that will propel Hinchingbrooke into the premier league. Dunn also stressed that transferring the hospital to Circle was not privatisation and urged other NHS trusts to consider similar contracts. Staff and assets will be protected, and the taxpayer will not be forced into bailing out Hinchingbrooke. This could be a model for hospitals that face similar challenges.
NHS East of England’s board has recommended that Circle run the hospital for at least ten years. Within that period, the company is planning to repay all Hinchingbrooke's debt.
Ali Parsa, Circle’s managing partner, said: Circle’s co-operative model offers a Big Society solution for Hinchingbrooke – liberating doctors and nurses to deliver the best services for the patients they know best. This is a great opportunity for a social enterprise and local clinicians to come together to lead the next chapter in the long and successful history of the NHS. Working in partnership, we are confident that we can unleash innovation that delivers real quality gains for patients in Huntingdon.
Dr Gerry McSorley, interim CEO at the hospital, said: Patients can be reassured that they will continue to receive quality NHS services from NHS staff in the hospital they know, on their doorstep. Circle will take over the operation of the hospital from 1 June 2011, subject to approvals from DH.
Peter Holbrook, CEO of the Social Enterprise Coalition, welcomed NHS East of England’s recommendation. This is great news for the social enterprise business community. It demonstrates that staff ownership can give an organisation a competitive edge when bidding for large-scale contracts against the private sector. An employee-owned organisation gives staff a say in how it's run, and production and profitability normally increase as a result of a loyal and happy workforce. The majority of the profits from the contract to run the Hinchingbrooke hospital will be reinvested back into the local community. These are the advantages of a social enterprise running our health services over a private company, he added.
An information sheet summarising the Hinchingbrooke Next Steps project stages can be found at http://www.strategicprojectseoe.co.uk/index.php?id_sec=92
Source; Social enterprise livewire, 1 Dec 10: http://www.socialenterpriselive.com/section/news/public-services/20101201/employee-owned-circle-picked-run-debt-riddled-hospital