Closing in on the circle

As the Department of Health considers final approval for the first NHS hospital franchise deal in Cambridgeshire, the managing partner and founder of Circle explains why the model could work elsewhere
South Africans were surprised to see a rainbow wrapped around the sun
Circle says it will put patients at the heart of services should it take over Hinchingbrooke but will it light up the hospital's finances? Photograph: Getty

Hinchingbrooke hospital in Cambridgeshire is set to become the first NHS hospital franchise deal in the country under a groundbreaking move to save the debt-ridden hospital without further taxpayer subsidy.

The deal, which is still to get final approval from the Department of Health around the end of next month, will see Circle, Europe's largest healthcare partnership, take over the running of the hospital under an ethos of partnership.

If the deal does get approval, which looks likely, it will be the first time that an operating franchise has been offered for an NHS acute hospital in England and will begin operating in June.

However Circle, one of five organisations including one from the NHS to bid for the contract, which NHS East of England has recommended to run for a 10-year term, claims to do things differently to a conventional private sector organisation.

Made up of a partnership of clinicians but half-owned by investors, it says it can make a real difference to patient outcomes through a bottom-up style of management, giving a stake of the business to staff and putting patients at the heart of any decision making. And it believes it can turn around Hinchingbrooke, which caters for around 160,000 people and runs accident and emergency and maternity service, for no more cost.

"We're a social enterprise but partly owned because we believed it was better to have a smaller size of the pie but be well capitalised," says Ali Parsa, managing partner and founder of Circle. "We work for our patients and have a set of priorities and our staff have a say in what we do, from consultants to cleaners."

Circle was created five years ago on the back of complaints from consultants of poor management in healthcare institutions in both the private and public sectors, and he believed there was space for clinicians and staff to run their own hospitals.

It now has a number of NHS contracts and operates services for the NHS's Choose and Book initiative, which aims to give more choice to patients on where and when they use services. While Circle provides private services, Parsa says its aim was always to take on as many NHS patients as possible.

"There were people who thought it was giving over the asylum to the lunatics," says Parsa. "But if we have a failing group of hospitals, let's demonstrate that we can do better. We have oncologists for example who meet on a regular basis and take on what our patients say, what we should fix, and we do this religiously. In healthcare institutions almost all decisions are made at the top and by the time it gets within the range of doctors and those lower down the scale they don't have a say.

"Around 94% of our assets are owned by financial institutions or the stateand distanced from the interests of people. Everybody has the right interest but these interests are probably not identical. The same is true with state ministers who have to please a party or newspapers which may be at odds with the people who use a service. Those who work in hospitals, schools, should have a say in future of the enterprise. If you want to call that "privatised" so be it."

Parsa says the proof of the pudding is in past projects. Circle took over the struggling Nations Healthcare and the running of Nottingham NHS treatment centre in 2008, running day services including skin surgery, endoscopy and radiology for NHS patients.

The company's Bath hospital, which opened in March 2010, boasts Norman Foster designed architecture and a five star experience and as Parsa puts it: "A night in a hospital costs more than in a five-star hotel, so why shouldn't people get a similar experience?"

In Nottingham, Parsa says the company turned around the centre, raising productivity in a single year by 22% and lifting patient satisfaction to 99.6% – one of the highest in the country. Further he says it now has a lower return to theatre rate with 90% of staff rating themselves as happy in the job.

"The questions we ask are are we the best at patient outcomes and staff experience. Nottingham proved that patients could get better for the same price and clinical outcomes," says Parsa.

"In Bath we said why can't it look like a private hopital and it has won an award alongside other contenders in Budapest and Bangkok. We got a Michelin starred chef to design the menus. We've proved it can be done."

In the Hinchingbrooke deal – with more details to be announced after the DoH's decision – staff would remain with the NHS but be given a share in Circle and the company would tackle the hospital's historic £38.8m debt.

But Parsa, a former executive director at Goldman Sachs, defends that a five-star experience means five-star costs. "It will cost significantly less," he says. "Let's not forget that this is a hospital the NHS has tried to turn around for many years. It has a big debt burden on it's books that it hasn't always managed to balance. We believe we can do a better job. If not then it's our responsibility.

"What we mean to do is sit with staff, unit by unit, and ask what should the hospital look like in two years' time, what barriers are there and who should we deal with them?...We're eliminating the middle man and giving the same return as the NHS."

The deal has been welcomed by NHS East of England and the hospital's management and was open to public consultation.

"Hinchingbrooke has major debts and might have had to close, or receive a large subsidy paid for by the taxpayer," says Dr Stephen Dunn, director of strategy at NHS East of England.

"Thanks to this process this is not the case. We have selected a cutting edge partner with an innovative approach that will propel Hinchingbrooke into the premier league. This is not privatisation. 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."

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