By Paul Sandle
LONDON (Reuters) – The British government’s winter healthcare problems deepened on Friday as the company which won the first-ever deal to run a general hospital for the state-funded health service pulled out, saying the contract was not sustainable.
Circle Holdings Plc said it would walk away from running Hinchingbrooke hospital in eastern England, adding to pressure on Prime Minister David Cameron over the running of the National Health Service (NHS), likely to be a central issue in May’s national elections.
Accident and emergency (A&E) services, cited by Circle as a key pressure point, have become a focus of concern nationally in recent days with a number of hospitals declaring “major incidents”, complaining they are unable to handle the number of patients seeking care.
Both main British political parties have looked to bring in private companies to run parts of the NHS and 10 billion pounds ($15 billion) was spent on buying healthcare services from private companies in 2013-2014, out of a total expenditure of 119.5 billion, according to a report from the National Audit Office (NAO).
However the extent of private company involvement remains contentious and opposition health spokesman Andy Burnham tweeted to say the government had appointed Circle and its policy on the NHS “is unravelling before our eyes”.
Shares in Circle, partly owned by its doctors, fell 24 percent to 52 pence by 1102 GMT.
Circle, which took over the running of the hospital in 2012, said it could not afford the extra funding needed to cope with a jump in accident and emergency (A&E) admissions.
“Like most hospitals, over the past year Hinchingbrooke saw unprecedented A&E attendances and not enough care places for healthy patients awaiting discharge,” said Chief Executive Steve Melton.
The Department of Health said it was disappointed by Circle’s decision and there would be a managed transfer of the running of the trust back into state hands.
“RISKS WERE KNOWN”
The opposition Labour party said the Government was warned two years ago about Circle’s business plan. “Given that these risks were known at the outset, ministers must explain why they judged Circle a safe choice to run this hospital,” said Burnham.
But health minister Jeremy Hunt on Twitter said Burnham should stop playing politics. “He signed off decision to allow private sector operator. This Gov makes no apology for seeking solutions for failing hospitals. We won’t be deterred from tackling poor care & driving up standards.”
Hinchingbrooke had been described as a “financial and clinical basket case” by a minister before it transferred to Circle in 2012. It improved performance in A&E and cancer waiting times, but was already running bigger-than-expected deficits in the first year, the NAO said in November 2012.
Melton said demands on services had increased further in the last year, with 30 percent more patients treated in A&E. Providing the standard of care patients deserved needed more than the 5 million pounds of additional investment it was contractually required to provide, Circle said.
Analyst Charles Weston at brokerage Numis said Circle had turned around the clinical performance of the hospital, but its financial performance was slower to improve. But he did not expect the decision to affect Circle’s other NHS work, including the treatment of NHS patients in Bath, Nottingham and Reading. He believed it could still win new NHS business.
British voters list the state of the NHS as one of their top three concerns ahead of the May 7 election, with discontent about a system struggling to cope with rising patient numbers.
Cameron has rejected the criticism, saying there were 9,000 more doctors and 3,300 more nurses because his government had protected NHS funding.
(This version of the story was refiled to fix wording in sub-heading to ‘KNOWN’)
(Additional reporting by Sarah Young and William James; Editing by David Holmes)
UK private hospital provider quits, putting pressure on government
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