Circle Subcontracting Back to Local Hospital – Rejected!

Bedford Hospital Trust refused to sign a contract to become a subcontractor of private healthcare provider Circle Partnership earlier this month amid fears that the arrangement of Circle’s musculoskeletal (MSK) service could endanger the trust’s trauma and accident and emergency services.

In April, Circle was awarded a five-year contract by Bedfordshire Clinical Commissioning Group (CCG) to run Bedfordshire’s £120 million integrated musculoskeletal service. The deal merges 20 separate contracts into a single service run by Circle.

At the time, the CCG praised the deal as providing a “pioneering new service” which would help patients get faster and more appropriate treatment closer to home. Rather than being referred by GPs multiple times to separate specialists, the MSK service would allow patients to be referred to a multidisciplinary team, which would then assess them for the most appropriate treatment.

However, after a 30 percent drop in musculoskeletal referrals since Circle began the service in April, Bedford Hospital Trust refused to agree to become a subcontractor. The trust claimed that there was a risk that the income from MSK would not support its consultant surgeons, and could undermine its ability to provide trauma service including A&E, and could endanger its capacity to retain the trust’s seven trauma surgeons.

Chief executive of the trust Stephen Conroy emphasised the risk of the MSK service, and said that the service would ultimately lose income or become non-viable.

A request from Bedford Hospital Trust for a minimum income guarantee for 2014-15 to cross-subsidise the trauma service was turned down by the CCG and Circle because it would limit patient choice. The trust continues to negotiate with the CCG about the possibility of a risk share arrangement in 2015-16.

Commenting on the news in his excellent blog, "My Thoughts on the NHS - Robbing Peter to Pay Paul," Dr David Wrigley writes that Circle’s attempt to subcontract the service back to the local hospital shows an attitude of “grab the money and let someone else do the work.” He adds that the situation arose because of the CCG having to abide by legislation forcing them to put services out to tender. Wealthy private companies obviously benefit from the tendering process. "Another blow to the NHS by the City" he says.

This is not the first time Circle’s hospital management has come under fire. Circle Hinchingbrooke was lauded as the future of ‘franchising’, ‘partnerships’, and a huge success, but according to an article in OpenDemocacy, is far different beneath the surface. Hinchingbrooke was slammed in a report earlier this year for its financial instability, incredibly low staff satisfaction and poor care.

A National Audit Office report from 2012 criticised the East of England Strategic Health Authority for its lack of scrutiny of Circle’s contract for Hinchingbrooke, stating that the contract was based on “assumptions that were not directly informed by previous experience.”

Circle claimed they would achieve a massive £311 million in “savings” over ten years, described as an “unprecedented” target by the NAO. However, they commented: “Circle’s bid did not fully specify how it would achieve these savings. Perhaps this target is what prompted Circle to cut jobs for nursing and healthcare assistants and cleaning jobs to the extent that, in a recent survey, only 27 percent of Hitchingbrooke staff felt there were enough staff for them to do their job properly. Circle doesn’t appear to be delivering on its long-term savings target either. At the time of the NAO report, Circle expected to miss its 2012-13 target of £9.9 million, instead only generating £7.5 million, and with no revised plans to cover the shortfall.

The OpenDemocracy article says that both Circle’s private hospitals in Bath and Reading depend entirely on generous contracts from the NHS to keep them afloat. As well as the MSK service in Bedford, Circle is looking to bid for NHS contracts across the country regardless of its “lack of local knowledge or appropriate expertise.” CCGs are also set on outsourcing pathways of care and seem unwilling to take these factors into account.

To be fair to Circle, it was engaged by Bedford to provide a sort of health equivalent to an IT “systems integrator.” But if the hospital then loses revenue, and volume of patients (and you suspect Circle will be taking its “cut” of the income), then the whole hospital service may become unviable. This is the tricky balance CCGs are facing.

First Voice

  1. Stephen Heard:

    Hi Peter,

    This is the beginning of the dilemma that CCG’s will face as they try to integrate with their local social services providers (local authorities) whilst including the voluntary sector and the private sector. The more advanced health commissioners are trying to utilise the principles of alliance contracting without having any experience or tools to do so. The current standard NHS contract is not fit for purpose for new integrated services or capable of delivering the vision set out in the NHS England Five Year Forward View. The challenges of the future will only add to the confusion around the differences between commissioning and procurement and their interoperability. Interesting times ahead.

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