10/11/2011 08:22 GMT | Updated 23/01/2014 18:58 GMT

NHS Reform: Private Takeover Of Hinchingbrooke Could Have Profound Consequences

The announcement that a private company was given a contract to run a “failing” NHS hospital in Cambridgeshire could have profound implications for Britain's health service.

Circle Health was handed the £1bn, 10-year deal to run the Hinchingbrooke hospital in Huntingdon on Thursday.

The move represents the first time a private firm has been given control of the entire package of NHS services within an area.

Ali Parsa, Circle Chief Executive, said the deal offered “a more sustainable alternative” to a merger or the hospital shutting it down, while promising to prioritise patients by “unleashing NHS professionals' talent”.

However, Unison, the UK's biggest public sector union, called the deal “an accident waiting to happen”.

Circle, a stock-market listed company, will not only assume responsibility for the day-to-day running of the hospital but will also take on the financial burden, including debts that currently run to around £40m.

Moreover, the deal does not represent a full privatisation, with staff retaining their pensions and pay, while the buildings will remain in public ownership.

The hospital’s poor finances are such that before the deal it faced an uncertain future.

Should the Circle model prove successful, more of the country’s 20 or so failing hospitals could be outsourced to private entities.

Dr Stephen Dunn, the strategic health authority's Director of Policy and Strategy, said the agreement "will usher in a new era, unleashing innovation into the NHS, with staff and patients firmly at the centre.”

Nigel Beverley, interim Chief Executive for Hinchingbrooke Health Care NHS Trust, was equally gushing, saying: “Circle recognises our excellent achievements at the hospital, and we look forward to working with them to build on our successes."

However, the move could have long-term repercussions for the future of the NHS, so much so that Labour MP Liz Kendall has asked for an urgent question in the Commons today regarding the takeover.

The Tory’s desire to reform the NHS was highlighted by the health and social care bill, which was criticised by Labour for promoting the private sector over the public.

Though the eventual bill was heavily watered down on Liberal Democrat insistence (Nick Clegg trumpeted that the final bill did not “give preference to the private sector”), the handing over of Hinchingbrooke to a private firm is likely to fuel fears that the government wants to hand the NHS to companies, which will always be seen to value profits more than patients.

Christina McAnea, Unison’s head of health, said:

"We know that the government is intent on privatising our NHS - that is the clear outcome of the health and social care bill. Privatisation, which brings in the profit motive, will damage our NHS.”

McAnea also questioned Circle’s claim of being a social enterprise.

“Their management band… [is] stuffed full of bankers and managers from private industry, who have no experience of health care,” she said, possibly referencing the Circle's chief executive, a former Goldman Sachs executive.

McAnea also expressed concern that a private company now responsible for the lives of hundreds of thousands of patients.

“This must not become a precedent for the NHS, or millions more staff and patients will be put at risk," she said.

Allyson Pollock, Professor of Public Health Policy at Queen Mary University of London, has called for the publication of the financial details of the deal.

"All the evidence shows that when you bring in the for-profit sector you are leaching money out of the NHS," she said.

Circle, one of the UK’s most prominent private healthcare providers, which was selected to run the hospital following a two-year tendering process, has already stated its ambition to run up to 30 independent hospitals that provide NHS and private treatments.

A Patients Association report published on Wednesday highlighted some of the problems facing the cash-strapped public health service, with elderly patients left neglected due to staffing problems and a lack of money.

That the NHS requires some kind of reform is in little doubt. However, the handing of an entire hospital to a private firm may be a step to far for those wary of the creeping privatisation of the NHS.