03/05/2012 06:20 BST

Privatised Hinchingbrooke Health Care Trust 'Profit Deal' Cuts Fears

Bosses at the UK's first privately-run NHS general hospital have insisted they will improve standards despite claims that they will need to make "eye-watering" savings, amid criticism from unions about the scale of profits they could make.

The statement from the chief executive of Circle, the company in charge of Hinchingbrooke Health Care Trust in Cambridgeshire, comes as the Health Service Journal (HSJ) publishes a report today saying the hospital will need to make surpluses of at least £70 million over the next decade if it is to clear its debts and meet Circle's contracted share.

A letter deposited in the House of Commons library by Earl Howe, a junior health minister, and uncovered by the

HSJ, details for the first time the terms of the deal to hand running of the hospital to Circle.

A statement from the HSJ said: "The first £2 million of any year's surplus goes to Circle; the company then takes a quarter of surpluses between £2 million and £6 million, and a third of surpluses between £6 million and £10 million.

"The terms mean the trust, which has an annual income of around £100 million, will need to make a surplus of at least £70 million to clear its debts. 44% of that money would go to Circle."

Circle began its 10-year management franchise at the struggling Huntingdon-based hospital in February in what is seen as a potential model for other hospitals across the country.

Christina McAnea, head of health at Unison, called on the company to stick to assurances that it would not take a profit until debts are paid off.

She said: "Any surpluses should be going directly into improving patient care or paying off the hospital's debt, securing its future for local people - not ploughed into making company profits.

"Instead patients and staff are facing drastic cuts.

"The hospital was already struggling, but the creep in of the profit motive means cuts will now be even deeper.

"Whilst this hospital was the first to be transferred into private hands, it may not be the last."

Ali Parsa, chief executive of Circle, did not comment on the scale of possible cuts but said the management team was committed to improving service and would not "share the rewards" until this goal had been achieved.

Mr Parsa said: "Projections in the bid process showed the potential losses facing Hinchingbrooke in the coming years could reach many tens of millions.

"We have been tasked to stop taxpayers losing this money.

"Our plan is not only to do this and make the hospital sustainable, but to turn it into one of the best district general hospitals in the country.

"Only when we succeed in our ambitious goal will there be rewards to share fairly between our partnership, which includes Hinchingbrooke staff, our start-up backers and the local health economy.

"Circle has always re-invested profits back into building our partnership and services, and will continue to do so."

A spokeswoman for the Department of Health said that, had the deal with Circle not been agreed, Hinchingbrooke Hospital may have had to close.

She added: "Far from simply making a profit, Circle have already set out that they plan to repay the trust's past deficit of £39m.

"Not only are they heavily incentivised to do this by receiving a share of any surplus over £2 million, but they must also fund the first £5 million of any losses while they are managing the trust.

"Any fee that Circle receives isn't all profit - Circle must meet the ongoing cost of delivering the deal and indeed any costs they incurred in bidding for the contract.

"This process, which was started under the previous Government, will deliver improved patient care and will put the hospital on a sustainable financial footing for the future."