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Vultures Circle The NHS

Vultures Circle The NHS

Yesterday the NHS announced that for the first time in the UK, a private firm would run an NHS hospital. The reason is that Hinchingbrooke hospital in Cambridge is £40 million debt and is likely to overspend by £5M this year. Circle Health, which has put together the deal with the hospital's doctors, also had it's eye on Epsom hospital, which it wanted to take it over with Royal Surrey County Hospital Foundation Trust. Circle CEO Ali Parsa has trumpeted the deal as a 'John Lewis-style partnership' where clinicians get a share of any profits. But many commentators have been less enthusiatsic, suggesting the company's strong links with the Conservative Party may pose a conflict of interest.

 

Circle Holdings, the parent company, is owned by a complex network of private investment firms. According to the Bueau of Investigative Journalism these include Lansdowne UK (started by by Paul Ruddock, a major Tory donor) and Odey Asset Management (owned by Crispin Odey, another major Tory donor). All this private cash may help to explain why Circle can afford to run the hospital when the NHS cannot. According to Circle themselves, they are a 'growing and entrepreneurial company in its investment phase'. In other words they are buring up contracts at a loss with the hope of making a profit in the future. But how will this profit emerge?

 

Circle 'Managing Partner' Ali Parsa clearly believes the key is his model of co-ownership by staff and private investors. No doubt this will ensure that senior staff will be well motivated to do whatever is necessary to cut costs and run the hospital within budget. The effect on other staff is less clear. With a £5M hole to fill and the company beeing given a 'free hand' on staffing, many must be worrying about their pay and conditions, or even their jobs. It is perhaps ironic that some of those investors hoping to cash in from Hinchingbrooke are indirectly responsible for its problems in the first place. As a result of the recession caused by the banking crisis, the NHS has had to make radical reductions to what it calls 'low priority treatments'. The Health Service Journal has calculated that this meant a 16 per cent reduction in income at Hinchingbrook - enough to push it further into the red despite cost-saving measures that had already been introduced. Cambridge News has quoted local councillor Geoff Heathcock, chairman of the County Council’s health scrutiny committee, as saying "Once GP commissioning takes off, there will be even more uncertainty ... this could potentially threaten the viability of keeping open a district hospital in Cambridgeshire.”

 

Circle's close links with the Conservative government have also been raising eyebrows. As well as being part-owned by Tory donors, Circle has funded two conservative MPs, Kwasi Kwarteng (who was paid £10,000 as a consultant to the aforementioned Odey Asset Management) and Mark Simmonds, who is paid £12,500 quarterly for 10 hours work. Many people will also remember that Health Secretary Andrew Lansley was funded to the tune of £21,000 by John Nash of Care UK when he was still in opposition. And of course Tory MPs are not the only ones to get their snouts into the trough of NHS privatisation. Former Labour Health Secretary Patricia Hewitt was caught selling influence for cash whilst still an MP, and now earns over £1/4M a year working for (amongst others) Boots and a private equity firm active in the health sector. With a potential income stream of around £8 BIllion annually for running NHS acute hospitals, it's no wonder that investors are splashing their cash around, and perhaps not too surprising that some MPs and clinicians will have their hands out.

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