Circle (healthcare partnership)

Circle is an employee co-owned hospital group based in Britain, co-founded in 2004 by social entrepreneur Ali Parsa and Consultant Ophthalmologist Massoud Fouladi.^[1] It has private hospitals in Bath and Reading, and an NHS Treatment Centre in Nottingham. In November 2011, it was awarded a contract to run the first National Health Service (NHS) hospital franchised to an independent provider, and began the contract in February 2012.^[2]

History

Circle was founded in 2004 as an employee co-owned hospital group, aiming to offer high quality healthcare efficiently, by focusing on the patient experience and clinical results, as well as implementing efficient operating process. In order to make their hospitals more productive, Circle has taken many examples from the Toyota Manufacturing System.

Circle is a partnership, in which clinicians and healthcare professionals are given the power to run their own services. The flattened organisational structure is said to allow quality and efficiency to remain high, through the creation of ‘clinical units’.^[3] Speaking at Hinchingbrooke hospital, Francis Maude, the Cabinet Office Minister, described the Circle model as ‘a third option which goes beyond the monopoly of state provision or the private sector’.^[4] Its claims to be a “John Lewis style social enterprise.” have been challenged by Prof Martin McKee who pointed out that "Staff shares amount to only 49% of the total number of shares, and the staff’s decision making powers are far less than even this suggests".^[5] The Guardian reported that it was funded by about £120m of investment from highly astute and profit-driven venture capital and hedge funds, including Odey European, Lansdowne Partners Ltd, Balderton Capital and BlueCrest and controlled by Circle Holdings, which became a publicly listed company following its flotation on Aim on 17 June 2011. Almost 95% of the shares remained in the hands of six investors, including the above-mentioned funds.^[6]

Board members

The company announced in December 2012 that Ali Parsa had stepped down as Chief Executive. Steve Melton on an interim basis, assumed the position of Chief Executive. Ali Parsa will remain on the Board of Circle as Founder and a Non-Executive Director.^[7]

Corporate Structure

It was reported in December 2013 that the company had secured £25 million of new funding and overhauled its corporate structure to grant its employees and NHS staff working at its sites direct access to its publicly traded shares.^[8] Circle Holdings, announced it is to acquire the rest of the company, currently in the hands of Circle Partnership, on behalf of employees. Circle employees and NHS staff are being offered shares in the company for free, providing they meet performance criteria.^[9]

Centres

CircleBath

A private hospital that opened in 2010. It was described by The Observer as ‘One of the finest hospitals in Britain’.^[10] It reportedly made a loss of £2.7 million in the six-month period to 30 June 2013.^[8]

CircleReading

A private hospital that opened in August 2012. It reportedly made a loss of £3.4 million in the six-month period to 30 June 2013.^[8]

Nottingham NHS Treatment Centre

The largest Treatment Centre in Britain, operated by Circle since 2007. It reportedly made a profit of £4 million in the six-month period to 30 June 2013, up from £2.5 million for the same period a year ago.^[8]

Hinchingbrooke Hospital

In November 2011, Circle won a 10-year contract to run the struggling NHS Hinchingbrooke Hospital.^[11] The hospital had previously been described as a ‘clinical and financial basket case’ by Health Minister Earl Howe.^[12] The hospital’s buildings and staff remained part of the NHS, but Circle took over all day-to-day management responsibilities.

The architect of the deal, Dr. Stephen Dunn, described it as "a good solution, focused on local needs. Without this deal, services might have been cut, the hospital might have had to close, or an £80m subsidy might have needed to support the existing management."^[13]

The Prime Minister’s former special advisor on health commented in the Daily Telegraph that these results had shown ‘the right kind of reform can turn around shoddy government monopolies and transform them into huge success stories’.^[14] However during 2012 losses doubled, and Circle obtained a £4 million advance on fees to ease cash flow problems at the hospital.^[15] For the Conservative Party this was seen as a test case for private sector contracting.^[16]

Following the early successes at Hinchingbrooke, where it appeared the hospital had attracted some orthopaedic surgery from Addenbrookes Hospital^[17] Circle stated that they would like to bid for more NHS contracts.^[18]

In November 2012 a National Audit Office (NAO) report into the franchise was published. It found that while Circle had made early improvements in some clinical areas, the in-year deficit was already £2.2 million higher than planned. Circle will have to generate unprecedented levels of savings to pay the deficit and most of the savings are expected in the later years of the ten-year franchise, so the value for money of the project cannot easily be assessed for some time. The NAO found that while NHS East of England had assessed bidders’ savings proposals, the relative risks had not been fully considered, which had the potential to encourage over-optimistic bids.^[19][20]

In February 2013 The Health Service Journal reported that senior health figures were questioning the viability of using the model more widely in hospitals. They cited austerity and the need to reduce activity in hospitals as key drivers.^[21]

In December 2013 the company announced that it expected its Hinchingbrooke contract to finish at or near break-even by the end of its financial year.^[8] The Care Quality Commission had inspected the hospital and were satisfied. Waiting times in the A&E department were reported to be among the best in England and Dr Foster revealed the hospital has a “statistically significant low mortality rate”^[22]

In January 2014 it was reported that Circle could table a rescue bid for Peterborough and Stamford Hospitals NHS Foundation Trust involving partnering it with nearby Hinchingbrooke Hospital.^[23]

References

External links

• Circle Partnership
• Hinchinbrooke Health Care
• Briefing on Circle by NHS for Sale