Basically Hinchingbrooke is a failing hospital. It has huge debts (£40m, with a turnover of just £92m). No doubt there are many reasons for this: management, changing demographics, and most likely chronic underfunding. The Department of Health under Labour should have had the balls to sort out this hospital> They should have changed the management and re-finance the debt. Instead the Department of Health saw this as a trail blazer for what the Blairites (and now the Cameroons) want: to end the public responsibility for the provision of healthcare. They decided that in a "health market" providers fail and are taken over by other providers, so this is what they wanted to trial with Hinchingbrooke: see how a failing hospital could be taken over. The East of England strategic health authority (SHA) effectively put the management of the hospital out to tender. Local NHS Foundation Trusts were allowed to bid, as were private companies.
Earlier this year the only FT bidder (Cambridge University Hospitals Foundation Trust) pulled out of the bidding, clearly realising that it was too much of a risk. Last year Hinchingbrooke made a surplus so there is a possibility that good management could eventually pay off its debts. However, rather than simply changing the management the Labour government decided to bring in the private sector. There are now just two bidders, Serco and Circle and the decision about the 7 to 10 year contract will be made in November.
Andrew Lansley and David Cameron have often said how they prefer employee-led co-operatives as the embodiment of their Big Society idea. Indeed Lansley said at the launch of the Conservative manifesto that "if co-ops of doctors think that they can run a hospital better, then we will invite them in". Such a "co-op" is Circle, which is said to be "employee-owned" and having a "John Lewis style" profit share (this must be true because I heard it on BBC Radio 4). However, Circle is not owned entirely by its employees: 50.1% is owned by city investors (the chief executive, Ali Parsa, is a former Credit Suisse, Merrill Lynch and Goldman Sachs banker). The other 49.9% of shares are owned by the employees who can afford to provide the capital (ie, only the highly paid consultants, so it is not a "John Lewis Partnership" model at all).
This is clearly the model for the future: as NHS hospitals fail the private sector will be brought in to take them over. And this will happen throughout the NHS in England. Mark Britnell, who was a former NHS chief executive and now works for KPMG, told Health Investor that,
"more than 20 organisations could follow Hinchingbrooke’s lead in the next 12 months. Our own analysis suggests there are perhaps 20 or 30 organisations that will be in a level of distress not dissimilar to Hinchingbrooke over the next year or so."Watch Hinchingbrooke very carefully, and also pay careful attention to how Lansley announces who will take it over. This will happen increasingly over the coming years.