So – Hinchingbrooke NHS Trust has gone down the plug-hole. Privately controlled vultures have been circling over-head – Hinchingbrooke’s demise has been long fore-told – and, neatly enough, it was the circling Circle Health Ltd who have been allowed to swoop down and pluck the entrails of the Trust from the clutch of the drains. We now have, Circle say, the ‘first franchised NHS trust’. NHS East of England, the SHA ‘overseeing’ the deal, was far more upbeat. ‘History was made today’ was their clarion call, as a ‘groundbreaking’ deal secured a ‘bright future’ for the debt-laden Trust.
Now there are some who say that this is privatisation. In fact it is not – yet. The ‘balance sheet assets’ – beds, bricks and mortar etc – remain, we are told, in NHS ownership, and the staff, we are told, will be seconded on NHS terms to Circle. Instead of privatising the Trust, Circle have been given the franchise to run the hospital – and the franchise model is not a privatisation model.
On the face of it, then, early hysteria about selling off the NHS is unfounded. Or is it? As the muddy waters of Hinchingbrooke Hospital started to swirl down the drains of debt, so too did mighty public relations machines start to spin. Like a North Sea mist, a miasma of misinformation has rolled over the detail of the deal. Much is not what it seems.
Firstly – and others have spotted this too – Circle is not the John Lewis style social enterprise we’re-all-in-this-together for the greater good outfit that it claims to be. John Lewis is all held in trust for the benefit of all its partners; Circle has a co-ownership model, with 50.1% – ie a controlling majority – owned by for-profit City investment company Circle International plc; ‘partners’ are left with a non-controlling 49.9% share in the company. Although Circle does have minority partnership model ownership, the bottom line is that it is majority owned by an investment company focused on profit. Let me say that again: the bottom line for Circle is profit; looking after patients is merely a means to that end.
Secondly, this is not franchising as we normally know it. Normal franchising – say McDonald’s – has a franchisor licence a ‘brand and support package’ to a franchisee in return for an initial and ongoing fees. Both sides benefit – the franchisor generates income with relatively little risk or effort, while the franchisee benefits from an off the shelf, up and running business. Something similar to this model can be seen at work in the NHS here.
But, even on the most cursory glance, down-the-drain Hinchingbrooke fails to match the conventional franchise model. Circle get to use the ‘NHS Brand’ – and the NHS is one of the if not the best known brand there is in the UK – but after that, allusions to a franchise model start to look thin. Circle appear to have agreed to ‘take on’ Hinchingbrooke’s historical £40m debt, perhaps even pay it off, although how they can hope to manage that and make a profit on a £90m annual turnover escapes Dr No – unless we have not yet heard all of Circle’s plans. Nor is there any overt mention of a franchisee (Circle) to franchisor (NHS) fee or payment (unless taking on the £40m debt is framed as payment in kind). No Sir, make no mistake, this is no ordinary franchise deal: and, for the time being, ‘further and better particulars’ are hidden under a cloak of commercial secrecy…
What might we make of all this? The first awkward but unavoidable conclusion is that both Circle and the East of England Special Health Authority have employed an unfortunate wall of smoke, mirrors and spin to present an apparently benign but actually commercially driven bail out of a failing NHS hospital. The second conclusion, or rather question, is why would an investment company backed by blue chip City investors want to take over the running of a failing NHS hospital?
Some will hear the sound of Rothschilds snapping up minnows. Dr No thinks it is both simpler, and yet more complicated. Circle have got their foot in the door; and soon the cuckoo will be in the nest…