NHS hospital partnership decision delayed

Sarah Neville & Kiran Stacey, Financial Times, August 15, 2012

An eagerly awaited decision on whether an NHS hospital can seek a tie-up with a private sector partner, potentially reviving charges that the coalition is seeking to “privatise” the NHS, has been delayed.

The board of George Eliot Hospital in Nuneaton, Warwickshire, decided at the end of May to seek permission from the Department of Health to tender for a strategic partner in an attempt to secure its future.

It is among 21 hospitals the department has identified as having financial problems.

The hospital had expected a verdict by the end of July, but says it has “been advised by the Department of Health that there will be a delay in the assessment of its Outline Business Case”. It is thought a decision will not now be made before October.

The political stakes are high. If given the go-ahead, it would mark the first time the coalition government had formally paved the way for a private company to take over an NHS hospital.

Circle Health, a private company run as a partnership in which staff hold 49.9 per cent of the shares, earlier this year assumed control of Hinchingbrooke Hospital in Cambridgeshire. But that process was set in train under the previous Labour government.

The department insisted there was never “a hard and fast deadline” for a decision on George Eliot. Officials are looking carefully at the business case, and in particular are examining performance data from Hinchingbrooke.

But the painfully protracted gestation of the Health and Social Care Act, which finally became law in March, after the Lib Dems forced big changes to the original blueprint, has left the government wary of courting further controversy over the NHS.

Andrew Lansley, health secretary, has in the past expressed scepticism about the capacity of the private sector to run large district general hospitals. But some within Number 10, notably Jeremy Heywood, the cabinet secretary, who has the ear of David Cameron, the prime minister, are thought to be enthusiastic.

The Lib Dem high command is also known to favour the Circle model, seeing the company as an exemplar of “responsible capitalism” touted by Nick Clegg, party leader.

In another potentially significant development, Stephen Dunn, who as director of policy and strategy at the Midlands and East Strategic Health Authority was pivotal in pushing through the Circle takeover at Hinchingbrooke, was recently appointed a director of development and delivery at the National Trust Development Authority, where he will have a key role in determining the future of hospitals unable to secure foundation trust status.

But tricky local politics look set to complicate the decision. Two of the constituencies which send patients to the hospital are Conservative-held marginals.

Mike O’Brien, who represented North Warwickshire for Labour until 2010, told the FT that if a private company were to take over the hospital it would become an issue at the next general election. He also criticised the delay in reaching a decision, arguing that staff had been left in limbo.

Chris Bradshaw, George Eliot deputy chief executive, stressed the hospital had “no pre-determined view” as to whether a private company or another NHS hospital would make the best partner.

Copyright The Financial Times Limited 2012.