A crowd of campaigners rallied outside the High Court’s Rolls Building on May 15 to express their support for the decision to end 11 years of privatisation and allocate a major treatment centre contract to Nottingham University Hospitals Trust rather than private hospital firm Circle [as we headlined in our last issue].  Inside the company’s appeal was being heard and within a week a judge confirmed that Circle’s case had failed. The NHS had won. 

Campaigners, including Keep our NHS Public in Nottingham, UNISON’s NUH branch and Unite activists in Nottingham had consistently called for an end to Circle’s contract, which yields the firm a £2.9m a year profit

They welcomed the decision to bring service back in house, made by a consortium of 16 CCGs in the East Midlands and Yorkshire led by Rushcliffe CCG, and endorsed by NHS England’s Regional Director.

But celebrations will be muted until a further threat of legal action by Circle, seeking damages from the CCGs, has been dealt with later this year.


Legal battle

Circle Health has been fighting since the beginning of last year to cling on to the Nottingham Treatment Centre contract, which was worth £55m in 2017.

The firm has been running the centre since the first contract was offered by New Labour back in 2008 – a time when NHS trusts were barred from competing.

The company secured another five-year deal in 2013, but by 2018 the rules had changed, and NHS trusts are now allowed to bid to bring back in-house and re-integrate services that were arbitrarily privatised by the establishment of treatment centres.

Financial dispute

Last year Circle complained at the reduced money on offer, which it claimed was insufficient to ensure adequate services at the centre, pulled out of bidding and threatened legal action. These antics secured a further year’s extension of contract, but did little to win over the CCGs.

In January his year Circle Nottingham asked the High Court to stop NUH taking over the contract.

Their argument  was made no more convincing by Circle apparently inflating the value of the previous 5-year contract, which it insisted had been worth £67m a year, although Circle Nottingham’s own accounts show income has hovered around the £55m mark for the last couple of years.

Since then NUH has become the CCGs’ preferred bidder for a new £64m a-year contract, while Circle complains the five-year deal has been unfairly awarded to the Trust and breaches competition law.

 

In what can be seen in a heavily redacted court document, Circle claimed NUH could not credibly deliver what it estimated to be 16 percent savings on current costs, without impacting patient services.

The private-equity-owned company, which depends upon NHS funding and has never posted an overall profit and notoriously walked away from its failing contract to run Hinchingbrooke Hospital just two years into a 10-year contract, has the brass neck to point to NUH’s £30m operational deficit and question its financial viability, arguing the trust would need to rely on government loans, and that this would breach competition law.

Circle also argued that NUH’s staff costs would be up to 20 percent higher than its own. That’s no surprise, since the Nottingham Treatment Centre employs less than one in 10 (just 12) of the consultants who work there, and is heavily dependent upon another 163 NHS-employed consultants with “practising privileges” to do occasional private sessions. Delivering only limited, elective surgery, Circle did not have to carry the costs of emergency and complex cases – all of whom are treated at NUH.

Despite employing all these arguments, this time Circle were not so fortunate in their resort to legal action. Deputy High Court judge Sir Anthony Edwards-Stuart ruled that the CCGs could go ahead and hand the 5-year £320m contract to NUH from July.

The Nottingham unit on the QMC site is Europe’s biggest treatment centre, and provides NHS-funded services including gynaecology, cardiology and respiratory medicine.

The company must now face up to having lost their largest NHS contract (and one of very few if not the only one of their contracts making any profit.)

Having delayed matters by months before losing their court action Circle has now argung the timescale is too tight for the handover to be achieved in time for a July start.

However BMA News last year reported that Nottingham University Hospitals Trust (NUH) which had spent at least £500,000 drawing up its bid to bring the treatment centre in-house, and noted that the move would see patient care much less fragmented in the city.

Now the Trust will be able to make efficiency savings by reintegrating the services, most of which it has had to run in parallel in order to deal with cases too complex for a treatment centre to handle – and would of course gain a significant extra injection of revenue to cover its extra costs.

The Trust and commissioners now clearly see the benefit in NUH receiving the extra revenue, rather than Circle and its owners.

However we have not heard the last from Circle on this disputed contract. They are still saying they will sue the commissioners for damages from what they say is an “unfair” procurement.

What are the chances the High Court will follow up its judgment in favour of the NHS by suddenly deciding the procurement process they have just endorsed was flawed, and awarding damages to Circle?

Who knows what another judge on another day might decide?

John Lister
Author

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