May I prevail upon you and allow myself a fleeting moment of smugness? I've been hinting at it for months (two years actually) and nailed my colours to the mast in a prediction last week. Despite trying to tough it out, Circle, a venture-cap backed company is pulling out of their contract to run Hinchinbrook NHS Trust. CircleBrook is no more. Here goes; 'I told you so'.

I don't claim to be a haruspex. Just a bit of common-sense and the experience of running businesses for most of my life.

Circle's deal allows them to walk when their losses amount to £5m. To date they've racked-up £4.8m. Very sensibly they've looked at the tightening tariff for next year, patient volumes, collapsing social care, ludicrous fines for not achieving things that are out-with their control, a row with the CQC (them again), the damage to the wider Circle brand and concluded; enough is enough. I don't blame them.

Business has no business in the NHS;

because there's no business in it.

Last year Serco pulled out of clinical NHS contracts; pretty much for the same reasons as Circle. The spotlight is now on Virgin, struggling with overheating community block-contracts. I doubt it is sustainable for them (fundamentally another venture-cap company) to continue on and pay Richard Branson a rumoured 5% of all contract values, just to use his brand-name. What happened to Virgin Vodka, Brides, Casino, F1, Cola, Cosmetics, Clothing, Cars, Underwear, Flowers, Student...

The private sector brings no magic. They bring a hard-nose and an eye for reality. On their lips there may be honey-words about their staff and customers but at the end of the day they have to make a margin, pay dividends or reinvest in the business. But, and it is the biggest 'but'; no margin, no point in being in the business. Circle has lost £5m subsidising the NHS and faces a £2m walk-away-payment. No prospect of a margin. No business.

Circle is set for a row with the flat-earthers and faces special measures over their CQC assessment. As reports go, for an award winning hospital, this is a stinker. How did they go from the 'best  Trust in Britain' to the worst?  Is it possible?  Is it fair and true, anecdotal, observational, based on data and evidence? Worth the paper it's written on? It doesn't matter. What matters is it is hugely damaging to Circle's private health chain and share price.

Circle has gone full circle; will pack-up and get going. The NHS just has to keep going. However, more importantly, Circle is the canary in the mine for the NHS. What is happening to them is happening to the rest of the heath service.

Finance? If the NHS did a snap audit my guess is 80% of Trusts would be technically insolvent, surviving on grace and bungs,

Demand? Everyone is swamped and neither primary nor social care equipped to help with the heavy lifting.

Quality? The private sector fairs no better than the NHS. In fact Circle was average. Everyone struggles with arbitrary, made-up and anecdotal standards.

Politics? This gives Andy Burnham, who opened the way for a Circle deal and the Tories who signed it off, a problem just in time for the election. It also rings the death knell for the H&SCAct, Monitor, markets and the whole caboodle.  Distributed leadership doesn't work. 

Privatisation? Don't worry about it. There is no margin, too much instability, fluctuating policy, increasing volumes of care and no clear leadership or direction which can be managed or measured. The private sector will run a mile.

Health policy is in tatters. Markets haven't worked, inspection hasn't worked, demand management has failed, morale at an all-time low and workforce planning botched. The sky is dark with chickens coming home to roost. The NHS is now all about muddling through.

What shall we do? Pause and look, gratefully, into the mirror Circle has held up before us and thank them.

Time to close Monitor (who pay back a zero ROI on the money we give them) and the CQC (Who make up standards that cannot be compared nor audited, confuse everyone and bring nothing to the party except the blinding obvious).  Stop paying for any organisation that isn't directly patient facing.

Invest every pound we have left into the front line; rationalise services and heath economies; vertically integrate wherever possible; centralise PFI debt and be honest enough to realise, without a realistic, long-term investment programme and an identifiable person in charge, we are heading for a poor service for poor people.

It is becoming impossible for the NHS to square the circle. 

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roy.lilley@nhsmanagers.net 

Know something I don't - email me in confidence.

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