Hinchingbrooke

There is a flurry of tweets at the moment about Hinchingbrooke. To put this into context, Hinchingbrooke has been in debt for several years and the East of England SHA decided to change the management by outsourcing it. NHS Foundation Trusts were allowed to bid, but because the contract had a £40m debt attached to it, no NHS trusts were willing to take over the hospital. That left the usual suspects of the private providers: Serco, Ramsay, etc. It has to be stressed that this process started a year ago, Andy Burnham could have stepped in and stopped it. He decided not to.

One of the bidders is Circle. These are the poster boys of the government. On the surface they look like a mutual,. but when you look at the details it is clear they are not. The following is from their website:

• 49.9% of Circle is owned by Circle Partnership Ltd, which is owned by everyone who works in clinical services, directly or indirectly and at every level.
• 50.1% is owned by Circle International plc. This is the investment vehicle that blue chip City institutional investors have subscribed to for shares by providing the capital for Circle. They ensure that any refinancing is achieved without diluting partners' 49.9% ownership.
• The investment needed to buy land and build hospitals, clinics and invest in infrastructure is raised by Health Properties Ltd, a separate business.

So the first thing that you can deduce is that the majority of Circle is owned by City investors. This means that the majority of Circle is a for-profit company, and since a "social enterprise" must be not-for-profit that means that Circle is not a social enterprise. It also scores weakly as a "John Lewis" style of company because the profit share is only through 49.9% of profits.

So Julia Manning the Tory parliamentary candidate (from 2005, she failed to get selected in 2010 even though she tried several times) who runs the right-wing 2020Health is wrong to call Circle either a "social enterprise" or a mutual. When I tweeted her to say that she was wrong she replied:

@richardblogger I understand this bid is a Soc Ent model - I know they aren't as a company

Ms Manning will know a lot about the Big Society model because she has advised David Cameron.

The second thing that you can deduce is that Circle does not even own their own hospitals, these are all owned by a for-profit company.

Also we are given the impression that Circle is some kind of mutual using profit-share. It is not. In fact, most of their employees are consultants - highly paid doctors. So their model is not so much profit-share as dividend payments.

Some people have tweeted that Hinchingbrooke is being privatised. This is not the case. Circle will just provide the management, it is certainly outsourcing. This is a tweet from the East of England SHA:

Hinchingbrooke: Not privatisation. Staff & assets protected; no need for taxpayer bail out. Model for hospitals facing similar challenges

On the one hand this is reassuring (Staff & assets protected) but on the other hand it is worrying that they say it is a model for the future.

Julia Manning's quote worries me. Those people who read this blog will know that I do not like the prospect of so-called "social enterprises" (Community Interest Companies) taking over our hospitals, but at least their values are defined: "social purpose" and not-for-profit (ie profit re-invested as further services).

Since Circle is a for-profit company with half of its profits handed back to City investors and the other half shared as effective dividends to the wealthy consultants who work for the company; and since Ms Manning (who is one of the people driving the Big Society for Cameron) this means that Big Society is simply the take over of our public services by private companies.