UPDATE Circle in talks to withdraw from Hinchingbrooke contract

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Private healthcare group Circle has announced it is in talks to withdraw from its contract with Hinchingbrooke, the UK's first privately run hospital.

In a statement the company said the "playing field had changed" significantly since the contract was awarded in 2012 with A&E attendances increased by up to 30% year-on-year and not enough places for discharging patients.

At the same time the hospital's funding had been cut by about 10.1% according to Circle, after making savings of £23m - which the firm said was above the NHS average.

The contract was first put out to procurement in 2009 with Circle announced as the winner in 2010. It was the first case of an NHS hospital being run by a private company.

The hospital, in Cambridgeshire, remains open to patients and the announcement does not concern other Circle hospitals.

The company has also said that a forthcoming CQC report into the hospital will be "unbalanced" and previous inspections had found the hospital to be meeting requirements for patient care.

Steve Melton, chief executive of Circle, said: "To maintain the standards our patients deserve requires significant further investment, on top of the £4.84 million and considerable resources Circle have invested in the hospital to date.

"We believe that solving the problems facing Hinchingbrooke can only be achieved through joined-up reform in Cambridgeshire across hospitals, GPs and community services. We fully support the vision of Simon Stevens' (NHS England Chief Executive) 5-year Forward View, but these potentially exciting reforms are too far into the future.

He added: "The combination of these factors means we have now reluctantly concluded that in its existing form, Circle's involvement in Hinchingbrooke is unsustainable.

"We have entered into discussions with the Trust Development Authority with a view to withdrawing from the current contract, but if reform in the region develops fast and a new role for us becomes clear, we are happy to play our full part."

Update

The Care Quality Commission (CQC) has recommended that Hinchingbrooke Hospital be placed in special measures after it was rated inadequate on several criteria.

The hospital was found to be inadequate in terms of services being safe, caring and well led, with a "requires improvement" rating for whether they were effective and responsive.

There were particular concerns about A&E and medical care however critical care, maternity and outpatient care were all judged as good.

Professor Sir Mike Richards, chief inspector of hospitals at the CQC said:"We have given the trust an overall rating of ‘Inadequate' and I have made a recommendation to the Trust Development Authority (TDA) that the trust is placed into special measures. We have informed the TDA of the breaches and it will make sure these are appropriately addressed and that progress is monitored through the special measures action plan.

Richards added: "This is the first time that CQC has rated a trust inadequate for ‘caring'.

"Our findings highlight the significant failings at Hinchingbrooke hospital. They are not a judgment on the role of the private sector in the NHS or on franchise arrangements.

"Where hospitals are failing to promote good care, we will say so regardless of who owns and runs them.

"Inspectors also found some examples of good practice at the trust, but changes are necessary and the trust faces a number of challenges to ensure it meets the required standards.

"We have told the trust what action it now needs to take."

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