Circle signs Hinchingbrooke contract

Press Release 10 November 2011

Circle signs historic Hinchingbrooke contract

Circle Holdings Plc (LSE:CIRC) is pleased to announce that Circle Health Limited ("Circle"), the social enterprise co-owned by employees, clinicians and Circle Holdings Plc, has today signed a definitive contract (the "Contract") to run Hinchingbrooke Health Care NHS Trust in Huntingdonshire, which will see Circle manage an estimated £1 billion of revenue over the 10 year contract period. The contract is scheduled to commence in February 2012.

NHS Midlands and East (the Strategic Health Authority for the region) selected Circle as its preferred partner in November 2010 following a rigorous 14 month procurement process involving 19 initial bidders. Circle will become the first ever non-state provider to deliver a full range of NHS district general hospital services when the contract commences in February 2012, and will seek to transform Hinchingbrooke by pushing boundaries on clinical excellence, hospitality and patient experience. Circle will share surpluses generated over the term of the Contract with all who contribute to the transformation process, including reinvestment in the local health economy and historic debt repayments.

Should the hospital fall into deficit as part of the transformation, Circle has agreed to make working capital contributions of up to £5m. The Contract allows either party to terminate if the Trust incurs more than this £5m in aggregate deficits, at which point Circle is also required to pay a further £2m termination fee to Hinchingbrooke. Circle's liability under the Contract is capped at £7m. The Contract can also be terminated at any time on a "no cause" basis; in such an event, Circle would be compensated up to a capped amount.

Circle has a strong social mission focused on re-engineering the delivery of healthcare to make it simpler, better and smarter value for patients. It operates under a unique partnership model, where those who work for Circle are co-owners in the business. Circle has a track record of transforming NHS services through clinical leadership, devolved decision-making, and a rigorous quality improvement operating system in Nottingham, and of redefining patient experience by combining clinical excellence with luxury hotel-style hospitality and award-winning building design in Bath.

In recent months, senior clinicians, including GP commissioning leaders, hospital consultants and union representatives, have written to the Prime Minister on repeated occasions expressing their support for the franchise to Circle. Hospital consultants cited their belief that Circle 'would facilitate the improved productivity and better health care value gains which are so important in the present financial climate.' GP commissioners described Circle as 'a helpful enabler to achieve better productivity and value for money,' commenting: 'We have been impressed by the approach adopted by Circle and believe that we can work together to mutual advantage.'Circle's Chief Executive, Ali Parsa, said: "At a time when some healthcare commentators say the solution for small district general hospitals is simply to merge or be shut down, we believe NHS Midlands and East's courage and zeal for innovation will enable us to show how clinician and staff control can provide a more sustainable alternative. Our partners have now met hundreds of Hinchingbrooke staff, and we know that we share a core value of prioritising patients above all else, and a passion for reengineering healthcare delivery to make it simpler, better and smarter value for the patients. Circle arrives not with a top-down plan to impose change, but with a proven methodology of unleashing NHS professionals' talent through clinical leadership and devolved decision-making." 

Dr Stephen Dunn, the Strategic Health Authority's Director of Policy and Strategy, said: "This is a momentous day. Circle secured this operating franchise following an open competition. They outshone the best of the best from the NHS and independent sectors. This will usher in a new era, unleashing innovation into the NHS, with staff and patients firmly at the centre."

Nigel Beverley, interim Chief Executive for Hinchingbrooke Health Care NHS Trust, said: "We have been bowled over by Circle's enthusiasm and the efforts they have taken to engage with staff, patients and our other partners. Circle recognises our excellent achievements at the hospital, and we look forward to working with them to build on our successes.

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About Circle

Circle is a social enterprise with a social mission to reengineer the delivery of health care, making it better, simpler and smarter value for the communities it serves, as well as providing examples of the type of innovation that can solve the growing social challenge of the provision of universal healthcare. Circle is co-owned by the largest partnership of doctors, nurses and healthcare professionals in the UK, 'Circle Partnership', and Circle Holdings Plc, and was co-founded by social entrepreneurs Ali Parsa, Chief Executive Officer, and Massoud Fouladi, Chief Medical Officer in 2004 with the aim of empowering doctors, nurses and healthcare professionals to redefine UK healthcare delivery for the benefit of their patients. Within the Circle Partnership, which holds 49.9% of Circle, more than 2,000 doctors, nurses and all staff who work in Circle's hospitals, treatment centres and clinics are empowered to achieve the greatest levels of patient care and efficiency through active participation in managing Circle's operations. Circle's NHS and independent healthcare operations include a day surgery hospital in Nottingham treating NHS patients, an independent hospital, CircleBath, and two independent clinics in Windsor and Stratford.

Since seconding almost 1,000 NHS staff to the Company in its Nottingham NHS hospital in 2008, the largest day surgical healthcare facility in Europe, it has delivered average productivity gains of 18%, as well as 99% patient satisfaction and clinical outcomes - measured by re-admissions after day surgery - 8 times better than the national target. CircleBath is renowned architect Norman Foster's first hospital worldwide, and was named 'Best Building' in the 2010 British Construction Industry awards for Building Projects in the £3m - £50m category, as well as "Best Public Space" in the 2010 FX International Interior Design Award. Hospitality services were designed by the team that brought Mandarin Oriental into the UK and are delivered daily by former five star hoteliers. Food is cooked by a chef who joined Circle from a Michelin starred restaurant. Construction is underway on their second new-build hospital, CircleReading, which will open to NHS and private patients in Autumn 2012. Circle also has a strong pipeline with plans to grow through a combination of new hospital builds and increasing delivery of NHS services.

For more information please visit www.circleholdingsplc.com and www.circlepartnership.co.uk

[1] References to Circle in this announcement are references to Circle Health Limited.