Circle Health, the private healthcare company handed a £1 billion contract by David Cameron to run Hinchingbrooke hospital in Cambridge, has admitted that its plans “could affect its ability to provide a consistent level of service to its patients”.

As part of the Tories plans to privatise the NHS, they are proposing private companies take over “failing” NHS trusts – any NHS trust with large debts or poor standards. Circle Health recently donated £790,000 to the Tory Party; other big donors can now expect to be first in line to buy up public services like schools, universities and hospitals which the Tories are trying to sell off.

In Tory fantasy land, NHS trusts are failing because they are deprived of the “competent” management of the private sector, rather than the reality that many are chronically underfunded, function in an inefficient and bureaucratic “internal market” and burdened with massive debts from Private Finance Initiatives (PFI) started in the Labour year’s, which can cost as much as 10% of a hospital’s annual budget.

The plan to hand control of Hinchingbrooke hospital over to private healthcare companies has been in development for several years, and is now reaching its final stages. The Tories are giving Circle Health a £1 billion pound contract to run the NHS trust for 10 years. Private companies already provide £8 billion pounds worth of NHS services through outsourcing, using private healthcare to reduce waiting lists and the creation of privately run NHS clinics under the last Labour government, however this will be the first time the control of an entire hospital is given to the private sector.

The government are trying to hide this blatant privatisation of the NHS by saying the hospitals buildings and staff will still be in public hands, only management control will be handed to Circle, and circle is infact a “John Lewis-style mutual” with 49% of the shares controlled by the workers. This is just an ideological smokescreen to conceal the reality of the proposals – the handing of control of NHS hospitals and funds to private sector companies.

 Firstly, allowing Circle to take over management, without bearing the cost of the facilities and staffs means Circle doesn’t have to take on the cost of pensions for staff, or maintenance of the NHS facilities, meaning its time running the hospital will in fact be subsidised by the government. Instead it will just have total control over what level of service to provide, how many staff and what operations patients will have access too.

Secondly, Circle is little like a “John Lewis-style mutual”, and even if it was, this would be no protection against the detrimental effects of privatisation. 2500 Circle staff are being given shares, but these are shares in an offshore firm called Circle Partnerships, registered in the Virgin Isles. Circle Partnerships then has 49% of shares in Circle Health, which is itself a subsidiary of Circle Holdings. Circle Holdings is where the real power lies, and who controls Circle Holdings? A group of just 6 investors control 95% of the shares of Circle Holdings, 4 of these investors are venture capitalists and hedge funds;  Odey European, Lansdowne, Balderton and BlueCrest.

Circle Health isn’t an independent company, in reality its a loss making (£44.3 million last year) front company for a network of capitalists which want to use it to get their toe in the door of the NHS, as the first step to full scale privatisation.

In a hospital already struggling with £40 million pounds of debt, with an operating cost of £90 million a year, turning a profit without any new investment can only come through slashing staff and cutting services for patients. And with Circle Health already a loss making venture, if these profits don’t materialise and the venture capitalists and hedge funds pull out Circle Health could be faced with a “Southern Cross” style situation with the company going bankrupt and endangering NHS patients even more.

There is a massive mythmaking machine surrounding the issue of private sector efficiency in healthcare. The Tories and the right-wing media constantly extol the virtues of the private sector in health and criticise the inefficiency and bureaucracy of the NHS. Yet the NHS is one of the most efficient health systems in the world, even after a decade of privatisation and outsourcing which has only increased costs and bureaucracy. The government lies about this were exposed when a study of caner mortality rates demonstrated the NHS achieved the best reduction in cancer deaths per 1% of GDP invested in healthcare. A large part of this is due to the way the NHS is structured and the health systems which have survived decades of underfunding and privatisation.

For 40 years when the NHS was fully integrated, administration costs were only 6% of the NHS annual budget. When the internal market was introduced in 1991 they doubled to 12%.

 Now they are closer to 30%, and climbing ever nearer to the mammoth 40% of costs which they are in the United States private healthcare system. Before Thatcher was elected the NHS functioned with 1,000 senior managers. In the 1980s this was increased to 26,000 as private sector managers were employed in the name of “increasing efficiency”. The privatisation and outsourcing, and artificial purchaser/provider split created by the Labour government to create a “market” in the NHS have all created a massive bureaucracy where none existed previously. Layers of management and consultants and lawyers have been employed to oversee a costly and inefficient “internal market” which just adds to administrative costs and takes money away from patient care where it is needed most.

Having free access to treatment actually reduces bureaucracy as it removes the entire invoicing, billing, accounting and legal apparatus needed to charge for care in for-profit market based healthcare systems. Alyson Pollock, an academic reasearcher specialising in public health systems has stated that actually returning to an integrated healthcare system, eliminating the internal market and removing outsourcing from the NHS would save between   £6-24billion pound a year and make the system more efficient.

With the government planning £20 billion of cuts to the NHS ober the next 4 years and the sacking of 150,000 NHS staff in the pipeline we need to redouble our efforts to defend the NHS. A massive turn out by healthworkers on November 30^th will scare the private sector off from wanting to take over hospitals. But out struggle must not just be to defend the NHS, but to improve it. To kick out the parasitic private healthcare companies, bring services back in house, nationalise the PFI building schemes without compensation and struggle for a truly socialised healthcare system, planned to meet everyone’s needs and run by healthworkers themselves.

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