Hinchingbrooke Hospital: Circle to hand back to NHS by end of March

Circle became the first private firm to manage an NHS hospital three years ago

The first NHS hospital to be handed to a private management firm will be back inside the health service in March, a parliamentary watchdog has been told.

Steve Melton, head of Circle, which ran Hinchingbrooke in Cambridgeshire, from 2012, was being questioned by the Public Accounts Committee (PAC).

He said budget cuts and high demand made the deal unsustainable and denied a damning report was the cause.

Last month, the Care Quality Commission branded the hospital "inadequate".

Mr Melton said the report did not show the full picture and the trust's income increased by only £1m over the franchise period.

Analysis by Tom Barton, Political Reporter

From Hinchingbrooke's chief executive, to the boss of the Care Quality Commission (CQC), to the man who's responsible for finances within the NHS, the six senior executives called in front of MPs read like a Who's Who of those who had been involved with the hospital.

The hearing was feisty, with MPs putting pressure on Circle over the hospital's finances and on NHS bosses over the contract they signed with the firm.

There were particularly tough questions for the CQC from Peterborough's Conservative MP, Stewart Jackson, who accused the regulator of basing its damning inspection report on "anecdote and tittle-tattle".

So did the MPs get answers? Well, they got a range of answers and that was the problem.

Almost every difficult question they asked received a different answer from each organisation.

But on one key issue there was a straightforward answer - we now know that the hospital will be handed back to the NHS in March.

Mr Melton told the committee he was "proud" of what Circle had achieved and would be ready to consider taking on similar contracts, if the terms were right.

The Department of Health's director of finance, Richard Douglas, said there was nothing in Circle's performance that would prevent them being considered for future contracts.

He added: "I don't think there will be any more of the kind of franchising we have had, until we have resolved some issues."

Head of the CQC, David Behan, insisted he stood by the report, which last month branded Hinchingbrooke Health Care NHS Trust "inadequate" and called for it to be taken into special measures.

PAC chairwoman, Labour MP Margaret Hodge, said the decision to award the contract to Circle had been "rash" and health service officials played down the risks when they entered into the private sector franchise.