Thursday, 10 November 2011

Buy Circle Holdings PLC - make Ali rich!

It's probably considered infra dig to talk about people one used to know at school or university who are now public figures, but I can't help myself! It's one thing resenting fat cats, but when you knew the fat cat personally and how they operate it becomes all the more intolerable seeing them making (or seeking to make) profits from the privatisation of our public services.

In this case I am talking about the announcement this morning that Circle Holdings PLC's bid to run Hinchingbrooke Hospital in Cambridgeshire has been approved. The hospital has big debts and one stipulation of the contract is that Circle will wipe them out.

Staff will remain on NHS contracts - what, really? Fully? All of them? - and the buildings revert to the NHS at the end of the contract. But what about the equipment bought in the interim? You see, we here in One Barnet are getting wise to the wrinkles that can make an outsourcing deal better or worse for us, the poor saps who are paying for it.

It's interesting that the Hinchingbrooke contract is for about £1bn. We are looking at that sort of figure for the big customer service contract that Barnet council are currently negotiating. Circle beat Serco to the Hinchingbrooke contract.

The Daily Mail quotes Nigel Beverley, interim Chief Executive for Hinchingbrooke Health Care NHS Trust, saying:
'We have been bowled over by Circle's enthusiasm and the efforts they have taken to engage with staff, patients and our other partners.'
The only engagements that the companies bidding for Barnet's contracts have had are with council bigwigs and lawyers. The residents have not been consulted at all, so at least Circle have that over them.

What's my particular beef in the Circle/Hinchingbrooke case? The slick public presentation of this contract as representing win:win for the public and the company taking the hospital over. Circle is presented in the media as a John Lewis-type company, owned by staff. It isn't. The London Stock Exchange explains:
The Company's principal asset is its holding in Circle, an employee co-owned healthcare provider. Circle is 50.1 per cent. owned by the Company and 49.9 per cent owned by the Circle Partnership which is 100 per cent beneficially owned by Circle's clinicians and employees. 
(Naturally, Circle shares have gone up this morning.) What else? Perhaps Circle will deliver on what they have promised in this contract, but their game is not actually rescuing "failing" hospitals such as Hinchingbrooke. It is to make money from public services, that is, a portion of our taxes will go into the pockets of private shareholders and fat cats, such as chief executive Ali Parsa, the man I knew at university (he was then a leftist of sorts).

He will also seek to drive down staff pay and conditions. I would love to know what the terms for new employees will be.

Oh, yes, finally, where is Circle Holdings PLC incorporated? Jersey. You see, Ali wants to hang onto as much of our money as he can. Is this his just compensation for innovation, enterprise and risk-taking? No, it's just the dues we mugs pay when we fall for the spiel of a bloody good talker.


David Duff said...

You mean you would prefer for it to go broke and close down?

baarnett said...

I hadn't been able to see why the hospital trust had run up a debt of £30 million, which is what was causing all its problems.

Can anyone help?

DD - do you approve of tax havens being involved in UK mainland commercial activity? It's just like Boots being loaded with debt, and carted off to low-tax Zug in Switzerland.

Vicki Morris aka Citizen Barnet said...


I'm sure there are other options to letting it 'go broke and shut down'. It could be 'bailed out', and run more efficiently in future, for example.

I think Ali Parsa's strategy is to use this contract to gain more business from the NHS. He will make this one work, if it bankrupts him! Well, not quite, because that would defeat his object, but you get my drift.

Reports suggest that Circle is not profitable yet. This contract is a step on the way to making Circle profitable, that is Parsa's bottom line. But you can be sure that even before it is profitable, he is already paying himself a fat salary.

It has taken a while to approve this contract; I can imagine him sweating for months, wondering whether his gamble - I think this business model is a gamble - will pay off. It seems to be going in the right direction again, for him.

Here are some of the critical reports:
"Circle has been unable to make a profit. How will it turn around a hospital?"
"First privately run NHS hospital 'is accident waiting to happen'"

Vicki Morris aka Citizen Barnet said...

The quotation in the Guardian headline:

The head of health at Unison, Christina McAnea, warned that Circle's debt burden could overwhelm the company. "The company is currently in a vulnerable state and the takeover could lead to a second Southern Cross, putting patients at serious risk."

This was "nonsense", said Parsa: "We have £13m of debt, with revenues now at £200m."

McAnea added: "We just don't accept there is no expertise within an organisation the size of the NHS, and to turn to the private sector, which has a very patchy record in delivering these kind of services, is an accident waiting to happen."

Anonymous said...

One of the first terms new staff will have to get used to is that Circle do not recognise trades unions. Grass roots staff are "urged" (corporate-speak for bullied) into working longer hours for less money. An Enron-style "rank and yank" peer review system is in place which lets old grudges and office politics determine your scoring. Your score determines your pay review. I've worked for 'em and there's a book to be written about their practices.

Vicki Morris aka Citizen Barnet said...

A bit more on Circle in the Observer today, pouring scorn on its claims to 'mutual' status.

'Circle Health – the company that last week became the first private healthcare operator to take over the running of an NHS district general hospital – has variously been described as a "John Lewis-style mutual", a "third-sector provider", and a "social enterprise majority owned by employees". It is none of these things.

'If it were, it would not have attracted about £120m of investment from highly astute and profit-driven venture capital and hedge funds, including Odey European, Lansdowne, Balderton and BlueCrest. These funds are run by ruthlessly brilliant investment managers whose reputations are built on spotting trends in the capital markets before anyone else.'