The most well-known contract failure in hospital services is that of Hinchingbrooke Hospital and the contract for its management with Circle. The ten year contract was awarded to Circle in 2013, but just two years later in January 2015, Circle pulled out of the contract. The company announcement came just before the publication of a damning report on the hospital from the Care Quality Commission (CQC): the CQC raised serious concerns about care quality, management and culture at the hospital.
The CQC found a catalogue of serious failings at the hospital that put patients in danger and delayed pain relief. The hospital was put in to special measures, the first time the CQC had had to do this. Circle cited financial reasons for pulling out: under the contract the company was allowed to withdraw if it had to invest more than £5 million of its own money in the hospital and it looked extremely likely that it was going to have to invest much more than £5 million.
In another example, in December 2013 Serco announced that it would be pulling out of its contract for running Braintree hospital in Essex before the end of the contract. In March 2014 the contract was handed back to the Mid Essex Hospital Trust nearly a year early. The company’s other major contract with the NHS for community care in Suffolk has not reaped the profits the company was hoping for and by August 2014, the company announced that it was withdrawing from the NHS clinical services market altogether. In September 2015, when Serco handed over the community care contract in Suffolk to new providers, the company noted that the £140 million the company was paid for the contract was “not adequate” for the work. Serco estimates that it had made an £18 million loss on its three NHS contracts.
See below for further reading on contract failures.