Hinchingbrooke Hospital, East Anglia (near Cambridge), has been in the news recently. Circle Health took over running of the hospital in February, after winning a 10-year contract to do so. Circle is 50.1% owned by Circle Holdings and 49.9% owned by the Circle Partnership which is 100 per cent beneficially owned by Circle’s clinicians and employees. It successfully completed its listing on the AIM (AIM is the London Stock Exchange’s international market for smaller growing companies) in 2011, through an ability to attracted £153,000,000 (before costs) of new investment during the year through equity investments from existing and new shareholders,at a time of considerable political risk and market volatility.
Its annual report, dated 31 December 2011, proudly boasts that, “…the Group is on track in its ambitious programme to redefine UK healthcare“. Its major shareholders have included Balderton Capital (16.9%), Lansdowne Partners (28.9%), BlackRock (12.8%), BlueCrest Capital Management (14.7%), and Odey Asset Management (16.6%). In other words, in keeping with the ethos of corporate Britain, “real people” do not own the majority of what Circle does, but these major shareholders control what Circle does.
The issue of control is taken up here in this excellent article in the Guardian:
“As Gregg McClymont, Labour frontbencher and former Oxford don, has pointed out: at 80% ownership, the private equity firm has complete control over the company, not the employees. At 75% ownership, a shareholder can, under company law, amend the articles of association in any way the majority shareholder sees fit. Get down to these low levels of worker stake – and with no asset lock to stop the sell-off of prized possessions – and the state will be privatising not mutualising. It was this thinking that led to Bradford & Bingley and Northern Rock being transformed from co-ops to private companies in the 1980s. Both ended up as casualties of the great crash of 2008.”
That’s the first thing to note, if Circle is a model for the new NHS, a lot more ‘control’ of the NHS will be through people who haven’t done a day’s service in the NHS, who will be interested primarily in shareholder dividend. The flotation of Circle was a key part of its business model – it doesn’t always work. Look at Facebook, for example.
I am a proud member of Labour, and the Socialist Health Association, and I hope to explain my arguments for retaining a socialist NHS with time. I am concerned about this first observation, that some people will use the NHS primarily to make money. It doesn’t matter what sector they originally trained in – education, law, utilities – it all has the same end-point. For clarity, I don’t agree with this.
Shibley is a member of Labour, and a member of the Socialist Health Association. He has postgraduate degrees in medicine, natural sciences, law and business.
