Circle Health Group
Circle Health Group is a private healthcare provider in the United Kingdom, and is the country's biggest private hospital provider. The company was founded in 2004 and rebranded as Circle Health Group in 2019 after acquiring a rival, BMI Healthcare; in the same year it began an expansion in China. In 2023 the company was acquired by PureHealth, an Abu Dhabi-based holding company.
Circle Health ran an independent sector treatment centre delivering dermatology services in Nottingham from 2008 until 2019, when operation of the services was returned to Nottingham University Hospitals NHS Trust. The services during the period in which they were run by Circle Health were described as an "unmitigated disaster" in an independent report commissioned by the local clinical commissioning group which ran health services in the county.
In November 2011 the company was awarded a contract to run Hinchingbrooke Hospital in Cambridgeshire, the first NHS England hospital to be operated by a private company. Circle Health withdrew from the hospital, three years into the ten-year contract, shortly after being severely criticised by the Care Quality Commission over standards of care and hygiene. The CQC report indicated that "Medical services were inadequate because we found poor emotional and physical care which was not safe or caring. This was not reported by leaders of the service to the trust management therefore we judged the leadership to be inadequate." It was the worst rating for 'caring' that the CQC had ever given. Circle Health left the hospital with a £14 million deficit that, because Circle had limited its liability to £5 million, the taxpayer had to pay for.
History
Circle was founded in 2004 as Centres Of Clinical Excellence Limited, co-founded in 2004 by Babylon Health founder and former investment banker Ali Parsa and consultant ophthalmologist Massoud Fouladi. It said that it wanted to be a model "a little bit like John Lewis" or a law firm, and referred to itself as a "partnership". The flattened organisational structure was said to allow quality and efficiency to remain high, through the creation of "clinical units". In January 2010, Gordon Brown, as Prime Minister, said: "Circle's provision of healthcare from the private sector is crucial to a 21st century health service."The company's plans were ambitious, involving opening 30 private hospitals, and encompassing the possibility of running 30 NHS trusts in time. In October 2009 it was shortlisted to become the first franchisee of an NHS trust. It raised £200million from investors and had an initial public offering on AIM, with the shares peaking at £2.
In 2015, Circle entered a £50M deal with Tech Mahindra to improve IT infrastructure and applications.
In October 2015, Circle entered an agreement with Advanced Oncotherapy to open a proton beam therapy cancer centre on Harley Street, London.
In April 2017, work began on a third private hospital, in Birmingham.
As Circle Integrated Care, it has had a prime provider contract to manage musculoskeletal services in Bedfordshire since 2014 and a £74M deal to oversee musculoskeletal services in Greenwich began in April 2017.
The company announced in December 2012, that Ali Parsa had stepped down as chief executive. Steve Melton assumed the position until November 2016. Paolo Pieri, a former finance director of lastminute.com, is now chief executive.
Expansion
In November 2016, Circle announced that it is it to develop hospitals in China in conjunction with Chinese investors. In April 2019, it opened a £23m hospital in Shanghai. The hospital provides access to multi-disciplinary teams including specialists outside China.In November 2019, the Financial Times reported that Circle would acquire the holding company of BMI Healthcare, the biggest private hospital provider in the UK with 54 hospitals; the cost of the acquisition was not disclosed. The deal was called in by the Competition and Markets Authority in December 2019, resulting in the enlarged company agreeing in June 2020 to divest Circle's hospital near Bath and the new hospital at Birmingham, which had not at that time been put into operation.
Corporate structure
Private ownership
In 2017, the company was taken private by Toscafund Asset Management and its affiliate Penta Capital. Previously, the company had been listed on the Alternative Investment Market. Its initial public offering in June 2011 which raised £45M had valued the company at £95.4M. In June 2012 it raised £47.5M through a placing of shares with institutional investors. In December 2013, the company secured £25M of new funding and overhauled its corporate structure to grant its employees and NHS staff working at its sites direct access to its publicly traded shares.During its time on AIM, as Circle Holdings, investors included Odey Asset Management, Lansdowne Partners, Balderton Capital, BlackRock, Invesco Perpetual, BlueCrest Capital Management and Toscafund Asset Management.
In March 2017, Toscafund proposed to buy all the company shares, valuing the company at £74M.
Circle reported that "the underlying performance of the group improved considerably during 2018", making an EBITDAR profit of £12.3M, up from £6.7M the year before, although the company had an overall loss of £11M as a result of "exceptional costs... relating to the impairment of intangible assets and goodwill".
In December 2019, the company acquired its larger rival BMI Healthcare to form the biggest private hospital provider in the UK, which it rebranded as Circle Health Group. The combined group had annual revenues of almost £1billion. As part of the acquisition, American healthcare company Centene took a 40% stake in Circle Health Holdings. Centene gained full ownership in July 2021.
In August 2023, it was reported that Circle Health Group would be acquired by PureHealth, an Abu Dhabi-based holding company and healthcare platform, in a deal valued at $1.2 billion. In January 2024, it was announced that this transaction had been completed.
Employee ownership until 2017
Initially, the company operated an equity incentive program under which doctors were offered equity in the company in return for a share of the consultants' private work, which was said to be "pivotal in raising capital from third party debt and equity investors". Circle employees were offered shares in the company for free, providing they met performance criteria. Consultant and staff ownership reduced to 25% after paying off £257M in borrowings in 2013, and those shares were bought in 2017 by Toscafund and Penta Capital.In 2014, Circle won "Employee-Owned Business of the Year" at the Employee Ownership Association Philip Baxendale awards, while a report by the All-Party Parliamentary Group on Employee Ownership referenced "impressive" productivity statistics from Circle but noted that "the argument that these successes derive not from the ownership model, but from an engaged workforce".
Speaking at Hinchingbrooke hospital, Francis Maude, the Cabinet Office Minister, described the Circle model as "a third option which goes beyond the monopoly of state provision or the private sector". The journalist Nigel Hawkes' description of Circle as "a John Lewis-style social enterprise co-owned by its employees" was described by Prof Martin McKee as nonsense. McKee pointed out that "staff shares amount to only 49% of the total number of shares, and the staff's decision-making powers are far less than even this suggests".
However, the Nuffield Trust found "the company's participative management style – based on devolving power and responsibility to the frontline – important in terms of motivating staff", while the King's Fund found that Circle was "developing the leadership skills and technical expertise for staff to test and implement service change".
Centres
Circle Bath
A private hospital designed by Foster and Partners that opened in 2010 at Peasedown St John, near Bath. In 2017, Circle Bath received a rating of Good from the CQC, and won a Wylde IA Happiest Workplace in the South West competition. Following the agreement with the Competition and Markets Authority, the hospital was bought by the NHS in June 2021, and became a subsidiary of Bath's Royal United Hospital under a new name – Sulis Hospital.Circle Reading
A private hospital that opened in August 2012 at Kennet Island, Reading. Circle Reading has a 2019 rating of Good from the CQC.Circle Birmingham
In 2017, Circle began construction of a private hospital at Edgbaston, Birmingham, on part of the site of the former BBC Pebble Mill studios, and financed through an arrangement with American real estate investment trust Medical Properties Trust. At a reported cost of £50M, its 120 rehabilitation beds were expected to create 250 jobs. Opening of the facility was delayed by the COVID-19 pandemic, and it was not yet operational when Circle agreed in 2020 to divest it as a condition of the acquisition of the BMI hospitals.Nottingham NHS Treatment Centre
This was opened as the largest independent sector treatment centre in Britain, as part of a programme of reforms to the NHS which aimed at introducing choice by increasing the diversification of providers. It was operated by Circle between 2008 and 2019. In 2010, the centre was visited by Andrew Lansley, who said: "The fundamental thing is, is it providing a good care to patients on the basis of NHS principles? Yes it is." It reportedly made a profit of £4M in the six-month period to 30 June 2013, up from £2.5M for the same period the previous year. In 2013, when Circle's five-year contract expired, commissioners decided to reconfigure services in the area.Circle had run outpatient dermatology services for the Nottingham area since 2008, with a mix of staff seconded from Nottingham University Hospitals NHS Trust and those directly employed. Circle's contract was renewed but the dermatology services were redesigned by Rushcliffe Clinical Commissioning Group, on behalf of all the Nottinghamshire commissioners, "based on its own specification".
In December 2014, it was announced that six of the eight consultants had left rather than transfer to Circle, while recruitment and retention was a problem for NHS hospitals across the East Midlands. David Eady, President of the British Association of Dermatologists, described dermatology nationally as "a specialty in crisis" and that "no single region in Britain has enough consultants" to meet Royal College of Physicians recommendations, which meant Circle replaced them initially with locum doctors, for whom Circle had to pay nearly £300,000 per year per consultant.
In 2015, the operation of dermatology services during the period in which they were run by Circle Health was described as an "unmitigated disaster" in an independent report commissioned by the CCG and undertaken by Dr Chris Clough of Kings College Hospital, London. The British Association of Dermatologists stated that it was "very concerned by the decline of services in Nottingham from a centre of excellence to somewhere now unable to offer expert dermatology, dermatological care for patients... and now its failure to deliver teaching to trainees and medical students". An inspection by the CQC in January 2015 had rated the centre as 'good' overall, although the termination of pregnancy service required improvement; a follow-up inspection in May 2016 rated that service as 'good'.
In 2018, local commissioners extended Circle's contract after a legal challenge. The following year the centre, which has 700 staff and treats around 250,000 patients annually, was taken over by Nottingham University Hospitals NHS Trust.