Healthcare group Circle has entered into discussions to pull out of its contract to run Hinchingbrooke, the first NHS hospital to be run by a private firm.

Circle was granted a ten-year contract in February 2012 but chief executive Steve Melton said that “after considerable thought and with great regret”, the group believes its involvement in the Cambridgeshire hospital “does not have a sustainable future in its existing form”. As such, it has entered into discussions with the Trust Development Authority “with a view to withdrawing from the current contract”.

Explaining the rationale behind the move, Mr Melton said that like most hospitals, “over the past year we have seen unprecedented A&E attendances – at times up to 30% higher, year-on-year - and not enough care places for healthy patients who await discharge”. At the same time, “our funding has been cut by approximately 10.1% this year”.

He went on to say that “with these pressures on the system, to maintain the standards our patients deserve requires significant further investment, on top of the £4.84 million and considerable resources Circle have invested in the hospital to date”. Mr Melton also referred to a forthcoming report by the Care Quality Commission which is expected to be very critical of Hinchingbrooke, saying he “fully expects it to be unbalanced and to disagree with many of its conclusions”.

The news gives considerable ammunition to opponents of privatisation within the NHS and of hospitals in particular.