The Good Hope Hospital in Sutton Coldfield has been taken over by a private sector company in the first management 'franchising' of a failing NHS hospital.

The trust has signed a three-year deal with outsourcing private sector company Secta, who already work as consultants with a number of other NHS trusts.

The £1.3m agreement will see new chief executive and previous NHS employee, Anne Heast, appointed on a salary of £122,500 as an employee of Secta and on secondment to Good Hope.

The hospital is one of 14 in the UK to be labelled 'Zero Star' in the 2003 NHS performance ratings, and is one of four to have had its ratings drop to zero over the last year. This is partly due to targets having become tougher this year, with some completely new targets added to the ratings criteria.

This tougher climate is believed by some, including Secta, to actually be a driver for change and improvement.

"In the last year we have worked with a number of zero star trusts seeking to improve their performance and several have made it out of the Zero Star zone," says Jonathan Pearson, Director Secta. "Some are now comfortably assessed as two star organisations.     

Secta claims its recipe for helping hospitals achieve performance improvements is applying he right management focus and is to provide the Good Hope with a set of support services that will similarly "ensure targets are met and non-clinical savings are made."

Anne Heast says: "Good Hope, like many hospitals, has its challenges yet, more importantly, it has many strengths, particularly a skilled and dedicated team of forward-looking clinical services and a real commitment to make the most of the franchising process."

This could be what the hospital needs, as its main criticisms - outlined in CHI's November 2002 review of the Trust - related to management issues, with the watchdog identifying unclear lines of responsibility for frontline clinical governance and a cumbersome organisational structure, recommending a management re-think.

A spokesman for  trade union Unison says it is "totally opposed" to the franchising, saying the running of a hospital requires different skills to those found in private companies.

Says Phil Green, Unison National Officer Healthcare: "This is a waste of money when perfectly good management expertise is available in the NHS. What possible justification can there be for paying a private company to provide an NHS manager?

The CHI report also identified finances as another source of problems, leaving areas of the Trust shabby and in need of major refurbishment, with overcrowding of patients and related health and safety issues.  

"NHS managers are under enormous pressure to deliver, as public expectation rises. For years they had massive under-funding and now they are faced with constant change and being asked to hit what often seems like too many, and too ambitious, moving targets," says Green.

Those opposed to private competition within public institutions such as the NHS, say it has a tendency to raise costs without raising the amount spent on long-term improvements.

Opponents fear the creation of foundation Trusts could add to these problems, creating competition between Trusts and destroying co-operation and sharing of good practice.