The hospital dropped from a three-star rating to no stars

Good Hope Hospital in Birmingham has been franchised out to a private company in the hope it can reverse its fortunes and win back three stars within three years.

The NHS Trust's board signed the �1.3m agreement with health service consultants Secta on Tuesday.

The agreement sees the appointment of a new chief executive at the hospital in Sutton Coldfield.

Anne Heast, who has worked in previous NHS roles and is returning from New Zealand to take up the post , will join the Trust on 1 September as an employee of Secta on secondment to Good Hope on a salary of �122,500.

'Dedicated team'

Secta, which already has a �9m stake in a new hospital in Coventry, will provide a range of support services to ensure performance targets are met and non-clinical savings are made, all of which will be approved and monitored by the Trust's board.

Management of the hospital was put out to franchise after it dropped from a three-star rating to no stars at all.

Sir Bernard Zissman, chairman of the Good Hope's Trust board, said: "This is a new chapter in the history of Good Hope Hospital, perhaps even in the NHS.

"As the first hospital to undergo the franchise process we are looking forward to working with Secta and the additional expertise this puts at our disposal to continue to provide our patients with the best possible service and care.

"There are many challenges facing Good Hope."

The incoming chief executive Mrs Heast added: "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."