Circle Holdings, a British health workers' co-operative backed by investment funds, is set to be the first private company to run a general hospital for Britain's state-funded National Health Service.

Circle said on Thursday it will oversee an estimated 1 billion pounds ($1.6 billion) revenue running Hinchingbrooke hospital in Huntingdon, eastern England, for 10 years from February.

Circle, which has to pay off Hinchingbrooke's 40 million pounds of debt while maintaining existing medical services, expects to make a single-digit surplus on the hospital's annual revenue of around 100 million pounds.

Chief executive Ali Parsa said it planned to revinvest part of that surplus improving services. Our profit will not come from taking more money out of the healthcare, it will come by taking waste out and ensuring that the surplus that comes from that (is shared) between everybody, he told Reuters.

It will be the first time since the NHS was founded in 1948 that a private company will be running the full range of hospital services, including an emergency and maternity ward.

The hospital will remain NHS property, staff will remain NHS employees, and patients will continue to receive NHS treatment free of charge.

This is not privatisation, said Stephen Dunn, policy director at local health authority NHS Midlands and East, and architect of the deal.

Hinchingbrooke is one of 20 NHS hospitals identified as suffering financial problems and the deal could be a model for other turnarounds, Dunn said.

It is bound to be looked at closely by the NHS. This will be one of the options when organisations are struggling financially, in terms of being able to bring in new management to drive up the quality of services and ensure sustainability, Dunn told Reuters.

Circle beat British outsourcer Serco to clinch the deal a year ago.

($1 = 0.627 pound)

(Additional reporting by Rosalba O'Brien; Editing by Dan Lalor)