Private sector healthcare scheme to be halved by ministers

Source: ExecUK

Date :14/11/2007 10:01:37

A £700 million-a-year government scheme to buy surgical treatment centres and diagnostic services from the private sector is expected to be more than halved by ministers this week.

According to the Financial TImes, Alan Johnson, health secretary, is to announce that a number of contracts will go ahead, including ones for extra imaging and renal services.

However, it is expected about six contracts will be discarded, along on top of a number that were abandoned earlier this year.

The treatment centres that remain in the programme are, in most cases, smaller than the deals originally envisaged.

Losing value

The decision will not only mark another retreat from the use of the private sector in healthcare but will also see the health department forced to pay out millions of pounds in compensation.

It could mean that the original £700 millon a year's worth of business could turn out to be worth as little as £200 million.

According to industry insiders, the late cancellations mean that the government will have to pay out up to £20 million in bid costs to contractors – including Netcare, Clinicenta and Alliance Medical - on top of the £5 million already paid out for the abandoned schemes.

Aside from the private sector's costs, the health department had by March this year already spent £72 million on the procurement, according to official figures.

November, 14 2007