The decisio – 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.

Although Alan Johnson, health secretary, is to announce that a number of contracts will go ahead, including ones for extra imaging and renal services, about six contracts will be canned, on top of a number that were scrapped earlier this year.

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

The move means that the original £700m a year’s worth of business will turn out to be worth less than half of that – possibly as little as £200m.

People in the industry say that the late cancellations mean that the government will have to pay out up to £20m in bid costs to contractors, which include Netcare, Clinicenta and Alliance Medical. This is on top of £5m already paid out for scrapped schemes.

Stephen O’Brien, the Conservative health spokesman, said yesterday that he will be asking the National Audit Office to investigate the programme. “The health department has spent a phenomenal amount of money to achieve very little,” he said.

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

The department admitted last month that just eight of the 190 staff in the health department’s commercial directorate were civil servants. The remainder were external hirings costing a total of between £88,000 and £120,000 a day – or the equivalent of between £20m and £30m a year.

The dramatic scaling back of the second wave of big central contracts will delight Unison and other opponents of the drive to involve the private sector in the delivery of NHS care.

However, it has left much of the private sector fuming, although ministers will argue that big opportunities remain as the government’s focus for the private sector switches from hospital services to primary care and proposed “polyclinics”.

But one senior executive said companies were now very wary. “There is a trust issue here,” he said. “We have been led up the garden path. We are not sure we want to go up it again”.

From:
http://www.ft.com/cms/s/0/1073a3fc-918f-11dc-9590-0000779fd2ac.html