The 2008 Lord Carter of Coles review of NHS pathology services was the trigger for a steady reconfiguration of the market and consolidation of providers.

The first trust to enter into a joint venture with the private provider Serco to run its pathology services was Guy’s and St Thomas’ Foundation Trust in 2009. This month King’s College Hospital Foundation Trust followed suit.

Plans now being drawn up by Nottingham University Hospitals and University Hospitals of Leicester trusts could create the biggest single pathology provider in England. The trusts plan to merge their pathology services.

NUH chief executive Peter Homa said: “Discussions are at an early stage, but the intention is to look at a single managed service that will create one of Europe’s major pathology services. We are pretty sure this will be the largest pathology service in the country and is an opportunity to combine two strong units into an even stronger one, with all the benefits to the service and research.”

If they were combined as they stand the new service would employ more than 1,000 staff and have a combined budget of £65m. In 2009-10 the two services performed roughly 23 million tests.

Mr Homa said the two trusts were also exploring the “benefits of working with a third party”.

Private companies are also gearing up to enter the market more generally. In July facilities management group Sodexo announced it was setting up Integrated Pathology Partnerships with medical diagnostics group Labco to bid for services in the NHS and private sector.

HSJ understands at least one other medical group, in this case from the US, is also planning to enter the NHS market.

Outsourcing quotas to drive mixed health services provider market