The Department of Health paid £8m to end early a contract with a private health provider whose services had twice been suspended.

The DH’s annual report and accounts for 2010-11, published last week, showed it paid Clinicenta £8m in January to end a contract to provide care in London which had three years left to run.

The accounts explain the sum was paid “in respect of the agreed early termination of the London North independent sector treatment centre project”. They say: “The payment, and the agreement to terminate, was made at the request of NHS London, which was responsible for the management of the contract.”

The £136m contract was for elective surgery, sexual health services and out of hospital services including early supported discharge for stroke patients. Services were suspended because of an investigation into a death in the community in October 2009.

NHS London imposed a further suspension last autumn after a patient was treated with contaminated equipment.

In relation to the contract cancellation, an NHS London spokeswoman told HSJ “all parties agreed” the lack of patient volume made the contract unsustainable.

NHS London said the contract was terminated with a remaining value of £92m, £41.7m of which would have been payable regardless of the level of activity.