Bupa has pulled out of a contract with the Department of Health to provide NHS diagnostic services across the South East, HSJ has learned.

The independent healthcare provider was selected as preferred bidder for the South East tranche of the DoH's diagnostic programme in August 2006. However, Bupa has pulled out of the contract negotiations because it failed to agree 'acceptable' terms.

A Bupa spokesman said: 'We are very disappointed that it has become necessary to withdraw our bid for the South East diagnostics contract. However, we are realistic that not every contract comes to fruition.'

A DoH spokeswoman confirmed that the government was also 'disappointed' that they had been 'unable to reach agreement with Bupa'.

HSJ understands that private provider Clinicentre, in partnership with Lodestone and Carillon, are in negotiations with the DoH to become the new preferred bidder for the scheme.

Amicus InHealth, a joint venture between Amicus Healthcare and InHealth Group, has won preferred bidder status on two of the contracts to deliver diagnostic procedures, in London and the East of England. Atos Origin will provide diagnostic services to patients in the South West, Mercury Healthcare in the West Midlands, and Alliance Medical has won preferred bidder status for the North East.