Cancellations of diagnostic contracts with the independent sector could damage confidence in future deals, investors have warned.

Graham Kendall, acting general manager of the NHS Partners Network, which represents independent healthcare providers, said investors might decide there were 'easier and safer opportunities to pursue'.

'It is very disappointing as and when contracts get cancelled but we still remain optimistic that the government is going to press ahead [with private sector work],' he said.

Five of the seven diagnostic contracts are unlikely to go ahead in their current form (for more background, click here), although in some cases the firms involved have not yet been formally told of a cancellation.

Two contracts with Atos Healthcare were cancelled because it could not deliver to the agreed timetable. But three others have been reviewed by the Department of Health, partly because the NHS needs less additional capacity than was initially thought.

In some areas primary care trusts will now place smaller contracts with the firms.

Clinicenta, which was due to provide a range of diagnostic services across the South East, will carry out more than 4,000 audiology assessments and fittings of hearing aids, starting in West Kent and extending to Surrey and Sussex. Clinicenta managing director David Highton said the system was now going through a transition from national to local procurement.

A spokesperson for Alliance Medical/Care UK said they were still waiting to hear what was going ahead in the North East, where they had been chosen as providers.

NHS East of England said there were no plans to secure additional diagnostic capacity as part of a national procurement. NHS North East said it was working with the DoH and was awaiting guidance on the next step.