The NHS spent £1.78m on an abandoned procurement to find an organisation to take over George Eliot Hospital Trust, HSJ can exclusively reveal.

The cost was split between three trusts, with George Eliot alone spending more than £1.2m on the aborted process.

Two neighbouring NHS trusts – South Warwickshire Foundation Trust and University Hospitals Coventry and Warwickshire Trust – collectively spent more than £500,000 as they bid to run the £124m-turnover district general hospital.

George Eliot Hospital

George Eliot alone spent more than £1.2m on the abandoned takeover process

Private providers Circle and Care UK were also in the running in early 2014. George Eliot’s search for a organisation to take it over began in August 2011, when its board decided it had no future as an independent entity.

The competition to take over the trust was abandoned in March, after the NHS Trust Development Authority, which oversaw the process, said George Eliot had improved its clinical performance.

According to a breakdown of costs obtained by HSJ under the Freedom of Information Act, the trust spent £426,000 on legal advice and support; £358,000 on financial advice and support; and £434,000 on procurement advice and project management from the NHS Strategic Projects Team.

A further £14,000 was spent on “miscellaneous non-pay” costs.

The trust would not put a figure on its internal staff costs, claiming no additional resources were employed “that would not have been used in the absence of the project”.

It said no resources had been diverted from patient care and the project had “created resources that will be shared with other organisations that may be considering alternative organisational models”.

Coventry and Warwickshire spent £336,000 before pulling out of the competition in February.

HSJ understands the trust dropped out after being told by the TDA its bid would fail to meet the liquidity criteria required for foundation trust status.

According to the breakdown, Coventry and Warwickshire spent £240,000 on an external support partner and £1,000 on legal support. A dedicated strategy team and programme and project teams cost £50,000 with other staff costs accounting for £45,000.

A spokeswoman for UHCW said it was “disappointed” it had to withdraw but continued to “explore options for greater collaboration with George Eliot”.

South Warwickshire FT spent a total of £204,000 on its bid, of which £114,000 went on advisory fees with consultancy EY; £6,000 on legal fees with Mills & Reeve; and £84,000 on the secondment of its own staff.

Trust chief executive Glen Burley said South Warwickshire was “very disappointed” when the procurement was stopped, as its proposed solution of an “integrated Warwickshire Foundation Trust” had offered a “sustainable future” for George Eliot.

The TDA spent just £5,694 on legal fees from Hempsons solicitors.

An authority spokeswoman said that the trust exiting special measures and its “good” Care Quality Commission rating in July had been a “great achievement”, which “demonstrated the effectiveness of their response to special measures and the buddy relationship with University Hospitals Birmingham Foundation Trust”.

George Eliot forecasts a £12m deficit this year.

A source familiar with the details of the abandoned procurement said: “The NHS has not sorted out how to resolve these unsustainable organisation issues in a sensible and reasonable and timely way.

“It needs to get its head round that rapidly given, if we think we’ve had financial pressures before, we haven’t seen nothing yet compared with what’s happening next year”.