London treatment centre deal collapses

The government's plan to open up the NHS to the international private sector has been dealt another blow this week as AngloCanadian, the preferred bidder for the London chain of independent treatment centres, pulled out of contract negotiations with the Department of Health.

HSJ understands that negotiations have been called off because Anglo-Canadian was not able to offer a package that the DoH considered to be value for money.

Anglo-Canadian, a consortium including Calgary Health Region, the province's healthcare provider, University of Calgary Medical Group, and Surgical Centres Inc, was appointed as preferred bidder to the London chain, also known as GC7, in September.

The chain comprises Barnet and Chase Farm hospitals, King George Hospital in Ilford and the Royal National Throat, Nose and Ear Hospital in King's Cross.

The contract is to provide orthopaedics and general and specialised ear, nose and throat surgery over five years, treating approximately 30,000 patients a year.

A DoH spokesperson confirmed that Anglo-Canadian had been 'de-selected' from the bid, and said 'the [ITC procurement programme's] national implementation team is presently reviewing the situation with NHS sponsors and considering the available options with regard to continuing this contract'.

Anglo-Canadian was unavailable for comment.

HSJ understands that a letter was sent to all trust project leads for the chain from DoHappointed law firm Addleshaw Goddard, to inform them of the breakdown in negotiations late last week.

In February, when Mercury Health pulled out as preferred bidder for the national spine chain of ITCs, the status was handed to reserve preferred bidder Capio Healthcare UK. But in London, there is no reserve preferred bidder that can automatically replace Anglo-Canadian.

Yesterday, representatives from the national implementation team, the DoH and the trusts involved were due to meet to discuss the appointment of a new preferred bidder. It is expected that the DoH will open up the contract to bidders shortlisted in September's first wave of bids.

A source close to the London chain negotiations said AngloCanadian was given a 'loose tender document in terms of volume and specialty at the start of negotiations', and had been given a bid price the DoH 'expected [it] to stick to'. He added that 'the DoH would not expect big changes resulting in swings to the bid price', something which had now happened.

But NHS Confederation policy director Nigel Edwards said he was surprised the process had not encountered more problems 'given the programme had been so rushed'.

A private sector source close to programme negotiations said the negotiating process was 'extremely complex'.

He said that one of the judgements bidders had to make was about the level of risk they were taking on. Typical sticking points in this type of negotiation might include quality assurance, national healthcare standards, building standards, high insurance costs for complaints and malpractice, and high legal fees.

Meanwhile, an announcement on successful bids for a further procurement programme is expected by the end of April.

Earlier this year, the DoH invited bids from private sector providers to treat an additional 25,000 patients nationally over the next year, two-thirds of whom will receive orthopaedic treatment. It is expected that the domestic private healthcare sector will be awarded the contracts, as it already has the infrastructure in place to carry out operations.

Both Bupa and Nuffield Hospitals have put in a bid.