Published: 21/03/2002, Volume II2, No. 5797 Page 9

The drive to increase private involvement in NHS pathology services has suffered a severe blow with the loss of a key contract held by Quest Diagnostics.

Quest Diagnostics - regarded as one of the pioneers of public-private partnerships, having presented a paper on the subject to prime minister Tony Blair - has lost its contract for all pathology services across West Middlesex University Hospital trust.The contract went instead to Hammersmith Hospitals trust because Quest's was too expensive.

The company, which ran the service from a greenfield site at Heston and employed the staff directly, was last year involved in discussions with trusts nationwide, in conjunction with accountancy and management consultancy company KPMG, about private companies running pathology services.

A private contract to supply pathology services to Ealing Hospital trust, previously provided by TDL, has also been terminated and the provision of services to the two trusts will now be made by Hammersmith Hospitals trust. Though the details of the Hammersmith contract are being finalised, it is understood all staff employed by Quest will now transfer back to the NHS, employed by Hammersmith.

A spokesperson for West Middlesex said: 'The process has reached the stage where the joint pathology board of West Middlesex and Ealing have selected Hammersmith as the preferred bidder. Both providers put forward bids that were acceptable, but Quest was substantially more expensive.'

The service-level agreement is due to be signed in the next few weeks, and the new contract will start in July. The joint bid by the two trusts is part of an NHS-wide process of seeking to achieve economies of scale in the provision of laboratory services.

West London Pathology Consortium, a partnership between Hammersmith Hospitals trust, St Mary's trust, Chelsea and Westminster Healthcare trust and Imperial College school of medicine, has signed a contract with Misys Healthcare Systems to provide a single integrated pathology information system across the trust's hospitals.The five-year contract, which is worth around£3m, has been funded from the pathology modernisation fund.